Sunday, November 14, 2010

IPO research

Months ago I was keeping good track of IPOs, got quite a list of them. It seemed like some I was following closely at the time have gone on to nice gains. About the time I was getting into futures I stopped this discipline and following. Well today I had it on my list to get back to this research, have now built some watch lists and put some stuff on the quote screens.

At first it seemed like good easy money could be had. One of the key chart patterns I've heard about of late is a Uturn or IPO Uturn. Several IPOs exhibit this, then break out to new highs, generally on better volume with increased or new highs in the RS line. I found many with 10 % gains, other with >60% gains. I got all excited.

But I am the kind of person that has to be careful what I put into my brain. Most of the IPOs were actually very messy in the charts. Many of the issues were tough to believe in on a fundamental level. Much pain could be had.

I will continue to keep my eye on select IPOs, those with good stories with room for exponential growth, those that large institutions would buy and hold for years.

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