Studies have shown that 75% of all stocks move in the same direction as the market. So if you buy stocks when the market is trending higher, you have a 75% chance of being right. But if you buy when the market is trending lower, you have a 75% chance of being wrong. Even the strongest IPOs will have a hard time when the market is heading south.
How do you best determine the IPO Market direction?
Several indicators can help assess the strength of the IPO market, but the #1 way to evaluate IPO Market performance is to examine the Renaissance IPO Index.
The IPO Index represents a basket of mid- and large-cap US IPOs that are all less than two years old.
When the index is doing well relative to the overall market, that means recent IPOs are currently profitable for investors.If this index is weak, IPO investors have been losing money with their current holdings.
Get this right, and you will know when you are buying an IPO with the wind to your back or facing an uphill battle.
The icon on the upper right-hand side of the IPO Pro navigation is the IPO Market Indicator.
You’ll know every time you log in whether the IPO Market is receptive to new offerings.
The IPO Market activity is the first thing you should look at when considering investing in an IPO. The next step will be how to examine the IPO’s underwriter.