12May1:37 pmEST

Unwrapping Recent IPOs

Of the IPOs which were met with with plenty of attention dating back a full year or so, there have indeed been quite a few disappointments to note. Both ACIA and TWLO, for example, were as hot as any duo in the entire market back around August and September 2016. Unfortunately for longs initiating long-term positions back then, they have both suffered steep drops ever since, with not much in the way of concrete evidence of a bottom, just yet.

Specifically, ACIA dropped from a $128 handle down into the low-$40s, and TWLO from a $70 handle down into low-$20s. By any measure, this is disappointing price action and one cannot help but conjure up memories of the TWTR YELP, even FB (to a degree), post-IPO swoons. 

SNAP's latest earnings blow-up, as the more recent prominent IPO, would justifiably lead many a trader to simply eschewing IPOs altogether. 

But that may throwing the baby out with the bathwater and therefore missing some opportunities.

First, as a general rule, waiting about four-to-six months after an IPO before aggressively swing trading the given name is a conservative but sound strategy. The reasoning behind this strategy is to all a brand new chart to develop an identity, with its own ebb-and-flow. Granted, you can trade it beforehand, but using smaller-than-usual size is a good way to guard against the random gaps and movements often seen in new charts taking shape. 

Next, we have at least two (and a few more I will delve into for Members shortly) recent IPOs which are acting rather well. TTD is surging today after earnings and has the look and feel of a new growth run at hand. 

And PI, a name which bounced back nicely from some recent earnings volatility, is coiling just under the key $40 level, seen on the daily chart, below. 

So while navigating the IPO neighborhood is always fraught with danger, it is worth remembering that proper risk management is magnified all the more with the likes of ACIA SNAP TWLO. And we should not let those inevitable lemons detract from some emerging, quality setups. 

A Cold Chart from the Cold W... Saturday Night at Market Che...


This website is intended for educational purposes only. | © 2018 MarketChess.com | All Rights Reserved | Website design by Saco Design | Superpowered by Site Avenger

mobile site | full site