This Tutorial is used in conjunction with the Stocks Over Coffee Podcast on Technical Education series on IPO Bases
Alphabet aka Google you might have heard of it where it IPO'd at $85 (share split adjusted price of about $42) and now it is over $1000, which is a hefty increase. This won't be a pure fundamental take of where you hold a stock for 15 years and just believe. This is more about how you can swing trade a stock buy a stock at the pivot point and make a 25% or more profit and move on.
Every year there are typically over 100 IPOs that come out and one way to filter through all of them and know when to buy is to find the IPO Base. Google is one of the model example I use when I am confusing about my own trading rules. Why Google? Lets talk about the technical Formation.
Technical IPO bases
Minimum 5 days long in a sideways movement
Base Starts in the iin the first 25 trading days
Bases are maximum 6 weeks long
Minimum liquidity of $10mm average daily volume
Doesn't substantially undercut the first day IPO price low
From this criteria you can already eliminate over 50% of stocks that IPO. From here you can get even more specific to looking if A+ institutions with great and long time managers are in this stock. Then again even more specific if they are increasing sales and earnings quarter over quarter.
Using these criteria you can try to get in early on the stock even before the base happens, which is a little bit riskier but always have a stop loss in place of 7%. After investing in IPOs you get a sense from your winners how IPOs should make you feel and once they break character then it is time to take the profits and reinvest.
Hope this little blurb helps. Until the next post!
Alphabet aka Google you might have heard of it where it IPO'd at $85 (share split adjusted price of about $42) and now it is over $1000, which is a hefty increase. This won't be a pure fundamental take of where you hold a stock for 15 years and just believe. This is more about how you can swing trade a stock buy a stock at the pivot point and make a 25% or more profit and move on.
Every year there are typically over 100 IPOs that come out and one way to filter through all of them and know when to buy is to find the IPO Base. Google is one of the model example I use when I am confusing about my own trading rules. Why Google? Lets talk about the technical Formation.
Technical IPO bases
Minimum 5 days long in a sideways movement
Base Starts in the iin the first 25 trading days
Bases are maximum 6 weeks long
Minimum liquidity of $10mm average daily volume
Doesn't substantially undercut the first day IPO price low
From this criteria you can already eliminate over 50% of stocks that IPO. From here you can get even more specific to looking if A+ institutions with great and long time managers are in this stock. Then again even more specific if they are increasing sales and earnings quarter over quarter.
Using these criteria you can try to get in early on the stock even before the base happens, which is a little bit riskier but always have a stop loss in place of 7%. After investing in IPOs you get a sense from your winners how IPOs should make you feel and once they break character then it is time to take the profits and reinvest.
Hope this little blurb helps. Until the next post!
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All ideas are for information purposes only. I may or may not invest in the stocks discussed.
All ideas are for information purposes only. I may or may not invest in the stocks discussed.