Hey there, VWAPians!

Were you in yesterday’s LIVE trading session, and if so, did you short the Invesco QQQ Trust (QQQ) and live to tell about it?

I know I always scream, “Never short the Qs!“… but if you’ve been following me for a while, you know there are a couple exceptions to that rule – and one includes when the ProShares Ultra VIX Short Term Futures ETF (UVXY) is moving higher.

Still, even if you DID short the QQQ yesterday morning, I hope you also followed my other rules: If you’re going to short, don’t stay short for long, and never short the Qs breaking back above the VWAP!

However, today I’m not here to impart more of my precious QQQ wisdom on you… I’ll save that for today’s Money Morning LIVE talk and my 9:30 session.

Today I’m here to impart other Warlock wisdom on you.

Wisdom about a topic that’s been hyped up on Wall Street this week amid the Robinhood (HOOD) debut…

And yet another example of why EVERYTHING I SAY IS IMPORTANT:


If you’re not checking Announcements during my LIVE trading sessions, what are you doing

Today I want to discuss when to jump on IPO stocks, and the worst best trade of my life.

It Would Take 657 Years to Make This in the Bank!

If you’re a trader, you certainly heard of Robinhood before the company’s recent initial public offering (IPO).

Amid the COVID-19 pandemic and subsequent rounds of stimulus money, we saw an influx of fresh-faced traders looking to play the markets – a lot of them via Robinhood’s trading platform.

In fact, it was a surge in retail-level interest that helped so-called “meme stocks” like GameStop (GME) and AMC Entertainment (AMC) skyrocket earlier this year.


Robinhood app downloads soared – courtesy of Airnowplc.com

However, as with any stock I’m trading – I don’t care about the fundamentals at all.

That’s because I’m a day trader, and the ONLY thing that matters to me is being on the right side of VWAP at the right time.

I’m not looking to be an INVESTOR in anything – I like to play with my toys and call it a day, with nothing in my portfolio overnight.

So while Garrett Baldwin – my colleague on Money Morning LIVE each day – and I have joked that the Robinhood IPO is basically an indictment of this crazy market right now, in the end, what I think doesn’t matter…

Particularly when it comes to IPOs.

See, what I’ve found is – these new stocks are particularly susceptible to Blue-Sky Breakouts.

Specifically, when I see a recently IPO’d stock about to take out all-time highs – especially if that peak happened on Day 1 of trading – consider me interested on the long side.

Or, I guess you could say, All-time highs can act as launching pads to buy.

That’s why yesterday morning, during our LIVE trading session, I told you that if HOOD took out its recent top at $40.50, look out.

That’s because – take a look at where HOOD peaked on its first day as a publicly traded stock.

You can see one of its first prints topped out right above the round-number $40 level.


HOOD 1-minute chart on first day of IPO – courtesy of ToS

So when I saw HOOD doing this during our 9:30 session, I was pretty jazzed.

After all, the stock had three things going for it:

  1. Breaking above its 1-minute VWAP
  2. About to break a significant round number
  3. About to break its post-IPO high, which could trigger a mini short squeeze


HOOD 1-minute chart to start Tuesday’s session

And guess what?

YOU’RE WELCOME.

HOOD honestly went from the mid-to-high $30s to ABOVE $50 in a SINGLE DAY.


HOOD 1-day chart on Tuesday, Aug. 4

Do you know how many years it would take to make that kind of money in the bank?!

You’ll also notice that the 1-minute VWAP remained the truth – HOOD stayed above it the rest of the day, telling us the buyers remained in the driver’s seat.

Ladies and gentlemen, the moral of the story is, if an IPO is about to take out an all-time high, pay attention, and let the VWAP be your validation… even if it is a stock you despise fundamentally, it could be the best trade of your life.

See you in the room!

Kenny “The Warlock” Glick


Comments

2 responses to “It’d Take 657 Years to Make This IPO Money in the Bank!”

  1. Kenny, You are refreshing! I am retired and have tried to play the markets for years and always lost in the end. I am about to give up, but you daily show me a ray of hope.
    With you as my guide, I may stick my toe in again!

    How can I make sure that I can always view your trading sessions?

    Warmest regards,
    Charles Moeller

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