Update: LNKD and CMG remain appealing short candidates
The S&P is giving us a strong bounce at the moment and may have much higher to go if shorts start feeling squeezed. Speaking of shorts, there are a couple of compelling short candidates that I’d like to update. I remain of the belief that CMG – while a fine company – is likely topping out as a stock. It formed a rising (bearish) wedge over the last 5+ years and has now clearly broken support on both the daily and weekly chart. A move to lower prices would likely take years, but it starts with a break.
LNKD remains very optimistically valued. They broke under a steep trendline last month, then reported an outstanding quarter just a few weeks ago (the after-hours action and ensuing gap-up being the short term top), but have now clearly broken their supporting trendline.
I suspect the market is due for continued upside follow-through from its oversold condition. A rally in price for CMG and/or LNKD may provide a nice shorting opportunity – particularly if they make it back to trendline resistance. I am also intrigued by the idea of shorting FB, but today’s sell-off and the lack of pricing history makes me a bit more skittish. Fundamentally, I see FB as being a lot more like MySpace than a younger (IPO) Google.