The PlayBook is a valuable Webinar event held every Thursday at SMB. Throughout the week traders submit their analyses of a particular trade. They discuss the Big Picture, any news pertaining to the particular stock at hand, and then offer a detailed explanation on why and how the trader behaved as he or she did. This week Mike discussed an Opening Drive in LNKD. For more information on The PlayBook Webinar Series, please go to www.smbtraining.com/blog

1. Opening Drive Play
Leo Selya
LNKD
August 3rd, 2012

4. Strategy Description
• The SPY got above important resistance
• LNKD gapped up in the after-hours
• Held above the after-hours high in the pre-market
• Extremely bullish setup that needs be played more
aggressively
• Explosive stock that is now more likely to move quickly
in our favor
• A type of Momentum Trade

5. Opening Drive Play
• “I cannot make money on the Open,” said by too many traders.
• A pattern that works on the Open
• Excellent risk/reward when you master this trade
• Can be up big $$ by 9:45AM
• Difficult trade
• Quick execution skills
• Gumption
• Capture the Big Move

6. Big Picture
The SPY has been in an ascending range since early
June. It finally got above 138.60 on the Open, which
was the resistance level from the end of July.

8. SPY vs. LNKD
LNKD had been in consolidation
between 103.50 and 104 at the
top of the after-hours and pre-
market action. It finally got above
104 as the SPY got above the
138.60 level.
On the open, the SPY traded
higher and LNKD made a push
towards 108 which was the next
major level. This stock had fresh
news, but the bullish pre market
price action coupled with the
strength of the SPY, made it a
better opening drive trade
overall.

9. Trade Idea
• In the after hours, the stock traded above the prior day high and held above 100. Then
in the pre-market, the stock drove over 102 and held between 103.50 and 104, above
the action from the after hours.
• This shows that not only was the reaction to earnings viewed positively, but the buyers
clearly had control. This is my favorite pattern for an opening drive long. Seeing this
pattern made me confident that I could take on a bit more risk in a stock that is normally
rather thin and risky.
• Probability is very important. There is a difference between risk/reward and probability.
Just because a stock has a tight 5 cent consolidation and one is comfortable taking the
trade, especially beginners, doesn't mean that it is likely to work.
• Having this probability on my side, allows me to pay through offers on the opening drive
and hold a core until the next level. The opening drive must stop eventually, thus we
must understand where those sellers that had lost will legitimately thing that they have
a chance to slow down these powerful buyers that had clearly been wining since the
news release.
• Naturally, the first place would be at the next big level of 108 and then the next level
after that is 110. Thus, my play was to hold a long on the opening drive as long as it is
above the 103.50/104 area and hope for a move close to 108.
• Once the stock approaches the 108 area, my risk reward doesn't signal to hold
anymore and I sell once it fails to get above 107.50 after having a battle.

10. Intraday Fundamentals
•Third-quarter revenue will be $235 million to $240
million, Mountain View, California-based LinkedIn
said in a statement yesterday.
•Full-year sales will be $915 million to $925 million,
ahead of the $880 million to $900 million it projected
in May.
•Analysts on average were predicting third-quarter
sales of $236.3 million and 2012 revenue of $906.3
million, according to data compiled by Bloomberg.

11. LinkedIn (LNKD)
LinkedIn Corporation (LinkedIn) is a
professional network on the Internet with
more than 90 million members in over 200
countries and territories. Through the
Company’s platform, members are able to
create, manage and share their
professional identity online, build and
engage with their professional network,
access shared knowledge and insights,
and find business opportunities. Its Average Volume: 3.5 Million
platform provides members with solutions,
52 Week Range: 55.98-120.63
including applications and tools, to search,
connect and communicate with business Short Float %: 8.0%
contacts, learn about career opportunities, Average True Range (ATR): 4.65
join industry groups, research
organizations and share information. Its
members create profiles that serve as their
professional profiles and are accessible by
any other member, as well as anyone with
an Internet connection.

12. Long-term Technical Analysis
This shows the 107.70/108
area of resistance.

13. Short-term Technical Analysis
This shows the 107.70/108
area of resistance.
This shows the hold
above after-hours price
action in the premarket.

14. Reading the Tape
• I noticed the buying in the pre-market and then I noticed how when offers
would lift, the stock would just hold higher and not really drop out.
• Once it got above the 104 offer, it never came back. On a move to 106.50 so
quickly after lifting the 105 offer, the stock gets really steep and this is usually
a good place to take sales. That being said, the 105 lift and move gives us a
place to pay through 105 momentum and lock in some cash flow.
• We still hold our core from 104 for some, but we take sales once it slows for
whatever we paid over 105. Similarly, later when it pulls back to 104 and then
lifts the 106 offer, we pay and capture the move towards 108. When the stock
later forms a mini range between 107 and 107.50. It then forms a mini range
between 107 and 107.40. This is a sign that the sellers stepped down.
• Finally, a weaker tape and a change in character. Then when it lifts 40, it
can't lift 50 cents and gets back below 40 cents. This is a huge change in
character. For the first time since 104, the sellers are winning the battle over
the buyers. I got much lighter here and then hit the rest below 107.
• It is very important to get a feel for stock on the open. It is OK to be
aggressive early on, but when things change, you must be disciplined
enough to understand that this particular trade is over. There may be more in
the stock, and it might not be done going up, but this opening drive has
ended.

15. Trade Management
I got long when the stock was 103.50 by 104 and
paid for more over 104. Then 105 held the offer and
I paid for more when that lifted again and sold into
the momentum towards 106.50. I continued to hold
my core from the 104 area because this setup can
lead to an opening drive and a trend.
Later around 107, the stock was
tight between 107/107.50. Then
When the stock pulled it became 107/107.40. The
back towards the 104 sellers finally could step down
area, I bought a bit and defend a price, this never
more and then sold happened before. It is also below
again into momentum. the 108 area of resistance. 40
Every time offers would cents lifted but 50 held and then
hold around 105 or 106, it re-offered 40 cents. The tape
I would buy more got much weaker I got much
through the lift because lighter here and got flat below
I can. The pattern still the 107.
worked, it is an opening
drive.

16. Trade Review
• This was a good trade. As traders, we need to use screen time to our
advantage. When we see that certain trades work really well over and over
again, we need to take advantage the next time we see it.
• I knew that this was a tough stock, but the PROBABILITY was very important
and allowed me to have confidence and get in the stock regardless. I knew
that it had potential to drive on the open to the next level which was several
points away.
• However, I think I could have done a few things better. I could have been
better at buying it back near 104 and paying for more. If I pay for more
through the 105 lifts, I can hold more for the bigger move and take more sales
along the way, making more money.
• Sometimes it is tough to gauge a pull-in vs. a reversal on the Open. Thus,
buying into the 104 area isn't the best place to add a lot, but certainly a place
to add some. The place to add a lot is paying through these offers as long as
the pattern doesn't chance.
• Everyone tries to get in between 107 and 107.50 but in reality, this is a weak
tape, the real place to make money is by having confidence, being
aggressive, and capturing this opening drive. Once I already made money on
the move pre market, I could have been a bit more aggressive with size once
the bell had opened.

17. Trade Idea
•Long above the resistance at 108.
•Watch 104 as possible support for a pullback play.
•Longer term resistance is at 110 and 115.

18. Contact information
mbellafiore@smbcap.com
@mikebellafiore