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Hurry Up Get in on IPO's....wait, maybe not...



March 02, 2011 – Comments (1) | RELATED TICKERS: TZA , GM

Investors, you're going to have to think for yourself.  No, I don't mean you need to read business articles and make a decision, I meant think dammit!

Let's say you were a business news reader.  This might be an interesting article, printed on Jan. 26, 2011:

IPO market showing signs of life as 2011 looks promising

Well, if you were nervous on Jan. 26, this article from the same newspaper should have gotten you off your worry horse:

IPO's Come Roaring Back
"The market is hitting new bull market heights, the Dow Jones industrial average is flirting with 12,000, and more companies are deciding now's the time to sell stock to the public." Jan. 27, 2011

I think we all know the DOW is now PAST 12,000.  Getting in on an IPO over a month ago would have done you well.  Or would it?

Oddly enough, only 35 days after this article the SAME newspaper has another IPO article.  

Chunk of IPO's Drop Below Offering Price
"A significant slice of IPOs are falling below their offering prices, an unwelcome development because privileged investors who bought at the offering price, and didn't sell, are losing money on these deals."

Not only is this an about face, but this line from the article "Any trouble in the IPO market is unwelcome, as the IPO market is a reflection of investors' confidence in stocks and the economy." makes virtually no sense at all.  Well, it would make sense if the markets were lower than they were 35 days ago, but confidence seems to be building.

What do these three articles tell me?  They tell me I'm right, that the market is forming a top.  I'm still long for another two to three weeks, but market sentiment is going to shift negative and I think it will happen very fast.  Watch for the DOW to break 12,600 soon.  It might even flirt with 13,000, but it will be a fast and quick move back to 11,000.  Probably within a 10 trading days and definitely before the end of June.

1 Comments – Post Your Own

#1) On March 02, 2011 at 11:22 PM, Valyooo (37.56) wrote:

I agree with this analysis....when IPOs start falling its usually a sign of a correction...but I wouldn't say like a large drop...I just mean you won't see junk stocks roaring, and we will be stuck in a trading range

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