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.
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.
Click to enlarge
Click to enlarge
Editor's Note: This content was originally posted on T3Live.com. Click here for the original.
Check out T3Live.com's Virtual Trading Floor to follow these traders and their live portfolios on real-time throughout the day! Take a free trial.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.