Finding and Tracking IPOs to Trade

 

I've been involved in the market for just over 20 years now and some of my best trades have always been in stocks which IPO'd not long before I bought them. That's because those companies (at least the good ones!) are usually very innovative, are (should be) growing quickly, have small floats and once they break to new highs there's no 'natural' overhead supply of sellers. So one of the things I wanted SwingTradeBot to help me with was tracking IPOs. I generally like to jump into IPOs in two different ways:

  • as they break out to a new high
  • as they pull back and reverse after a big pop on their IPO day

Investors Business Daily (IBD) / CANSLIM is also a big fan of IPOs. Here's a small sampling of what they've written about IPOs: From IPOs Can Be Risky But Profitable

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New Features and Pro Plans

You may have noticed some changes to the site this week. The other day I added three tiers of subscription plans. They are:

  • Free Plan - limited set of features
  • Gold Plan @ $10/month - Pro set of features
  • Platinum Plan @ $17.50/month - Pro set of features+

I've converted all pre-existing users to the Free Plan. Previously users could add an unlimited number of stocks to their watchlist and portfolio. Now the free plan limits you to 5 stocks on your watchlist and 5 stocks on your portfolio. Note that if you had more than 5 stocks on your lists you will still have those stocks in your lists. However, you won't be able to add new stocks to those lists until the list contains fewer than 5 stocks.

The Pro plans provide:

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Introducing the 'Calm After the Storm' Stock Scan

 

A few days ago I added a new scan which I'd been thinking about for a while. This scan was motivated by a somewhat tedious process I do almost daily during earnings season. I like to find stocks which have had a strong positive initial post-earnings response and then sell off a bit before rebounding. In order find those stocks I would look at the Earnings Movers scan for each of the previous 5 days or so. I would quickly look at those charts (using the hover charts feature) and then more closely inspect any stocks that were setting up to my liking.

The recent action in Shopify (SHOP) is a great example of the type of action I'm trying to find. I happened to catch SHOP setting up intraday on February 19th and I bought some when I saw it rebounding from the lows of the day. Here's the chart:

SHOP calm after the storm post-earnings setup

As you can see SHOP gapped up after earnings on the 17th and sold off the rest of the day (a gap & trap). It continued to sell off the next day and closed the gap from the previous day. (Closing the gap isn't a requirement but in this case I took it as a plus.) The action on the 19th (an open narrow-range candlestick after two long/tall dark/closed candlesticks) gave me confidence that the selling was over and that SHOP *might* try to mount a rebound back to the post-earnings high. This is a classic case of volatility swinging from high to low and (hopefully) back to high again. Obviously that trade worked out quite well -- I'm still holding SHOP today with approximately 30% gain.

I see this type of setup a lot but often not until after the rebound move is already underway. So I wanted to create a scan which would unearth these setups for me. That scan is what I'm calling the "Calm After Storm". Here's what it finds:

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New Feature: Hover Charts for Even Quicker Stock Screen Analysis

Update: Now there's an even faster way to view the charts.

I've just implemented a feature I've wanted since I launched the site. You can now hover your cursor (mouse pointer) over a stock ticker to get a pop up of the chart. (Similar to how FinViz.com pop-up charts work.) Here's an example:

hover over a ticker symbol to get a pop-up chart

For now this works on all of the stock scan result pages as well as your portfolio and watchlist pages (and one of my favorite pages, the list of recent IPOs). My primary goal with this site is to make my nightly analysis process more efficient and this has already boosted my productivity a lot.

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How I Use SwingTradeBot

I created this site to help me manage and speed up my nightly stock research.  Here I'll share how I'm currently using the site as a way to help others see how everything here ties together. My process consists of a few general categories:

  • Analyzing the broad market
  • Finding new trading candidates
  • Managing positions that I currently hold
  • Managing / monitoring my watchlist

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What the Stock Ratings (Grades) Mean

When viewing a stock's page or a scan results listing you'll see a rating for each stock. That rating will be A, B C, D or F. You can think of these ratings as basically a relative strength rating. The bot ranks all of the stocks according to a proprietary algorithm and then assigns A grades to the top 20%, B grades to the next 20% and so on.

snapshot of a stock scan page showing ratings

As of this writing, the algorithm only takes technical factors into account. I hope to fold in some fundamental elements into the mix in the near future. It's important to note that these ratings are *not* predicting any future actions -- they're backward looking.

How I use the Ratings:

I use the ratings as a quick way to see if a stock is strong or weak. I like to buy strength and sell weakness, so when I'm looking for stocks to buy I'll filter my stock scan results to only show me A's or B's (and maybe C's).  Conversely, when I'm looking for short sale candidates, I'll filter the scan results to only show me D's and F's (and maybe C's).

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