Update on LinkedIn and What it Means for the Broad Market

LinkedIn, a chic pick to assume a leadership role throughout last year, heading into 2016, was cut in half beginning around last November and culminating with a horrific post-earnings gap down in early-February. 

Without strong leadership, it is tough to see much meaningful upside sticking on the indices. As we noted throughout 2015, even though several major indices made fresh all-time highs, leadership was narrow and unimpressive. Bulls cavalierly dismissed that argument to their own detriment, with the market eventually buckling under its own weaknesses. 

Currently, an intriguing rotation into the material/mining/emerging market/energy complex may be in its early stages. But, clearly, there is much work to do there to cement that thesis. Moreover, it is questionable as to whether that type of rotation can sustain a bull run on the indices as a whole.

And that brings us back to LNKD, a promising leader burnt to the ground. 

We day-traded the name on the long side a few weeks back, in light of a Three Day Rule previously discussed. 

On the updated daily chart, below, it is tough to see LNKD filling its massive gap above to $186.18. But a move over $122.40 now, after the stock failed to roll back over for a secondary leg down, would have me looking at the for a quick scalp on the long side, again. Incidentally, a move back under $113 or so, the scene of the 20-day simple moving average, would have me flipping short here for another breakdown. 

However, the larger point is that LNKD has devolved into a very short-term trading vehicle and categorically not a bonafide market leader, not unlike what we have seen to many leading biotechnology and healthcare issues. One has to wonder if the FANG stocks will eventually meet this fate, too. 

More on the market and specific ideas in my usual Midday Video for Members.