Whew… I’m sure I’m not the only trader who felt like last week was a bit of a blur and is somewhat welcoming the weekend break. After HKD revitalized the day trading market for nearly every low-float ticker that could be uncovered by pumpers, trading groups, algos, and FURUs (like me)… we saw yet another Stealth IPO debut to enthusiastic hysteria that rewarded those brave enough to take a play on the debut and especially those patient enough to sit through the multiple sustained halts it went through the opening seconds it was traded and really, for most of the day.

Members of the Premium Membership group received my trading strategies guide for the Magic Empire IPO (ticker MEGL), and joined me for the live stream – it seems that everyone banked at least 100% profits on their trade: many taking home over 200% and some still holding a piece of your positions hoping for more. Positions trading with at least 10 shares paid for their annual Premium Membership subscriptions in full on just that trade alone, and I believe we have more momentum on the upcoming IPO calendar in low-float IPOs coming out of the pipeline. As more traders key in on this trade, the potential for downside risk will increase, and some trades will inevitably blow up: so the key will be identifying the setups that are most likely to run to the upside, while holding off (or reducing risk accordingly), when we don’t see the setups we like.

In the IPO Warriorhood, analysis starts at the beginning of the week with the in-depth reviews of the companies and structures of each IPO, and continues throughout the week as we gauge the conditions of the market and the hype around each IPO. Having traded through the cycle of hot-roasting-blownup-cold a few times, I will be sharing my insights, ideas, strategies and live trading the key IPOs as much as I can to help bring you information to inform your own trading decisions, and greatly appreciate all of the support and ideas that are likewise contributed by the IPOW community.

I expect the fervor in the IPO market to continue into next week, though we won’t get any IPOs before the CPI numbers that come out on Wednesday, so we may be facing some trepidation in the market that has been largely absent for the past two weeks: this may not matter at all, but there also may be some burnout as traders get further and further spread out into recent low-float IPOs, deSPACs, meme stocks, and other random low-float stocks that get pumped by algos and trading rooms. I am going to try to pull back on my number of trades, and wait for more definitive moves where I can take higher conviction entries and hold out for sustained runs, rather than trying to chase every pop in every corner of the market or spreading myself out into guesses as to which might be the next one to pop.

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Ok, Let’s take a look at what happened last week in IPO Land:

Bruush (BRSH) – July 28, 2022 | 1.66M Shares
IPO Price: $4.16
Debut Price: $2.85
Day 1 High: $3.00
Day 1 Low: $1.79
High Since Debut: $3.88
Low Since Debut: $1.79

Day 1 Action: BRSH showed us that despite the white-hot buzz around low-float IPOs, warrants are toxic for debuts, and not all IPOs are sure-thing hits. I had initially predicted that this one could have potential upside, but pulled my allocation request down to the minimum prior to the closing of the request window (as I shared with you all in a mid-week update), and when I received a full allocation, combined with the pre-debut indication substantially below the IPO price, and heavy sell-side imbalance; it was clear that we weren’t going to see any immediate run-up from the open. As expected, the stock plummeted on the open from $2.85 (with a very brief touch of $3.00), to an opening low of $2.38, followed by a brief bounce to $2.74, and an ensuing drop down to $2.22 before making a VWAP rally up to $2.56. Based on what we saw with MAIA, and the conditions of the market for IPO debuts, one could be forgiven if they started building a position on any of these drops (as I did), so long as they reserved additional funds to add should the stock continue to fall out (it did).
We generally see Day 1 droppers rally harder on Day 2 when they have little or no sustained rally on Day 1… so as BRSH continued down, I added to my position throughout the day, though my end of day order at $2.05 inexplicably didn’t fill, I still maintained my cost basis at a point where I was confident that a Day 2 rally would deliver substantial returns.

Day 2 Action: Day 2 was no surprise, with a 4:00 AM EST pre-market spike up to $3.65 – an ideal time to bank profits for early-bird traders, but unfortunate for accounts that don’t start trading until 7:00 AM EST (I was trading this in my ETrade, so had to hold out). I took some profits right at 7:00 AM EST, to reduce exposure in case we didn’t see a rebound run in after hours – it did drop as low as $2.42 in pre-market before later running back up to break $3.00 heading into 9:00 AM and again ran to $3.00 on the opening bell (this is where I took profits with a trailing stop). Higher conviction traders who held through the opening push and subsequent dip were rewarded with the biggest rally of the day, as BRSH caught fire and ran up to a top at $3.88 before quickly crashing back down to the $3.00 level, and steadily bled out from there.

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Magic Empire Gobal (MEGL) – August 5, 2022 | 5M Shares
IPO Price: $4.00
Debut Price: $50.00
Day 1 High: $235.95
Day 1 Low: $49.25
High Since Debut: $235.95
Low Since Debut: $49.25
Watch the Live-Stream Replay Here:
https://www.youtube.com/watch?v=kjW6mle5h24

Day 1 Action: This was THE IPO of the year so far, after HKD re-wrote the rules of what we can expect from the debut of a little-known Chinese financial firm, and EVERYONE wanted to trade this one. What ensued was nothing short of expectations, as the stock debuted at $50.00 on 15k shares and after a momentary dip to $49.25, was halted on volume back at $50.00 – an opening move I can’t recall seeing since trading these low-float IPOs. The initial sell-side imbalance threw me off a little, and I switched my strategy from an all-in on the debut (with a conservative risk-averse amount to begin with), to a strategy of laddered-down orders in case we saw a drop down into a halt. I made sure to put a starter order in above the debut price to ensure I got in, so while none of my ladder-plays filled, I was able to successfully get myself into the trade: and most of the Premium Members following the live stream appeared to have joined me in what was ultimately a very successful entry.

The stock was halted for a full 1hr 20m and opened again at $100.00; instantly halting again at $105.00 – I decided to take profits at the first halt, as I could see this was going to be halted for the majority of the day, and had a sick daughter to pick up early from school: a reminder that trading IPOs on the debut can easily be a full-day chore and requires devoted attention. The second halt lasted 45 minutes, and opened at $145.00, briefly dipping to $143 before running again into an upside halt at $159.00.
For novice traders, this may have been fairly frustrating, as they struggled to exit their positions, and likely they have learned how to trade through halts going forward: HINT: set a limit order during the halt at any price below where you think it will open.
The third halt opened at $195 and again halted to the upside at $214, and was of the 5 minute variety. Had I held any of my position at this point, I would have applied my “3-Halt Rule” – under which I sell whatever I have left of my position after the 3rd upside halt (typically I will sell a portion of my position out of each halt).
This 4th upside halt (5th overall), was another 5 minute halt, and it opened at $214.50, touched $235.95, and dropped down to halt at $203.87, demonstrating why I don’t like to take my chances after 3 halts upwards. The ensuing halts closed at $198.20, $150.72, and $102 respectively, and despite a couple small reversal halts back up to $124, the stock bottomed out through a series of downside halts to $70.00. But in a sign of some resiliency, it rallied back up to $142 through 3 upside halts, before giving up some steam again to close the day at $97.00.
Fantastically, at no point in the day did MEGL trade uninterrupted for a full minute without halting – this was not an easy one to trade, and took a lot of patience.

But that wasn’t the end of the Day 1 action, after entering after-hours trading at $97, and baselining for about 20 minutes, MEGL began a momentous rally up to $198.20, finishing after-hours at $192.00.

Day 2 Action: Day 2 is Monday… we’ll see what happens

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Recent IPO Runners:

We often see recent IPOs, especially the low-float variety, make monster runs after consolidation following their IPO. Often, these moves coincide with their 90 and 180 day lockup expiration periods (“LPX Plays”): this is a play we actively track and discuss in the weekly preview newsletter.

Honestly, there were so many recent IPO runners last week that it’s impossible to cover them all – it was the primary theme of the week after what HKD, then MAIA, then MGAM did… here are a few that we were tracking in Premium:

Ostin Technology (OST)
Catalyst: LPX + Market Trend
Type: IPO
IPO Date: April 27, 2022
IPO Price: $4.80
LPX Date: July 27, 2022
LPX Period: 90 Days
Historical LPX Notes: No meaningful rally after the IPO run
Free Float: 6.9M Shares
Outstanding Shares: 13.5M shares
Close day before vol: $1.76
High of the Day on vol: $3.39
Recap: OST was on-watch as an LPX play as of last week, and despite attempts to pump the stock with fluffy PR, had only seen a modest run to $1.84 prior to Tuesday’s rip up to a high of $3.39. Often times we see a delay in PR drops to runs in these trades, so if you see a few PR drops in coordination with an LPX date, and no corresponding rally, consider being patient for a few more days and even adding any dips.

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Intelligent LIving Group (ILAG)
Catalyst: Recent Stealth IPO
Type: IPO
IPO Date: July 13, 2022
IPO Price: $4.00
LPX Date: Not Relevant
LPX Period: Not Relevant
Historical LPX Notes: This was not an LPX play
Free Float: 8.7M
Outstanding Shares: 18.06M
High since IPO: $26.40
Low since IPO: $1.65

Recap: OST was a Stealth IPO debut that offered a user-friendly entry and exit, and crashed out on Day 2 – a relatively quick turnaround for one of these setups with no substantial rebound rally since the debut crash.
This one caught two runs last week, as it ran on Tuesday along with nearly every other low-float Chinese stock (not just IPOs), and rallied again on Friday on sympathy with MEGL.

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Heart Test Laboratories (HSCS)
Catalyst: Recent Low Float IPO
Type: IPO
IPO Date: June 15, 2022
IPO Price: $4.25 per Unit
LPX Date: Not Relevant
LPX Period: Not Relevant
Historical LPX Notes: This was not an LPX play
Free Float: 5.93M
Outstanding Shares: 8.24M
High since IPO: $6.00
Low since IPO: $1.15

Recap: HSCS was one of the many recent IPOs that got run by algos and trading rooms last week purely on account of being a recent IPO with a low-float, as this setup attracted runs across a wide range of tickers throughout the week. We can go back to Monday and Tuesday’s charts on this one to see evidence of accumulation in volume spikes, and a ramp up in volume going into Wednesday’s spike was the tip-off for the ensuing rip from around $1.80 to a high of $6.00 – one of the expert traders in the Discord group alerted this trade in time for me to enter at $1.80, and being short-armed and scared off by a large sell-order just above the $2.00 mark, I took tiny profits way to early and missed the run… silly me: when a trend is hot, it’s worth staying in with at least a partial position for further gains: something to bear in mind if the run in low-float tickers continues into next week.

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Other recent IPOs on the move:

So many I can’t list them, it would be easier to list the ones that have NOT yet run, but I’m gonna save those for next week’s Weekly Preview newsletter.

“I’m gonna go ahead and predict that we see a lot of activity in recent low-float IPOs, especially those that haven’t run yet. I’ll go into more ideas in this week’s Weekly Preview newsletter and Live Stream on Monday.”

Actually, I posted that last week in the Premium Member’s Recap … seems like that prediction worked out pretty well.

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