Successful Stock Signals for Traders and Portfolio Managers: Integrating Technical Analysis with Fundamentals to Improve Performance, + Website

CHAPTER 12

Evolution of Technical Signals from A to Z, with LinkedIn Exhibits

Studying an IPO like LinkedIn shows the evolution of technical signals over time. For example, the 200-day moving average needs 200 days of data before it will ever show up as a signal on a daily chart. An IPO shows the evolution over time of the signals that become available as data becomes available. Unlike Facebook, a recent IPO with only a few months of trading, LinkedIn is an IPO with more than one year of data on price and volume. In this chapter, we will go from A to Z in the technical signals as they come online over time. The signals that are immediately available on the daily chart are the candlestick signals and relative strength versus the Standard & Poors (S&P) 500 Index and the Point & Figure chart. Also, on-balance volume (OBV) and accumulation/distribution are quickly ­available.

In 14 days, the money flow index (MFI) kicks in, along with the relative strength index (RSI). Rate of change is available in 12 days, but you can set it at 5 days for an earlier reading. Bollinger bands would usually come on the chart in 20 days. You can see the fast stochastic in 5 days. For day traders all of these signals are available during the first day, because instead of 1-day intervals, they are using 1-minute intervals. The 200-day becomes the 200-minute line. Likewise for the 10-, 20-, 50-minute trend lines.

LINKEDIN IPO SUCCESSFUL

The IPO price was $45. On May 19, 2011, public trading in the shares ...