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Short squeezes can be the holy grail of market opportunities if you’re savvy, or your worst nightmare if you’re caught on the wrong side. Here’s a look at how to spot potential short squeezes and how to avoid them all together.

What Is A Short Squeeze?

A short squeeze is a stock market dynamic that can send shares of a stock dramatically higher in a short period of time—generally anywhere from a few hours to a few days. Any stock is susceptible to a short squeeze, but those with low volume are especially vulnerable.

Short squeezes occur when a stock with a large short interest (that is, a large percentage of shares are currently held by short sellers) begins to move higher. The catalyst for this initial move, if there is one, doesn’t really matter.

What does matter is the move higher causes some short sellers, whether by choice or automatically, to begin covering their positions.

This begins a feedback loop, with the initial short covering driving the price higher, which then causes more shorts to cover, which then drives the price even higher, which then…you get the idea.

As buyers flood into the stock, the short sellers get “squeezed” out of their positions.

How To Spot Short Squeezes

People can get caught on the wrong side of short squeezes because they can seemingly come out of nowhere. However there are warning signs that one may occur if you know what to look for.

Stocks with large short interest are the most vulnerable to squeezes. Generally, a short interest over 20% is considered a potential red flag. Tesla, one of the most popular stocks to short on Wall Street, has a short interest of around 27% at the time of this writing.

Any stock with a small amount of shares available to trade—a low float—has the potential to be squeezed as well, as a sudden surge in volume can cause volatile swings in either direction.

If you see a stock rise sharply on high volume without news from the company or a technical formation, there’s a decent chance it’s a short squeeze. If this happens to a stock you’re in, it’s important to understand your options.

What To Do If You Get Caught In A Short Squeeze

Short squeezes tend to be short-term events, meaning the huge gains often only last a matter of hours, days or weeks. At the same time, there’s no way of knowing just how high a short-squeeze can carry a stock in the near-term.

The first thing to determine is whether you can afford it, both emotionally and in your margin account. If you decide that you have enough in your margin account that you won’t be forced to cover, and can stomach some short-term pain, the only other thing to ask yourself is whether your fundamental thesis has changed. If not, the best move may be to wait it out.

If the short squeeze is overpowering you, set a stop loss if you don’t already have one. This will trigger a buy order that will get you out of the trade.

As a rule of thumb, you should never short a stock without first having an exit strategy and understanding your broker’s margin rules and requirements.

Short squeezes are unpredictable hazards of the stock market, but recognizing when one is happening can potentially save you some money on your trade.

The post How To Spot A Potential Short Squeeze appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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  • IPOX Indexes record strong gains across the board.
  • IPOX-linked AUM hit all-time high.
  • IPO Deal-flow Review & Outlook: Xiaomi (1810 HK) surges after lackluster debut/U.S. biotech set to dominate deal calendar.

IPOX Indexes record strong gains across the board. The IPOX Indexes rose sharply across the board ahead of U.S. expiration week, as strength in U.S. tech and smooth U.S. (economic) momentum as well as firmer China helped to mitigate the negative impact of renewed trade tensions amid temporary spikes in volatility. On the back of big gains in some of its heavyweights, most upside focus within the IPOX Indexes Universe was on the diversified IPOX Europe (IXTE) which extended its YTD lead vs. the European Market to a massive +827 bps. Relative strength extended to the IPOX China (CNI) or the IPOX Nordic (IPND). In the U.S., amid big gyrations in U.S. equity indexes spreads, the FAANG-free, diversified IPOX 100 U.S. (IPXO) finished the week with solid gains, significantly outpacing U.S. small-caps, while also lagging the S&P 500 (SPX) – benchmark for U.S. stocks. Ahead of key earnings, upside focus in individual portfolio holdings remained on global payment processors, including Netherlands-based Adyen (ADYEN NA: +17.24%), OH-based Worldpay (WP US: +3.74%) or EBAY (EBAY US: +0.59%) Spin-off IPOX heavyweight PayPal (PYPL US: +2.39%). Select China-domiciled small-caps bounced strongly from recent weakness, including packaged food maker Yihai International (1579 HK: +34.73%), streaming video services provider iQiYI (IQ US: +13.47%) or biotech Genscript (1548 HK: +13.42%). For a second week in a row, we note big declines in select IPOX Europe (IXTE) holdings, including specialty pharma producer Indivior (INDV LN: -21.91%) which drastically altered guidance for the rest of the year.

IPOX-linked Investment Products Performance Update: Last week, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) added +0.67% to +8.83% YTD, while its international version (FPXI) rose to +0.90% YTD. Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) extended the YTD gain to +11.43%. Across IPOX-linked Funds, AUM hit an all-time high.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 1.93 28.59 3.47
IPOX International (IPXI)* 1.74 37.80 0.04
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 0.59 33.64 9.40
IPOX 100 U.S. (IPXO)* 0.59 26.04 8.52
IPOX 30 U.S. (IPXT) 0.76 26.63 5.06
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 2.35 19.27 5.49
IPOX Nordic (IPND) 1.98 17.91 2.39
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.60 23.30 0.00
IPOX China (CNI) 3.29 37.67 6.52

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOU8].

IPO Deal-flow Review & Outlook: Xiaomi (1810 HK) surges after lackluster debut/U.S. biotechs set to dominate deal calendar: At least 19 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +17.45% (+7.35%) based on the difference between the final offering price and Friday’s close. Most notable is Chinese smartphone maker Xiaomi’s (1810 HK: +26.18%) big rally in the immediate aftermarket, despite its first day flop. Australian’s biggest IPO in almost 4 years – oil refining and marketing company Viva Energy (VEA AU: -4.00%) -disappointed, while Indonesian real estate developer Pollux Properti Indonesia (POLL IJ: 133.33%) ranked as the best performer last week. After a quiet week, the U.S. IPO market is set to pick up steam with at least 10 deals – 7 of which are VC-backed biotech or biopharma firms – set to go public. Most focus in deals outside the U.S. is on the H.K. IPO of Chinese real estate services provider E-House China Enterprise (2048 HK), with e-commerce conglomerate Alibaba (BABA US) and real estate developer China Vanke (2202 HK) being its cornerstone investors.

Select IPOs traded (week: 07/09/2018) Country
Bank of Jiujiang Co Ltd China
Hipgnosis Songs Fund Ltd Guernsey
Inke Ltd China
MTG Co Ltd Japan
Pollux Properti Indonesia Tbk PT Indonesia
Qeeka Home Cayman Inc China
Redsun Properties Group Ltd China
Tianli Education International China
Viva Energy Group Ltd Australia
Select IPOs expected (week: 07/16/2018) Country
AFG Holdings Inc United States
Allakos Inc United States
Constellation Pharmaceuticals United States
Crinetics Pharmaceuticals Inc United States
E-House China Enterprise Holding China
Qilu Expressway Co Ltd China
Replimune Group Inc United States
Rubius Therapeutics Inc United States
TheWorks.co.uk PLC Britain
Tilray Inc Canada

Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.

ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.

The post The IPOX® Week, July 16, 2018 appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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One of the more popular tools used by day traders is daily pivot points. Pivot points are technical support and resistance levels calculated for stocks using mathematical formulas based on a stock’s high, low, and closing prices from the previous day. Here’s a look at what pivot point trading is and how it’s used.

What Are Pivot Points?

Pivot points are technical price levels at which stocks will potentially face buying and/or selling pressure during a typical trading day.

The most important pivot point is called the basic or middle pivot point. The basic pivot level, sometimes abbreviated “PP,” is calculated by taking the average of the daily high, daily low, and closing price from the previous day. The calculation is represented by the following mathematical formula:

Pivot Point (PP) = (daily high + daily low + close) / 3

From there, subsequent resistance points (R1, R2, R3, etc.) and support points (S1, S2, S3, etc.) are calculated based on the PP. Here’s an overview of how each of these levels is calculated:

Resistance Point 1 (R1) = (2 x PP) – daily low
Resistance Point 2 (R2) = PP + (daily high – daily low)
Resistance Point 3 (R3) = daily high + 2 x (PP – daily low)
Support Point 1 (S1) = daily high + 2 x (PP – daily low)
Support Point 2 (S2) = PP – (daily high – daily low)
Support Point 3 (S3) = daily low – 2 x (daily high – PP)

If looking at those formulas brings back childhood nightmares of algebra classes, don’t worry. There are plenty of interactive charts online that can calculate important pivot points and overlay them on charts automatically.

How To Trade Pivot Points

As the term implies, pivot points tend to serve as levels at which a stock could change direction, or pivot, in the short-term. In other words, support points are potential buy signals and resistance points are potential sell signals.

Many traders consider the PP itself as the most important level of them all. The PP potentially serves as both support and resistance. If a stock approaches the PP from above and bounces, that is typically seen as a buy signal. If it approaches the PP from the bottom and pulls back, that is typically sell as a sell signal.

Limitations Of Pivot Point Trading

The strategies mentioned above are just a handful of the ways traders use pivot points. Of course, any trading strategy comes with certain caveats. Pivot points are used because traders see them as potential key levels, but these strategies are based on trends over time and not absolute rules.

Just like fishermen know the best fishing spots, traders see pivot points as the best levels for trading action. That doesn’t necessarily mean they will catch a fish on every cast.

In other words, on any given day, a stock may blow right through its pivot points and not look back.

To help mitigate the risk of surprising price action, pivot point traders also often use adjacent pivot point levels to place stop-loss orders to mitigate risk.

The post What Is Pivot Point Trading? appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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One of the most important aspects of trading equities is identifying catalysts that could trigger a stock to move strongly in one direction or another, especially in a short period of time. Anything that has the potential to move a stock—from earnings reports to technical setups—can be considered a catalyst.

But there is one catalyst that institutional investors pay very close attention to and can cause volatility in stocks on any given day: analyst ratings.

Who Are Analysts?

Institutions across Wall Street employ analysts that do research for every asset class, from real estate to equities. These analysts are Chartered Financial Analysts who are paid to offer investing opinions that are supported by in-depth research and financial models.

The analysts we’re referring to here are known as “sell-side” analysts. They work for investment banks, independent research firms, and anybody else who “sells” research to institutional investors, such as hedge funds, banks, or someone actually making investments.

This is not the same as “buy-side” analysts, who produce research to support preconceived investment ideas.

Analyst Reports

An analyst’s work results in research reports that are distributed to clients in the pre-market and after-hours sessions.

These Wall Street CFAs are responsible for periodically assessing all the stocks they cover and putting together in-depth reports on the financial well-being of the companies. Clients of these investment banks pay big money to have access to these reports before anyone else. The standard analyst report includes detailed commentary about a company, insights from access to company leadership, and analysis about a stock’s valuation. Almost all analysts include a rating and 12-month price target in each of their reports.

While these reports are ultimately opinions, the best analyst reports are unique and compel people to make trading decisions based off them. Oftentimes, these reports get distributed or leaked to the media, who then publicize what they say. An analyst may also give interviews to elaborate on their research.

Stock Ratings And Targets

Analyst reports can typically be dozens of pages, but the highlights are the rating and price target. Typically there are three ratings tiers for stocks: “buy,” “hold” and “sell.” Some analysts use alternate terminology, such as “outperform” instead of “buy” or “underweight” instead of “sell,” but most analysts conform to the three-tier system.

In addition to the rating, analysts typically release a price target, which is the price they expect the stock to be at 12 months in the future.

Changes in analyst ratings and new initiations (when an analyst starts covering a stock for the first time) are some of the biggest short-term catalysts for stocks. Analysts have the power to move markets by themselves, and this is especially true for the most influential equity analysts on Wall Street. A single upgrade or downgrade from an analyst at one of Wall Street’s largest institutions, such as Goldman Sachs, JP Morgan, and Bank Of America, can be the catalyst to jumpstart a stock higher or bury it lower.

The smart money is reading analyst research every morning, so it’s important for other traders and investors to at least know what the analysts are saying about their stock. You can see the ratings from over 4,000 Wall Street analysts by opening a Lightspeed account.

The post The Stock Market’s Favorite Catalyst appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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  • IPOX U.S. and IPOX Europe lead IPOX Indexes to strong start into the new quarter; concerns over trade pressure IPOX China anew.
  • IPO Deal-flow Review & Outlook: Slow U.S. deal flow seen/Hong Kong takes the lead/All eyes on Xiaomi.

IPOX U.S. and IPOX Europe lead IPOX Indexes to strong start into the new quarter; concerns over trade pressure IPOX China anew. Driven by strong momentum in select specialty holdings, big strength in global payment processors and good economic numbers into the week-end, most IPOX Indexes started the new quarter with strong gains. The FAANG-free, style-agnostic IPOX 100 U.S. (IPXO) ranked on top, adding +2.87% to +7.89% YTD, beating the S&P 500 (SPX) – benchmark for U.S. stocks – by a large +134 bps. during the shortened U.S. trading week. Here, while payment processors IPOX heavyweights PayPal (PYPL US: +3.21%) or Square (SQ US: +7.79%) rose strongly, relative gains were also driven by a big jump in select small-cap specialty exposure with 90/100 portfolio holdings closing the week in positive territory, with e-commerce firm StichFix (SFIX US: +18.11%), car vending machine operator Carvana (CVNA US: +13.39%), online health services portal operator Teledoc (TDOC US: +9.13%) or biotech Fibrogen (FGEN US: +7.43%) all hitting all-time highs. Strong gains also extended to the IPOX Europe (IXTE) which extended the relative YTD gains vs. the European market to a +638 bps. More positive sentiment there, however, was mitigated by the plunge in London-listed infrastructure software maker Sophos (SOPH LN: -28.08%), underlying the risk in this “red-hot” sector. Select high beta China-linked small-caps suffered most from the big jump in China-linked risk over the past weeks on trade last week, including biotech’s Genscript (1548 HK: -12.44%), Wuxi Biologics Cayman (2269 HK: -11.10%) or packaged food maker Yihai International (1579 HK: -10.70%).

IPOX-linked Investment Products Performance Update: Last week, the USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) added +2.87% to 8.12% YTD, while its international version (FPXI) fell to -1.38% YTD. Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) rose to +10.71% YTD.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) 1.60 28.59 1.50
IPOX International (IPXI)* 0.15 37.80 -1.68
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* 2.71 33.64 8.76
IPOX 100 U.S. (IPXO)* 2.87 26.04 7.89
IPOX 30 U.S. (IPXT) 2.74 26.63 4.27
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) 1.52 19.27 3.07
IPOX Nordic (IPND) 0.83 17.91 0.41
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) 0.28 23.30 -0.60
IPOX China (CNI) -3.03 37.67 3.12

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOU8].

IPO Deal-flow Review & Outlook: Slow U.S. deal flow seen/Hong Kong takes the lead/All eyes on Xiaomi (1810 HK): 5 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +7.15% (+1.55%) based on the difference between the final offering price and Friday’s close. Amid the shortened U.S. trading week, focus was on deal flow outside the U.S. with Sydney-traded VC-backed gas flow monitoring company Pivotal System (PVS AU: 44.09%) ranking as the best performing deal on the week based on final offer, while Hong Kong-based architectural and interior design company Steve Leung Design Group (2262 HK: +17.05%) defied the weak local market. Spotlight of this week is on a slew of listings across sectors in the Hong Kong Market, including the landmark IPO of Chinese smartphone marker Xiaomi (1810 HK). Priced at the bottom of bookbuilding range, the company raised USD billion 4.8 billion, ranking as the second largest global IPO of the year, and the largest tech IPO in Hong Kong market on record. We also note that the company postponed its plan for mainland China Depository Receipt (CDR) offering in Shanghai. Ahead of its official trading start on Monday, the shares fell in gray market trading.

Select IPOs traded (week: 07/02/2018) Country
Pivotal Systems Corp United States
Propnex Ltd Singapore
Okeanis Eco Tankers Corp Greece
Steve Leung Design Group Ltd Hong Kong
China Isotope & Radiation Corp China
Select IPOs expected (week: 07/09/2018) Country
 Xiaomi Corp  China
 Bank of Jiujiang Co Ltd  China
 MTG Co Ltd  Japan
 Redsun Properties Group Ltd  China
 FingerTango Inc  China
 Inke Ltd  China
Intron Technology Holdings Ltd Hong Kong
Qeeka Home Cayman Inc China
Tianli Education International China
51 Credit Card Inc China
Zhejiang Cangnan Instrument Group China

Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.

ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.

The post The IPOX® Week, July 09, 2018 appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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  • IPOX Indexes extend weakness into quarter-end, China-linked exposure slides anew.
  • IPOX 100 U.S. ETF (FPX) posts strong quarterly gain.
  • IPO Deal-flow Review & Outlook: U.S. shows strength as deals surge. Ahead of massive IPO, Chinese smartphone giant Xiaomi (1810 HK) prices Hong Kong IPO at low end.

IPOX Indexes extend weakness into quarter-end, China-linked exposure slides anew. Continued selling in China-linked exposure on rising trade tensions and profit taking in select high-beta names continued to pressure the IPOX Indexes into quarter end. Weakness extended across regions. In the U.S., e.g., the FAANG-free, style agnostic IPOX 100 U.S. (IPXO) shed -1.96% to +4.87% YTD, lagging the S&P 500 (SPX) – benchmark for U.S. stocks – by -63 bps. on the week, however, remained +194 bps. ahead of the S&P 500 (SPX) during Q2. Here, losses were driven by big declines in small- and mid-cap high beta exposure with 77/100 portfolio holdings closing the week in negative territory. Most pressure amongst individual stocks was on HFT Virtu Financial (VIRT US: -10.91%), social networker Match Group (MTCH US: -9.30%) or e-commerce firm StichFix (SFIX US: -8.99%), while pending corporate actions linked to entertainment facilities operator Madison Square Garden (MSG US: +11.32%) or drug maker IPOX heavyweight Shire (SHPG US: +4.29%) helped to mitigate portfolio losses. In non-U.S. domiciled exposure, while China-linked stocks including e-commerce behemoth Alibaba (BABA US: -8.16%) continued to trade under pressure, we note significant upside in select Japan-traded IPOX portfolio holdings, including application software maker PKSHA Technology (3993 JP: +21.07%), industrial machinery maker Optorun (6235 JP: +6.23%) or logistics firm SG Holdings (9143 JP: +3.23%).

IPOX 100 U.S. ETF (FPX) posts strong quarterly gain. The USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) fell to +5.10% YTD last week, recording a quarterly gain of +4.46%, while its international version (FPXI) fell to -0.91% YTD (-5.68% last quarter). Amongst IPOX-linked actively managed funds, the Catalyst IPOX® Allocation Fund (OIPAX) fell to +8.68% YTD last week, with exposure to immediate U.S. IPO deal flow propelling the fund to a quarterly gain of a strong +7.44%.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) -2.57 28.59 -0.11
IPOX International (IPXI)* -2.94 37.80 -1.83
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* -2.99 33.64 5.89
IPOX 100 U.S. (IPXO)* -1.96 26.04 4.87
IPOX 30 U.S. (IPXT) -1.58 26.63 1.49
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) -1.68 19.27 1.53
IPOX Nordic (IPND) -1.61 17.91 -0.42
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) -1.82 23.30 -0.88
IPOX China (CNI) -5.72 37.67 6.34

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOU8].

IPO Deal-flow Review & Outlook: U.S. shows strength as deals surge. Ahead of massive IPO, Chinese smartphone giant Xiaomi prices Hong Kong IPO at low end: A massive 27 (non-China A shares and non-local India) firms debuted last week across accessible regions, with the average (median) equally-weighted firm adding +9.53% (+0.67%) based on the difference between the final offering price and Friday’s close. While IPOs in foreign markets generally debuted lackluster, select deals in the U.S. soared anew, including U.S. biopharma Tricida (TCDA US: +57.37%) or retailer BJ’s (BJ US: +39.12%). Amid the shortened U.S. trading week, focus this week is on deals outside the U.S. (see next page). We also note the upcoming IPO of Chinese smartphone marker Xiaomi (1810 HK). Priced at the low end, the company’s market cap. was set at ca. ½ of its $100 billion valuation previously. Shares will commence trading on the Hong Kong Stock Exchange on, Monday July 9th.

Select IPOs traded (week: 06/18/2018) Country
Akasol AG Germany
Amigo Holdings PLC Britain
BJ’s Wholesale Club Holdings I United States
BrightView Holdings Inc United States
DM Wenceslao and Associates In Philippines
Domo Inc United States
Forty Seven Inc United States
IPL Plastics Inc Canada
Jiangxi Bank Co Ltd China
Neuronetics Inc United States
Quilter PLC Britain
Sprix Ltd Japan
Translate Bio Inc United States
Tricida Inc United States
Uxin Ltd China
Wise Talent Information Techno China
Select IPOs expected (week: 07/02/2018) Country
Pivotal Systems Corp United States
Propnex Ltd Singapore
Okeanis Eco Tankers Corp Greece
Qeeka Home Cayman Inc China
Steve Leung Design Group Ltd Hong Kong
China Isotope & Radiation Corp China

Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.

ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.

The post The IPOX® Week, July 02, 2018 appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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  • Sell-off in select high-beta exposure, China weakness pressures IPOX Indexes into quarter-end.
  • IPO Deal-flow Review & Outlook: Deals across global regions jump based on final offer / U.S. IPOs set for busiest week in three years.

Sell-off in select high-beta exposure, China weakness pressures IPOX Indexes into quarter-end. Amid continued geopolitical jitters on trade, profit taking in select high-beta exposure and continued weakness in China-linked stocks pressured the IPOX Indexes after expiration week into quarter-end. Weakness extended across the IPOX Indexes Universe with the IPOX 100 U.S. (IPXO) – benchmark for the performance of U.S. New Listings by applying the IPOX Indexes Technology – dropping by -1.79% to +6.97% YTD, lagging the S&P 500 (SPX) by 90 bps. on the week. Declines extended to select IPOX Indexes tracking non-U.S. domiciled exposure, with the respective IPOX Indexes all following the local market benchmarks lower. In the IPOX 100 U.S. (IPXO), portfolio holdings recording the biggest upside moves included e-commerce firm Stitch Fix (SFIX US: +16.63%), biotech Fibrogen (FGEN US: +10.37%), hard-hit goods retailer Michaels Co. (MIK US: +9.67%) or Conagra (CAG US: +0.10%) Spin-off potato products maker Lamb Weston (LW US: +4.54%), while recently issued software firms Zuora (ZUO US:-20.18%), Smartsheet (SMAR US: -19.32%) or DocuSign (DOCU US: -10.01%) ranked as the worst performing portfolio holdings on the week. We note big strength in consumer staple IPOX 100 U.S. (IPXO) holding Pinnacle Foods (PF US: +3.08%), gaining after reports of a takeover approach by packaged foods maker aforementioned Conagra. While we note weakness in China-linked exposure across size and sectors last week, select European-based specialty technology exposure recorded a strong week, including Dutch-based payment processor Adyen (ADYEN NA: +16.14%) and delivery platform operator Takeaway.com (TKWY NA: +13.78%) or German e-commerce firm Delivery Hero (DHER GY: +6.22%). Amid trade tensions, European-traded auto exposure fell, including German auto parts makers Schaeffler (SHA GY: -7.27%) and Hella (HLE GY: -8.80%).

Select IPOX-linked Investment Products Update: The USD billion 1.2 IPOX 100 U.S. (IPXO)-linked First Trust U.S. Equity Opportunities ETF (FPX) fell to +7.25% YTD last week, while the IPOX International (IPXI)-linked First Trust International IPO ETF (FPXI) fell to +2.74% YTD.

IPOX® 100 U.S. – Investing with the “FPX” ETF since 2006

IPOX Price Returns (%) Last Week 2017 2018 YTD
Exposure: Global/International (xUS) (USD) (Price)
IPOX Global (IPGL50) -1.88 28.59 2.52
IPOX International (IPXI)* -2.15 37.80 1.14
Exposure: United States (USD) (Price)
IPOX Composite U.S. (IPXC)* -1.77 33.64 9.15
IPOX 100 U.S. (IPXO)* -1.79 26.04 6.97
IPOX 30 U.S. (IPXT) -1.38 26.63 3.12
Exposure: Europe/Nordic Region (EUR) (Price)
IPOX Europe (IXTE) -0.72 19.27 3.26
IPOX Nordic (IPND) -1.80 17.91 1.21
Exposure: Asia-Pacific/China Region (USD) (Price)
IPOX Asia-Pacific (IPTA) -2.01 23.30 0.96
IPOX China (CNI) -3.44 37.67 12.79

* Basis for ETPs: FPX US, FPX LN, FPXU FP, FPXI US, TCIP110 IT and CME listed e-mini IPOX® 100 U.S. Index Futures [Symbol: IPOM8].

IPO Deal-flow Review & Outlook: Deals across global regions jump based on final offer / Significant deal flow lined up, IPOs in the U.S. in focus: At least 21 notable (non-China A shares and non-local India) companies debuted last week, with the average (median) equally-weighted firm adding a strong +19.32% (+16.00%) based on the difference between the final offering price and Friday’s close. Deals surged across global regions with Japan’s first tech unicorn-flea market app operator Mercari (4385 JP: +51.67%) ranking as one of the top performing IPOs based on final offer last week. At least 19 IPOs are lined up to go public this, with U.S. IPO activity set for the busiest week in three years, including retailer MA-based BJ’s Wholesale Club (BJ US). Focus outside the U.S. is on the IPO of Chinese commercial bank Jiangxi Bank (1916 HK) – marking the second largest listing of the year in the Hong Kong Market – and Philippines construction services provider D.M. Wenceslao (DMW PM). Please follow Page 2 and 3 of The IPOX Week for details regarding this week’s deal flow.

Select IPOs traded (week: 06/18/2018) Country
Aptinyx Inc United States
Autolus Therapeutics Plc Britain
Avrobio Inc United States
Eidos Therapeutics Inc United States
Essential Properties Realty Trust United States
I3 Verticals Inc United States
Klingelnberg AG Switzerland
Magenta Therapeutics Inc United States
Mercari Inc Japan
VCredit Holdings Ltd Hong Kong
Select IPOs expected (week: 06/25/2018) Country
Jiangxi Bank Co Ltd China
Neon Therapeutics Inc United States
Uxin Ltd China
BJ’s Wholesale Club Holdings I United States
BrightView Holdings Inc United States
Goodbulk Ltd Monaco
Translate Bio Inc United States
Tricida Inc United States
DM Wenceslao and Associates In Philippines
Sprix Ltd Japan
Wise Talent Information Technology Co Ltd China

Josef Schuster is the founder of IPOX Schuster LLC (www.ipoxschuster.com), a Chicago-based Financial Services company specialized in Financial Products Design related to Initial Public Offerings and corporate Spin-offs. He is the chief architect of the IPOX Indexes, a global index group initiated in 2004 that encompasses an index technology allowing for asset-allocation focused exposure to the “going public” effect associated with global IPOs and Spin-offs. Mr. Schuster earned his Bachelor of Arts degree in Business Administration in 1994 from the European Business School, London. Mr. Schuster was also awarded a MSc in Accounting and Finance in August 1996 and a MPhil / PhD in Accounting and Finance in June 2003 from the London School of Economics.

ABOUT THE IPOX INDEXES: Through the range of the IPOX Indexes, market participants have an innovative opportunity to navigate the global IPO and Spin-off market and to track the performance of this economically significant sector more accurately and comprehensively than with any other index group. The IPOX Indexes accomplish the systematic indexation of the aftermarket performance of the IPO and Spin-off sector, while – at the same time – preserving the benefits of diversification. Linked to the IPOX 100 U.S. Index, for example, IPOX-linked investment products available to investors include the pioneering USD million 600, 5-star First Trust U.S. IPO ETF (ticker: FPX). On February 18, 2016, CME Group, the world’s largest exchange operator, launched e-mini IPOX 100 U.S. Index Futures, offering market participants for the first time a tool to manage the aggregate risk associated with U.S. IPOs and Spin-offs.

The post The IPOX® Week, June 25, 2018 appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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The Russell Indexes’ annual rebalance took effect Friday afternoon, with parent company FTSE adding and removing stocks from their indexes based on changes in market cap over the past year.

The Russell 1000, 2000 and 3000 indexes contain some portion of a total 3,000 stocks that represent a combined 98 percent of the investable U.S. equity market. Countless ETFs and mutual funds mirror the composition of the Russell indexes, so changes will reverberate across Wall Street.

Russell Rebalancing

The Russell 3000 index is a collection of the 3,000 largest public companies incorporated in the U.S. The largest 1,000 of those make up the Russell 1000, while the smallest 2,000 make up the Russell 2000.

The rebalancing process plays out over several weeks, starting on May 11 when FTSE ranked this year’s potential index components. They then disclosed the preliminary results after the bell on June 8 and updated those results each subsequent Friday.

The actual reshuffling was scheduled for June 22 after the market close.

What It Means For Investment Strategy

Because so many funds mirror the Russell indexes, any stock that is added to the indexes, removed, or moved from one to the other typically sees some amount of near-term buying or selling volume as funds readjust their holdings. Funds representing roughly $1.2 trillion are currently tracking the Russell indexes, and IGT estimated there could be between $200 billion and $300 billion in U.S. market turnover on June 22 thanks to the Russell rebalancing.

Because the stocks in the Russell 2000 in particular are small-cap stocks, many of which have relatively small floats, a short-term flood of buying or selling volume can create major trading opportunities. Not every stock being added or deleted from the Russell indexes sees wild trading action, but traders should keep an eye on the dozens of stocks that the Russell is shuffling.

How To Play It

A full list of the preliminary Russell adjustments, including the dozens of stocks that will be impacted, can be found on the Russell website.

Each of the individual names typically experiences volatility immediately after the initial list is released—in this year’s case June 8. And because the list is released after hours, stocks will typically open higher or lower the next day depending on the move.

The volatility can also spread to funds like the iShares Russell 2000 Index (IWM), or any of the hundreds of other funds that track these indexes. It’s up to each fund to make the appropriate buys and sells as close to the rebalance as possible—either before Friday’s close or after Monday’s open. This can lead to added movement within the last hour of trading on rebalancing day as funds place large orders to get ahead of the change.

However, it’s important to understand that over the years this has become one of the most popular trades on Wall Street. It’s not as simple as simply buying the additions and selling the deletions. Proprietary Trader Dennis Dick has seen instances where the trade actually gets too crowded and leads to a reversal.

“Ten years ago it was a slam dunk. You bought the adds and sold the deletes…and it was a slam dunk and everyone would have their best trading days of the year because the ads would all go up and the deletes would all go down,” he said. Nothing is easy anymore because it’s predictable, and trades get crowded when they’re predictable.

“I’ve seen instances where the ads get killed a few minutes before the close and the deletes go up. You’ve gotta just go with the flow on these days. If you see the adds leaking going into the close, it usually gets worse. And if you see them going up, it usually gets better. So go with the trend.”

The post What Is The Russell Rebalance? appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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The U.S. Federal Reserve announced on Wednesday another 0.25 percent federal funds rate, which, when translated from Fed speak, means they hiked interest rates. Traders know that interest rates are an important variable when it comes to financial markets, but the immediate impact of monetary policy decisions on financial markets can be a bit more nuanced than it may seem.

Here’s a look at how the market typically reacts to central bank policy, and what it may mean if it reacts differently.

Dovish And Hawkish Decisions

Interest rate hikes and other policy decisions made to counter inflation at the expense of economic growth are known as hawkish policies. Lower interest rates and other policies intended to stimulate inflation and economic growth are known as dovish policies.

In general, rate hikes are bad news for stocks because higher interest rates raise the cost of borrowing for public companies. Not only does that higher cost of capital eat into earnings, it also discourages companies from borrowing money to invest in growth projects.

Interest rates are also inversely correlated to bond prices and commodity prices, meaning higher interest rates put pressure on both of these markets.

Higher interest rates tend to be good for financial sector stocks, especially banks. Higher rates allow banks to charge higher rates on loans and expand their net interest margins.

However, higher interest rates are generally bad news for high-yielding stocks, such as real estate investment trusts, utilities and consumer staples. Higher yields on lower-risk Treasury Bonds and bank CDs tend to lure dividend investors away from the relatively risky stock market.

Predictability Makes Things Complicated

The scenarios described above are centered on the fundamental impact that rising rates have on asset classes, market sectors and individual stocks. However, the knee-jerk market reaction to central bank policy decisions often has little to do with long-term fundamental market changes.

The Federal Reserve and other central banks typically do everything they can to avoid jolting financial markets with their policy changes. To accomplish this goal, the Fed and other central banks try to be as transparent and predictable as possible when it comes to their decisions. Language in public statements is carefully chosen to make it relatively easy for investors to read between the lines at the direction future policy is headed.

Expectations Are Key

By being intentionally predictable, the market can adjust to policy changes slowly in the weeks and months leading up to the changes, rather than violently reacting to the changes in a single day. For example, prior to Wednesday’s announcement, the bond market was already pricing in a 96.3 percent chance of a rate hike, according to the CME Group FedWatch tool. With that level of certainty already priced into the markets, it’s understandable that the immediate market reaction may not be very pronounced, or even discernable at all, in certain cases.

Traders should look out for any policy changes that deviate from general market expectations. It’s those decisions that break from expectations that potentially create the biggest near-term trading opportunities.

The post How The Stock Market Typically Reacts To Central Bank Policy appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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Traders depend on the speed and efficiency of their trading platform to meet the needs of their investment strategies. Sometimes, fast and effective order entry can be the determining factor between getting into (or out of) a trade at a profit or a loss. That’s why we have created one of the best stock and options trading platforms, Lightspeed Trader, designed with one central focus: speed of order entry.

Recently Lightspeed Rob Livson, VP of Business Development, hosted a webinar reviewing how to take advantage of the features of Lightspeed Trader for fast and effective order entry. The following recap should provide a general overview of the webinar, highlighting some of the key additions to the platforms, while answering some general questions.

Enhancements to Quality-of-Life

Quality-of-life features are central to this update. Our additions should effectively enhance your user experience, improve the customization of the window layout, and make it easier to navigate to your most-used functions.

Easy to Configure Hot Buttons – Stops, Orders, and Positions

One way we’ve made order entry easier is by adding configuration settings to set up orders as hot buttons. This allows you to set up a series of predefined orders to assign as a hotkey or custom order, making order management that much simpler and more efficient. For convenience at scale, hot button window selection will prepopulate the entry at 100 shares with the inside bid. With the ability to hotkey an immediate order, traders can purchase with one single click. To mitigate accidental purchases, you can set up a confirmation prompt to finalize your trade with an additional click.

With the ability to make custom orders for each option, you can create a series of hot button windows with different categories without having to jam them all into one that will react with any position chosen. For example, you can initiate a switch position, immediately buy 500 shares, immediately put in a stop, and immediately a limit, and within three clicks you can purchase a position.

We have added the ability to set stops with a variety of personalization features. You can create stops with predefined amounts, standard stops, stops based on bid, stops based on ask, stops based on position price, etc. This should give you greater control over purchasing information you see and ultimately choose to act on.

Nuances and Coming Features

We have been asked to do an average price field or a break-even, a feature available in this new release. To have access to this feature now, email sales@lightspeed.com to get a beta version, as it is not available in our standard website download at this time.

Demo layouts are transferable to your live account, but you cannot convert your actual live account into the demo mode. Once you transfer from your demo to your live account, you can load your saved layout.

Additionally, for after-hours trading, the platform will show which routes work best with each position. Not much has changed on that front, but this should help you make the best of your after-hours trades.

Those looking to learn more about the additions to the trading platform can watch the webinar in its entirety here. All traders who utilize Lightspeed’s trading platform are welcome to contact the VP directly for assistance with setting up hotkeys and deciphering other platform nuances at sales@lightspeed.com. For more information on the newest and most improved version of Lightspeed Trader, our premier trading system for day traders, please contact us at 888-577-3123.

The post Webinar Recap: Custom Orders, Hot Keys, and Hot-buttons appeared first on Low Cost Stock & Options Trading | Best Online Stock Trading | Lightspeed |.

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