Friday, August 17, 2012

Fri, Aug 17: LINTA, LVNTA

In mid-morning trade today, August 17, a few words about an intimate stock pairing: LINTA and LVNTA.

(And a question: does consonance carry across the blogosphere?)

The two equities are joined by more than just nearly identical symbols; LVNTA is in fact a spin-off of LINTA. But this post is not about corporate structure or governance. The charts are what matter.

LVNTA shares were issued just a week ago, on Friday, August 10. Each LINTA share was assigned 0.05 share of LVNTA. Based on the spin-off's opening price of $40, one would expect the parent to gap down about 0.05*$40, or $2, as though the underlying instrument were going ex-dividend, and so it approximately did. Interestingly, a three-month price channel supported the day's low almost to the penny -- even though the day's "sell-off" was caused not by an influx of bearish sentiment but, rather, by a mathematical identity.

LINTA (the parent). May 9, 2012 to present. Hourly candles.
Shares in the spin-off, LVNTA, look particularly interesting at the present mid-morning moment. The shares, of course, have very limited price action off of which to base a technical analysis hypothesis; and yet bullish price consolidation around the upper end of a five-day price channel is unmistakable. Volume is confirming the sentiment: a high volume capitulatory sell-off late yesterday was followed by a high volume rally this morning. The parent company, LINTA, is also rallying hard from intraday lows.

LVNTA (the spin-off). August 10, 2012 to present (all historical price action). 2-minute candles.