— The God of Trading (@TheGodOfTrading) September 5, 2017
— The God of Trading (@TheGodOfTrading) September 1, 2017
Investing in an IPO is actually one of the easiest decisions in stock trading but not on its first day.
But it is an IPO’s first day of trading that gives a clear look at when to buy the stock. Simply note the high price and the low price on day one of the IPO. Those are the lines in the sand (see chart 0f ZEAL below). The stock is a buy on a close above the high of the first day with a tight stop loss below the high of the first day.
With ZEAL that buy would have been at 18.95 on the open of August 28 (after its close above the high of the first day at on August 25). The stop loss is on any close below 18.69, the high of the first day. ZEAL backed off for a couple of days and retested its breakout above the IPO-day high but did not trigger its stop loss. Today it is, at the moment, turning up again at 18.90 (UPDATED: 18.80 on the close), again with a stop below 18.69.
This is an an opportunity for investors to buy and hold. This is not for traders. With a good-till-cancel stop loss order in, with very little short-term risk, it is a buy it and forget it with the hope it will appreciate over time.
(click on the chart for a larger view)