As you all know we played znga this week for a nice 2 day gain. I was going to explain the technicals behind the trade. Its pretty simple.. IPO stocks have a tendency to open high and then fade for a few months following the price at the open. Once this happens, you want to set your alert for a breakout to new highs for the IPO. Once the stock breaks highs, there are no more sellers and the stock often gets picked up by instiutions for weeks following the trade. This trade produces huge returns on a regular basis.. tons of examples of this happening over and over again. So this is exactly what happened with ZNGA. We bought the breakout price at 11.5 and sold at 13.5’s.. the stock has a chance of going higher but i always like to lock in my gains since i am primarily a daytrader!
Here is a look at the ZNGA chart
A similar stock that I have on my radar for next week is GRPN. Groupon reports earnings on wednesday of next week. the stock is close to a new high breakout. If the company reports good earnings and the chart breaks out.. this could be another killer ipo trade. Keep that in mind as we see what happens with their earnings! Here is a look at the chart