Against a backdrop of a fallen market that, until two days ago, couldn”t quite manage to regain its footing, LNKD impressively managed to shrug off the weakness by flexing its muscles to the tune of 13 percent. What next?

The chart below was released to my TradeWinds subscribers on December 9th, the exact day of the reversal. Having rallied in “wave a of 3” up to 238.77 through November 4th, profit-taking “wave b of 3” swiftly got underway and wouldn”t relent until almost filling the entire post-earnings gap and achieving a Fibonacci 78.6% retracement relative to “wave a of 3”.  Please note that this analysis is conducted using the Harmonic Elliott Wave (HEW) model, not the classic R. N. Elliott model. 

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Now that “wave c of 3” is well underway, its minimum target is expected to be in the vicinity of 248, where two distinct Fibonacci harmonic relationships are simultaneously fulfilled, as articulated below

  • At 248.27, “wave a of 3” = “wave c of 3”
  • At 248.79, “wave 3” = 2.764 x “wave 1”

Assuming “wave 3” does not extend any higher, and given the depths of “wave 2” and “wave b of 3” relative to “wave 1” and “wave a of 3” respectively, “wave 4” should be shallow relative to “wave 3.” A 20 percent to 23.6 percent retracement (~ 236 to 238) should suffice to set the stage for “wave 5”. Please note that just like “wave 1” and “wave 3” before it, “wave 5” will too subdivide into an “a-b-c” structure. 

Once again, assuming “wave 4” will terminate in the aforementioned area (see chart), the estimated target for “wave 5” is calculated by respectively multiplying the total distance measured from the bottom of “wave 1” to the top of “wave 3” by 0.618 and 0.764, and then projecting the two results from the bottom of “wave 4”. Based on the estimated “wave 4”, “wave 5” should reach a minimum of 275, possibly extending its reach well into the 280s. 

Another Perspective

Depicted in the chart below is another interpretation of the price pattern, namely, a Cup and Handle. The right cup lip established itself slightly above the left lip, setting the stage for a protracted handle. Per the chart pattern guidelines, the upside potential is twice the distance measured from the bottom of the cup up to its right lip. Clearly, the result is pretty consistent with the Elliott Wave analysis.

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Given the perpetually improving U.S. economy, it’s not surprising to see LNKD shine. A brighter employment picture should clearly lead to more “professional networking”, and hence a brighter future for LNKD. The market is clearly pricing it all in.