Thursday, September 18, 2014, 11:42AM ET
There is an old saying in this business, "buy the rumor and sell the news." Well, tomorrow the Alibaba IPO (BABA) will finally happen. This IPO is expected to be the biggest IPO in history, as the Chinese internet company is expected to be valued at around $160 billion or more. The one thing Wall Street needs to do right now is keep the stock market buoyant and jovial before this company debuts for business. After all, who would want to own this stock if the markets were tanking and selling off?
In 2007, there was a highly anticipated IPO which went public, it was the Blackstone Group L.P. (NYSE:BX). This was a huge deal for Wall Street and the markets traded just fine ahead of the IPO. Once the stock went public in June 2007, it was just four months later that the Dow Jones Industrial Average peaked and the start of the Great Recession began. Could the Alibaba IPO be signaling the same thing for stocks? After all, the Federal Reserve is expected to end its quantitative easing program in October 2014. Traders and investors must beware of the markets after this IPO. In the past, history has told us to watch for topping signs after such a euphoric IPO opens for trading, there has never been this much excitement for IPO in history. Therefore, the point is, beware of the markets after the Alibaba IPO.
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Chief Market Strategist