IPOs Are Hot | What To Watch
Today at a glance:
4 IPO names to add to your watchlists
Tactics to trade younger names
Previous IPO charts to study
Let’s dive in:
IPO Names To Track
Trades a ton of dollar volume, love the action over the past 3 days. The trigger day was Monday, coming right out of an inside day setup on big volume. We’ll see how it can close the week tomorrow but this is definitely one I’ve added to my lists to track going forwards.
Traditional HVC setup triggered Wednesday after SYM traded HVE and closed right at highs post EPS. Price then holds the $50 spot to nearly the penny on Day 2, offering a great area to place risk against.
I’ll be looking to buy any dips tomorrow vs. the HVC and place my risk under $50. It’s not often we see HVE with IPOs so want to pay attention here.
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Seeing a lot of noise on socials about Shark Ninja, am interested to see how this plays out over next couple of weeks. Would love for it to see a major gap up on news with some crazy volume to show institutions piling into name. Overall though definitely worth tracking going forwards.
One of main reasons I’m keeping this on my lists is I’m familiar with the service and have had good experiences with it on day job. Email marketing is here to stay and as far as I know this is the first major player in the space to go public.
Like how price is coiling, have alerts set for a move above $28.50 to check back on the chart.
I’ve been a major user of TradingView for over 3 years now and swear by it. Definitely best in class alerts, watchlist management, charting (duh), and broker integration make this app a no brainer for me.
Highly recommend checking out their Black Friday sale, up to 70% off here:
Trading Young IPOs
When it comes to trading in the stock market, not all stocks are created equal, especially when you compare young IPOs (Initial Public Offerings) with multi-billion or trillion $ companies like Apple (AAPL), Tesla (TSLA), Amazon (AMZN), and Nvidia (NVDA). The dynamics of trading newly listed companies are distinct, and understanding these differences will save you a lot of money & headache when trading.
Key Differences in Trading Young IPOs:
Less Liquidity: Unlike their well-established counterparts, young IPOs often have less liquidity. Prices are lower, shares traded are lower, thus a lesser amount of dollar volume comes into the stock on a regular basis.
More Volatile Movements: Expect more dramatic swings in both directions – upside and downside. This volatility is partly due to the less predictable nature of new companies which haven’t yet established a proper liquidity/valuation profile from major institutions.
My Strategy for Trading IPOs:
When I approach young IPOs, I look for these specific signals:
High Volume Gap Up: This is a sign that the stock is gaining positive attention from institutions and might be setting up for a strong continuation move.
High Dollar Volume: A high dollar volume indicates significant money flow into the stock, which solidifies institutional controls over shares (which ultimately helps me manage risk better)
A 10/10 Pattern: Usually this will be a picture perfect period of price contraction, on low volume, above uptrending short-term MAs. Check ARM above (which was a 9/10 due to lack of major volume on breakout day).
Implementing Specific Rules:
To manage risk & get long IPOs, I follow these rules:
Position Size: I never allocate more than 10% of my portfolio to a single IPO. This limits exposure and reduces potential downside.
Sell Rules: I apply the same sell rules as with other trades – selling in thirds at 5% and 10% profit, then holding the final third against the 10-day Exponential Moving Average (10EMA) as a trailing stop.
Entry Triggers: My main triggers for entering a trade are either respect for whole numbers in the stock price or a HVC entry tactic.
The Bigger Picture:
While I actively look for these opportunities, I also spend a considerable amount of time just observing the IPO market. It's essential to understand how new listings are behaving, how they deal with market risks, and the overall health of the IPO market. This observation is crucial because when IPOs start to move, especially the highly speculative ones, it can signal that big money managers are risk on.
Check these IPO winners:
Hope this starts your Friday off on the right foot!
Other resources to study:
2020 Best Charts: https://gregduncan.gumroad.com/l/wmfsd
2021 Best Charts: https://gregduncan.gumroad.com/l/2021
2022 Best Charts: https://gregduncan.gumroad.com/l/2022
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