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The Art of Trading a Hot IPO: Yandex Edition


IPO's don't always pan out, but if you follow a blueprint you can get some low risk momentum trades.

Yesterday Yandex NV (YNDX), another big Internet IPO, hit the Street. The inevitable hype surrounded it, with underwriters coining it the "Google of Russia." While not as hot initially as the LinkedIn Corp. (LNKD) IPO, YNDX got some steam later in the day with moves through key intraday levels.

For us, we go to our tool chest and use the art of trading the first day of an IPO. We went over the strategy before the LNKD IPO, but it's worth repeating. We likely will see more hot Internet offerings within the next couple years, with social gaming site Zynga the latest to announce an imminent IPO. They don't always pan out and trade well, but if you follow a blueprint you can get some low risk momentum trades.

YNDX quickly opened up around $35-36, and it quickly went to $30.55 before bouncing. The first entry was buying around $33.50 vs. the low of $30.50.

Then the stock based all day and broke above $35.50-$36.25 which was the confirmed buy or the next entry. As long as it stays above that area, you can add based on the intraday pattern.

The stock was set to open slightly lower this morning at around $38. Compare today's chart to that of Linkedin. They show similar patterns, and YNDX has a bigger float so it took longer to break above the opening range.

We will check back in before the next big IPO.

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Editor's Note: This content was originally posted on Click here for the original.

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Position in YNDX

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