How to Trade the IPO “Sweet Spot”

by Greg Guenthner
Daily Reckoning

Earlier this month, I alerted you to a left-for-dead trade that was finally starting to heat up: initial public offerings (IPO).

Fresh IPOs are just beginning to blast off after a painful dry spell. Two of the best performing names of the summer are newly listed stocks. Acacia Communications (NASDAQ:ACIA) is now up nearly 400% since it began trading in May, while Twilio Inc. (NYSE:TWLO) is up only 260% sine it hit the market in late June.

These gains are enough to make even the most seasoned trader salivate. But that doesn’t mean you should throw all your money at TWLO or ACIA and pray to the market gods that they continue to defy gravity.

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