IPOs from Hell

You won’t find traders who hate chasing more than we do and it’s probably a reason why we avoid IPO action. Good IPOs that want to move higher always set-up at a later day without all the insanity of the first few days.
The market is in a bad mood and no better way to understand the scope of its wrath by looking at the price-action of a few recent 2011 IPOs.    Three recent issues that have been popular on the streams: Pandora ($P) down a cool 48% from it’s highs from two days ago,  the first social-media IPO LinkedIn ($LNKD) down 47% from its highs from last month, and have to throw one Chinese IPO in there — QIHU 360 Technology ($QIHU) down  52% from it’s high from two months ago.
From our May 19 post (the first day that LNKD went public)  we wrote:
“And for those young bulls who think that old-schoolers don’t understand the new paradigm of social media…. you’re wrong.  Earnings are still earnings.   We learned that lesson the hard way (via fiber optic stocks) back in the last tech bubble and now you’ll learn your lesson in the new social media bubble.”
IPO’s have always been risky but the latest price-action in recent issues is taking it to a further level of danger.

Being aware of the foolishness of the chasing game is part of our trading strategy (fading tops) and we have a decent eye for it — two recent ones we’ve talked about on the StockTwits stream — the silver top call and our Osama top call made at 1372 $ES_F.   We can’t think of a faster way to exit this business than to chase parabolic moves.   We assume most of our readers are well acquainted with the saying “Bulls make money, Bears make money, but Pigs get slaughtered” — there are no bigger, fatter, juicier pigs in the trading world those who buy parabolic moves away from any base.
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