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 ...