IPO Bases

GOOGL represents a quintessential IPO base in 2004. This type base has been shown to work in the past. In the image below I show the Google IPO on a weekly chart just as it was breaking out. An IPO base can be as short as 2 1/2 weeks. This type of base is similar to a high-tight flag pattern which is the strongest formation I know of when coupled with blockbuster fundamentals. An IPO base is like a high-tight flag sans the flagpole.

The energy sector seems to have been in its own private bull market. Enable Midstream Partners (ENBL) shows triple digit quarterly earnings growth over the last 4 quarters as well as a 3-year EPS growth rate over 50%. When I find that kind of earnings growth coupled with reasonable volume (> 1 million shares per day on average) I suspect the dominant force is institutional buying. As a warning, the EV pattern doesn't quite support this view as LEV shows some divergence.


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[QUOTE=mscott;28066]GOOGL represents a quintessential IPO base in 2004. This type base has been shown to work in the past. In the image below I show the Google IPO on a weekly chart just as it was breaking out. An IPO base can be as short as 2 1/2 weeks. This type of base is similar to a high-tight flag pattern which is the strongest formation I know of when coupled with blockbuster fundamentals. An IPO base is like a high-tight flag sans the flagpole.

The energy sector seems to have been in its own private bull market. Enable Midstream Partners (ENBL) shows triple digit quarterly earnings growth over the last 4 quarters as well as a 3-year EPS growth rate over 50%. When I find that kind of earnings growth coupled with reasonable volume (> 1 million shares per day on average) I suspect the dominant force is institutional buying. As a warning, the EV pattern doesn't quite support this view as LEV shows some divergence.


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Hi Mike, Thanks for this. It popped up last week for me and I noticed the accumulation but did not see the precedent you point out.

Best,

Pablo