Here is a word of caution on the Face Book IPO, from a market timer.

I’m a technical and sentiment trader.  There are many things that influence market movement, I try to focus only on things I can verify.  Most the other things people spout are basically usless noise.  But when one of my indicators aligns with an important market event, then it’s worth paying attention to.

 

If you’ve perused my site, you’ve noticed several tools that I have developed to understand and predict market movement.  Here’s another one:

face book ipo

The above chart represents a popular trading cycle chart, the 35 and 105 day trading cycle.  Periodically it lines up well with the markets.  When things work, they’re worth paying attention to.  We’ll be on the look out for how it plays in with the Face Book IPO next week.

Why?  Because we have a significant reversal date coming up, it is both a 35 day and a 105 day trading cycle date.  So we are now in the window for a trading cycle top.  Just in time for the face book ipo.  There is no official facebook ipo date.  And they have not determined the facebook ipo price.

What about the facebook valuation?  I am a big believer that valuations, even the facebook valuation has very little implications with how something trades.  Think about it, all the best stocks in history had very high valuations during their biggest runs.

What’s different with Facebook, versus other IPOs is that, let’s take Microsoft for example.  When Microsoft came out, there was no real understanding of who they are and what they did.  There was no movie.  And very few people had a computer, nevertheless one that was running microsoft windows.

In addition, you couldn’t get shares in microsoft before the IPO.  Now, through new pre-IPO markets like second market facebook, you can get shares in facebook and participate in the face book IPO – unlike ever before…

That being said, here’s how I would play the face book ipo when facebook is publicly traded.

I’ve traded IPOs over the past decade and patterns imerge.  The best pattern is to let the stock trade for several weeks or months.  You’ll see a pattern were the weak hands wioll eventually get out of the stock.  Once this pattern breaks, that is your signal to jump in.

And I bet if you follow the same pattern with the facebook IPO you will be able to eventualy get in at a much better price that the face book ipo comes out with.

If you’re interested in following along, visit www.stockbarometer.com and sign up for our explosive stock alert service.  We’ll follow this as it comes out.

Regards,

Stock Barometer

Investment Research Group, Inc.