Both LinkedIn (NYSE:LNKD) and Groupon (NASDAQ:GRPN) traded lower today despite the major rally in the broader indices. This is a clear sell signal. If these stocks cannot trade higher in a market like today, then there is clearly something terrible wrong with LNKD and GRPN.
Perhaps investors are finally waking up to fact that these stocks are extremely overvalued on almost any metric. Maybe investors are beginning to realize that these companies do not actually have good business models. For example Groupon faces growing competition with each new day, and LinkedIn is having a difficult time figuring out how to actually make money. The reason does not matter, but rather the fact that these stocks have finally broken does matter. Recent declines are the tip of the iceberg.
As we have seen with Netflix (NASDAQ:NFLX), once momentum breaks in a stock, things can get ugly quickly. Groupon and LinkedIn could soon suffer the fate that Netflix did.
Sell Groupon and LinkedIn before it's to late!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.