IPO Update

Watching tech IPOs as a window on a tech Surge, here is the latest:  three VC-backed IPOs in 2008, two postponements, seven withdrawals and 41 companies remaining in active registration.

Comments

[john walker]

Yelnick, For those of us who don't follow the IPO market: is this good/bad/indifferent, and are you still expecting The Surge this spring??

[yelnick]

John Walker, I would call this news indifferent, but that makes it relatively better than all the bad news floating around & calls for the Little Big One to start as early as next Tuesday (Feb19). The IPO report leaves open the Surge for Spring, but does not predict it.

I use the IPO market as a canary in the mineshaft. If Prechter is correct and we are sitting around 1930 or 1937 (see his latest EWT for example), history showed that new issues simply evaporated. Mutual funds or stock trusts back then became tortoises and went into their shells. When mutual funds buy new issues, it shows that they have emerged as hares, and are seeking yield. I have written that we are in a Global Scramble For Yield, an offshoot of a low interest environment. I expect the hot money to go towards speculative new issues, since all other places seem to have lost their ability to provide premium yield. For tortoises or hares, it is all about relative gain to win the race.

The reason the IPO report is interesting is that only a modest number have pulled their offerings. Also some of the 'pulled' IPOs instead were being bought. Danger for example was bought by Microsoft for $500M; it had been in registration for an IPO.

[Upstart]

Off subject - Look at the S&P 500 Trucking Industry Index. I don't know the symbol. The chart was in our local paper. It bottomed in November, made a higher low in January, and has been on a tear. It's above all of 2007's price action. This must presage a turnaround in the economy, if only a temporary one.

[rwpd]

Um, when looking at a new index, it helps to do some research. Trucking is not trucking by itself, ie...it's more detailed than one can imagine....go here to start; http://www.cassinfo.com/frtindex.html
A little boat brings it to our shore(the baltic)......then a truck(oops maybe a RR, Fedex(packaging),even USPS)or it's mainland(ie not an import)...bottom line..it's gotta move somewhere...what's the cost is the first question.
Based on Cass Info one has to cut cost somewhere cause no revenue comin in. As usual follow the Baltic..and yes it's a bear
...sorry Yelnick...
I just can't follow your IPO scenerio....the indexes just don't show it...if the "soveriegn's" go for it, then I'll go for the ride(after all, they have the money).
rwpd

[MHD]

The bear loves to feed on those who think every counter rally means the "bottom is in". So to all who think that that's it for the bear, by all means go to the long side. The smart money needs someone to sell to!!

[MHD]

Looks like the tag team of Yves and the Predator, have The 3rd wave Neely and Steve on the ropes Tuesday morning as the taxpayers are bailing out North Rock. The markets love when someone else has to pay for its stupidity!!

[Dow Predator]

Here is a good one for the bears.

Since 1908, all the years ending in 8 have seen the low of the year in the first quarter.

As I have been saying. Odds are that the Bottom is in and the Jan 22 will hold for the rest of 2008.

Also, the Dow is acting better now. Some indexes in Europe are down almost 14% down and the Dow is only down 6.91%

My Predator oscillators are bullish!.. Listen to me!. The market is going up.
If for any reason the conditions change. I will change my mind. But for now I remain bullish.

Dow Predator

[email protected]

Ps. Anyone interested in joining Dick Diamond in his next course (march 3-6), let me know. I will be there trading live with Dick.

[best trader]

why you said about year ending in 8 and not say seasonal pattern pf presidential election which say that low will be in may :))
i dont use this year ending in 8 or presidential election,every year is different....and now we are in bear market.after 2-3 years maybe start the new bull :)

[MHD]

A move above 1400 in the S&P would certainly boost the bullish case. The economic news coming out this week will probably resolve the bullish or bearish scenario. The transports need to start heading down soon for the bears to get the upper hand here.

[Eventhorizon]

Regarding the notion that the market makes its lows in the first quarter of '08 years.

Over the last 106 years (taking from 1901 to 2007) the Dow has made its low for the year in the first quarter 52 times! This is hardly suprising - the market over time generally goes up. Any inter-temporal time comparison that boils down to comparing an earlier period to a later period (from the tick to the decade) will tend to show that the market is higher in the later period than in the earlier. All that is proven is that the markets have generally trended up over the last century.

If we look a little deeper, we discover that the market made its lows for the year in the fourth quarter 25 out of 106 times. Guess what, that was generally (but not always) during extended bear markets. Hmm, in a bear the market generally makes downward progress over time, surprise, surprise when we compare different time periods we discover the later ones tend to be lower than the earlier ones. Duh!

And guess what, the times when the low for the year is either the 2nd or 3rd quarters tend to be (but not always) the transition years from bull to bear or vice-versa when the market made a significant low or high that stood for at least a year or more.

This kind of analysis is classic fooled by randomness stuff.

One last thing, the low for 1998 was in the third quarter, so DP's basic assertion is inaccurate.

[Sean]

Here's my 2 cents.

I cannot remember who exactly, but there was a quote from the past master of current Wall Street master about the January effect and the lows of 1st quarter.

He said the January effect is not correct. The much better predictor, is the low in the 1st quarter break the low in December. If so, it's very likely that bear market has arrived.

This "untold" wisdom of probably 1 century just contradict with Dow Predator's idea. Again, it is told by the current Master of Wall Street, inherited from his master teacher in previous generation.

[Eventhorizon]

Some more thoughts ...

9 of 10 examples of XXX8 years have the low in the first quarter (as an aside, 10 of 11 XXX5 years exhibit this trait). We have to decide, given the probability of the low of any year being in 1Q is about 50%, whether this is a statistically significant finding. We would expect for each year XXXN that 5 out of 10 would have the year's low in the first Q. What are the odds that an additional 4 years have the low in the first Q?

If you picked 10 years at random, the probability that 9 or more of them had the low in the first quarter is 1% = (1 + 10) x 0.5^10. We have done ten tests (years xxx0, xxx1, etc), so we would expect 0.1 of our selections to show this characteristic, and yet we have 2 (xxx5 and xxx8)! It seems systematic, but our fundamental problem is too small a sample size.

Incidently, the odds of finding 8 or more years with a low in the first Q are 6% (0-1 in a sample of 10), 7 or more 17% (1-2 in a sample of 10). This shows how close we are to being able to explain this as just random.

What if we look a little more qualitatively: In six cases the low in the XXX8 year was a higher low than the XXX7 year. This is not our current situation. 1998 can be ignored since the low was later in the year. 1938 and 1968 more closely match where we are now in that the low was lower than any low the previous year. Both years were in the midst of protracted bear markets - is that where we are now? Maybe - once again the sample size is too small.

[MHD]

Another interesting post Eventhorizon!
Has Neely and Steve changed their views on the downside? Anyone? Seems we are bound to break big time one way or the other very soon.

[MHD]

Also, the Baltic Dry Index sure seems to be turning around and heading straight up from the big drop it just had.

[Mark Lytle]

In the "for what it's worth" column, it looks probable that another bearish wedge is forming on the 30 minute $NDX chart..Also the $ADX trend strength indicator, as well as Standard Deviation (with respect to price), on many breadth indicators is signaling another reasonably strong move is pretty close. Heads up!

[Eventhorizon]

MHD

Thanks for your comment. What do you use as a source for the $BDI - do you have to subscribe? I understand the Baltic Exchange has a series of indices. Do you find others interesting alos, or is there too much correlation to need more than one?

EH

[Dow Predator]

Hello guys!!

Despite all the bad news out there the market is up for second week in a row (so far).
The bullish scenario is still good. If for any reason we have to change our bias... I will let you know.

Buy dips!!

Dow Predator