A Repeatable Method For Trading IPOs

[] [View in browser]( [View in browser]( [] JULY 7 2023 [] [] SCOTT WELSH’S ANATOMY OF A GREAT TRADE PANW’s IPO Makes For A Great Case Study One way to make money in the stock market is to study the great trades of all time. Studying big wins can lead to getting big wins. What can we study? For big gains, a great place to start is IPOs. New companies tend to move up much more than established companies. And Initial Public Offerings (IPOs) are new companies by definition. The problem is that new companies are risky. And volatile. Many times new issues don’t have enough data to make a fundamental decision. Sometimes new companies haven’t even made a penny of profit. So, how can we trade these fast-moving, volatile stocks? Very boringly. Here’s a repeatable method for trading IPOs: 1. Use a Weekly chart. (That’s already boring.) 2. Wait for price to close above a long-term moving average. (Snooze.) 3. Wait for price to close above a long-term moving average five times. (Wake me when it’s over.) Yes, this way is dreadfully un-exciting. But it also allows us to use a calm, repeatable method. And it makes it easy not to miss a trade. After all, we have 5 weeks to get ready! Does it work, though? Does this method catch big moves? Here’s an example on one of the most famous IPOs in recent times, PANW (Palo Alto Networks). Since its initial offering, PANW has gone from $17.70 to $248. That’s why it’s famous. Could we have caught the beginning? Let’s see. First, we need to put a 30-week simple moving average (SMA) on our Weekly charts. Then we need to watch closely (once a week) to see when the SMA first prints. Once we see the SMA on our charts, we’re on alert. A slow, unhurried alert, but an alert nonetheless. The SMA showed up in February 2013, as indicated by the red arrow on the chart below: [] From there, we’re then looking for 5 consecutive closes above the SMA. If we get it, we go Long on Monday of the 6th week. We then hold it until the price closes below the SMA. That’s the end of our trade. And if we’re trading IPOs this way, we’re looking for something big to happen in the first two trades. On our PANW chart, we get our entry at the start of 2014 and our exit around May of 2014. That was basically a break-even trade. (That’s the first teal line on the chart.) Then we get the big IPO-style move on our next entry which runs from June 2014 all the way to October 2015. That trade takes us from $26 to $52. (That’s the second teal line on the chart.) Just the win we were hoping for: [] IPOs are a great place to look for huge winning trades. If we have a repeatable method, we can catch some of those explosive runs. Happy trading, — Scott Welsh [] [] JEFFRY TURNMIRE Common and Uncommon Pattern Trading As a fan of patterns, I thought it would be fun to go through some common ones (and one uncommon one) and how people use them to guide their trades. 1. Head and Shoulders Pattern - This is when a chart forms three peaks, with the middle one being the biggest, resembling a head with shoulders on either side. People usually trade this by waiting for the pattern to complete (so you have both shoulders fully formed) and then identifying the “neckline”. The neckline is is a line you can draw from the low after the first shoulder to the low after the head. If the price breaks below this after the second shoulder is formed, it signals a bearish entry. You can also trade this in the inverse, just flip the head and shoulders upside down. 2. Double Bottom Pattern - As the name suggests, this is a bottoming batten that suggests a reversal after a significant downtrend. Basically, the stock is testing a key support level and bounces off it twice, forming a “W” shape. The key here is to wait for a confirmed breakout, which you can find by spotting the resistance level. You can find that by drawing a horizontal line at the middle point of the “W”. Most folks consider the entry signal to be once the price action breaks through that point, but you can also wait a bit longer for a reversal before getting in. 3. Triangle Pattern - This pattern is formed when the price is essentially trending in one direction despite having ups and downs. If you draw a line connecting all the highs and then draw a line connecting all the lows, you’ll see what I mean. (or just see the image below) An ascending triangle is formed when the stock is having higher highs and higher lows. This forms an upward-pointing “wedge” or “triangle”. The opposite can happen, too, when a stock is having lower highs and lower lows. You can even get a sideways triangle when price is consolidating sideways. Most people take an entry when the price action moves above the trendline on the ascending triangle, or below the trendline on the descending triangle. For sideways triangles, it could go either way. In all cases, you should look for 2 closes above/below the trendline to confirm entry. [] Now, I promised you an uncommon pattern, so here we go… This one isn’t one I’ve seen anywhere before. There’s one specific ticker I follow that tends to follow this pattern: 1. It closes on an uptick 2. Overnight, it gaps down a certain amount 3. At the open it starts rising, filling in the gap that was created overnight There’s a little bit more to it than that, but you’ll have to [watch this video for the details](. Hope you enjoy, — Jeffry Turnmire [] [] [] [] [] JULY 7 2023 [] [] SCOTT WELSH’S ANATOMY OF A GREAT TRADE PANW’s IPO Makes For A Great Case Study One way to make money in the stock market is to study the great trades of all time. Studying big wins can lead to getting big wins. What can we study? For big gains, a great place to start is IPOs. New companies tend to move up much more than established companies. And Initial Public Offerings (IPOs) are new companies by definition. The problem is that new companies are risky. And volatile. Many times new issues don’t have enough data to make a fundamental decision. Sometimes new companies haven’t even made a penny of profit. So, how can we trade these fast-moving, volatile stocks? Very boringly. Here’s a repeatable method for trading IPOs: 1. Use a Weekly chart. (That’s already boring.) 2. Wait for price to close above a long-term moving average. (Snooze.) 3. Wait for price to close above a long-term moving average five times. (Wake me when it’s over.) Yes, this way is dreadfully un-exciting. But it also allows us to use a calm, repeatable method. And it makes it easy not to miss a trade. After all, we have 5 weeks to get ready! Does it work, though? Does this method catch big moves? Here’s an example on one of the most famous IPOs in recent times, PANW (Palo Alto Networks). Since its initial offering, PANW has gone from $17.70 to $248. That’s why it’s famous. Could we have caught the beginning? Let’s see. First, we need to put a 30-week simple moving average (SMA) on our Weekly charts. Then we need to watch closely (once a week) to see when the SMA first prints. Once we see the SMA on our charts, we’re on alert. A slow, unhurried alert, but an alert nonetheless. The SMA showed up in February 2013, as indicated by the red arrow on the chart below: [] From there, we’re then looking for 5 consecutive closes above the SMA. If we get it, we go Long on Monday of the 6th week. We then hold it until the price closes below the SMA. That’s the end of our trade. And if we’re trading IPOs this way, we’re looking for something big to happen in the first two trades. On our PANW chart, we get our entry at the start of 2014 and our exit around May of 2014. That was basically a break-even trade. (That’s the first teal line on the chart.) Then we get the big IPO-style move on our next entry which runs from June 2014 all the way to October 2015. That trade takes us from $26 to $52. (That’s the second teal line on the chart.) Just the win we were hoping for: [] IPOs are a great place to look for huge winning trades. If we have a repeatable method, we can catch some of those explosive runs. Happy trading, — Scott Welsh [] [] JEFFRY TURNMIRE Common and Uncommon Pattern Trading As a fan of patterns, I thought it would be fun to go through some common ones (and one uncommon one) and how people use them to guide their trades. 1. Head and Shoulders Pattern - This is when a chart forms three peaks, with the middle one being the biggest, resembling a head with shoulders on either side. People usually trade this by waiting for the pattern to complete (so you have both shoulders fully formed) and then identifying the “neckline”. The neckline is is a line you can draw from the low after the first shoulder to the low after the head. If the price breaks below this after the second shoulder is formed, it signals a bearish entry. You can also trade this in the inverse, just flip the head and shoulders upside down. 2. Double Bottom Pattern - As the name suggests, this is a bottoming batten that suggests a reversal after a significant downtrend. Basically, the stock is testing a key support level and bounces off it twice, forming a “W” shape. The key here is to wait for a confirmed breakout, which you can find by spotting the resistance level. You can find that by drawing a horizontal line at the middle point of the “W”. Most folks consider the entry signal to be once the price action breaks through that point, but you can also wait a bit longer for a reversal before getting in. 3. Triangle Pattern - This pattern is formed when the price is essentially trending in one direction despite having ups and downs. If you draw a line connecting all the highs and then draw a line connecting all the lows, you’ll see what I mean. (or just see the image below) An ascending triangle is formed when the stock is having higher highs and higher lows. This forms an upward-pointing “wedge” or “triangle”. The opposite can happen, too, when a stock is having lower highs and lower lows. You can even get a sideways triangle when price is consolidating sideways. Most people take an entry when the price action moves above the trendline on the ascending triangle, or below the trendline on the descending triangle. For sideways triangles, it could go either way. In all cases, you should look for 2 closes above/below the trendline to confirm entry. [] Now, I promised you an uncommon pattern, so here we go… This one isn’t one I’ve seen anywhere before. There’s one specific ticker I follow that tends to follow this pattern: 1. It closes on an uptick 2. Overnight, it gaps down a certain amount 3. At the open it starts rising, filling in the gap that was created overnight There’s a little bit more to it than that, but you’ll have to [watch this video for the details](. Hope you enjoy, — Jeffry Turnmire [] [] [] [] [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub]( [] ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit [( for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States [Prosperity Pub](