Today is a good day to go to the stock market casino for the headliner show, but not for the gambling.
If any of believe that you have an edge in trading Facebook today, then I would love to hear you articulate that thesis in my comments section. I do not see any edge whatsoever to trading the IPO. Despite how many stories the financial media run about Facebook, I am not going to let it distract me from the dangerous market we are currently negotiating. The IPO could just as easily double intraday as it could close below the opening price.
Markets that become, and stay, very oversold within the context that we have seen in recent weeks should command your attention much more than a casino IPO trade. I expect price swings to now become even more violent than what we have seen. In the coming days and possibly weeks, the most probable scenario is a few violent days truing higher, followed by a sharp sell-off giving up all of the gains, and then some. And then rinse and repeat that scenario.
I always try to keep an open mind about the market, but given the technical damage that has been sustained across a vast array of stocks and sectors, I am not expecting us to go off to the races higher for anything more than a few days, if that. When trading in high risk environments, it is extremely important to toss your ego aside. The downside to your portfolio is simply too great to allow hubris to destroy you in this type of a market.
I will continue to be highly selective in my trades, using a high cash level as a buttress against any risk I take on. Moreover, putting to one side the Facebook hype, you can see this morning that the broad market is having trouble holding any upside gains. Perhaps Mr. Zuckerberg and his group of billionaire techies will save the market today, but I am not betting on it.
I’m a Stu Unger (RIP) fan myself
That’s not Stu Unger
The edge in trading fb or any other ipo lies in the old techniques of tape reading and having very short time frames. That was the only way to make money in this messy ipo unless you got in on the deal and sold the open.
Agree 100%. I felt there was no way to know if FB would close at $76, $18 or anywhere in between. It could reach both those levels in the coming weeks and therefore I think it’s untradeable.