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The market looks as if it's going to begin the year with a large rally, thanks the last-minute "can kicking" deal to resolve the fiscal cliff -- at least for the short term. I do not believe any citizen or voter should be happy with the overall outcome, as the deal does next to nothing to deal with the long-run impacts of a large and growing deficit. I also think the rally will be short-lived as more details become available and analysts become more aware of some of the hidden impacts of the bill. One of the more obvious ones will be the effect on consumer spending, with the $120 billion annual payroll tax holiday being allowed to expire, which should knock at least a half percent off GDP in 2013.

But I'm not one to look a gift horse in the mouth, and am most grateful that the rally will rescue my bull call spread (530/540) on Apple (NASDAQ:AAPL) that expires on Friday for an over 200% gain on the position. However, this deal should do little to lift investors spirits over the longer term. It also sets up a series of mini-cliffs in the months ahead, including one on raising the debt limit and one on the sequester.

Running a long/short portfolio, I will be looking to start increasing my short positions on the back of the rally. One stock I will be looking to short again is LinkedIn (NYSE:LNKD). My record shorting this stock has been a mixed bag since it came public. I have two wins, two losses, and one breakeven. Overall, I am up a just a bit as my wins were bigger than my losses. (Note: I always go short with bear call option spreads to limit potential losses.)

Here are key recent negatives for LinkedIn:

  • Insiders continue to be active sellers of the stock. They have sold over 2 million of their shares in the last six months, with no buys.
  • Barclays just downgraded the shares from "Buy" to "Hold." A Barclays' analyst cited valuation and concern that guidance for FY 2013 could come in lower than expected as drivers for the downgrade.
  • Despite a large earnings beat on its last earnings report in November, consensus earnings estimates for FY 2013 are slightly lower than they were three months ago.

Here are four additional reasons to be skeptical of LNKD at $115 a share:

  1. Let's start with the obvious: LNKD is trading at almost 15 times annual revenue and 90 times forward earnings.
  2. In addition, growth is slowing. The company should post a better than 80% revenue gain in FY 2012, but analysts only expect around a 50% sales increase in FY 2013. The stock also sports a five-year projected PEG (2.35) that suggests the market is overvaluing the company's growth prospects.
  3. The stock is selling at the top end of its historical valuation based on P/E, P/CF, P/B, and P/S.
  4. The company has some of the same challenges with the transition to mobile as Facebook (NASDAQ:FB) does and has fewer potential revenue sources (fewer members, no search engine possibilities, etc.). However, LNKD is selling at more than twice Facebook's forward P/E (41.9). Facebook also has more than twice its market capitalization in cash vs. LinkedIn.
Source: LinkedIn: A Connection To Be Ignored At These Levels