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Support and resistance levels are two of the most basic technical indicators we can look at when analyzing a chart setup. 

Support levels can act like a sturdy ground floor that a stock can bounce off of, whereas resistance levels act like a ceiling that can prevent the stock from moving higher. 

But how do we know when that ceiling is made of glass and a stock is set to shatter through it?

Intuition and “gut feelings” are never something that we can rely upon, which is why I like to look at activity in the dark pools. 

Because while I may have a strong conviction about how things will go, I’m just one person— alternatively, orders placed in the dark pools represent large institutions, possibly event governments. 

In other words, I like to follow the volume and ride the momentum. 

Right now, I’m seeing a spree of dark pool prints come through on my scanner, indicating institutional buying interest in stocks pushing long-term resistance. 

If the overall market moves higher from here, especially in spite of a stimulus, these stocks could be breakout candidates.

I want to share 3 of those stocks off my dark pools watchlist here today.

 

Uber (UBER)

 

  • A familiar name, Uber is associated with a number of functions beyond vehicles for hire— including food and package delivery, freight transportation, and scooter rental through its partnership with Lime

  • The stock has been on the move since the beginning of this week, following the company’s confirmation of its profit goal for the fiscal year of 2021. The company announced that its prices will rise in large cities, as well as small cities in California.

  • That’s in addition to the breaking news that Uber has offered $1.2B to BMW and Daimler to buy Free Now, Uber’s major competitor in London. This is following Ubers’ recent appeal win that allows it to continue operating in London for another 18 months

  • The stock was up as much as 7.19% on Tuesday to $36.69, and it’s coming up on its 52-week high of $41.86. We’re currently seeing a nice support level forming at the $33 level, which has been sustained 3 times.

  • It’s favorable to buy stocks before they break out, and right now I’m watching for a break and hold above long term resistance at $38

 

 

Norfolk Southern Corp. (NSC)

 

  • Norfolk Southern Corp. operates one of the nation’s premier railways, operating 19,420 route miles in 22 eastern states

  • Institutional ownership in NSC is 75.9%, or $40,072M, with the top holders being Vanguard, Blackrock, and JP Morgan Chase. I’ve been seeing dark pool activity in the stock recently, with the stock just this week experiencing a very heavy trading volume of around 1,347,938 shares. 498 institutional holders raised their position in NSC by roughly 13,642,821 shares

  • So it came as no surprise that the stock received an analyst upgrade on Thursday. A Barclay’s analyst just suggested a new price target of $230

  • The company announced on Wednesday (10/21) that a new technology joint venture— between GATX Corporation, Genesee & Wyoming, TrinityRail, and Watco— could transform its rail shipping. It’s called Rail Pulse, and it will accelerate GPS adoption

  • The latest RSI for NSC over the recent two-week period is around 44.91, indicating that the stock is oversold. I’ll be keeping an eye out for a potential breakout above $220

 

 

Duke Energy (DUK)

 

  • Duke Energy is an electric power holding company, which is helping cities reach climate goals in the U.S. as well as Canada

  • Clean energy has been one of the big winners over the past month. DKS shot up from 82.41 to 93.89 over the past month— along with similar stocks like Jinko Solar (JKS), which saw a significant gain

  • Duke Energy had a notable earnings report for the last quarter, reporting a profit of $1.18 billion and revenue increase to $5.42 billion.

  •  The current average trading volume in DKS is high, about 3.53 million shares, evidenced by lots of recent dark pool activity. The reason for that increased volume likely results from the value proposition surrounding it’s good earnings

  • DUK currently presents an interesting risk/reward opportunity, and I will be keeping an eye on its peers as it historically follows them in price action. I’ll be looking for the stock to break above resistance at $93. 

 

 

Learn How I’m Trading Dark Pools Activity in Real-Time

 

These trades have high potential due to a combination of high trading volume and good technicals.

Whether I actually decide to trade them, I won’t know until Monday.

If I do, my Dark Pools Profits subscribers will be the first to find out.

Click here to learn more about Dark Pools Profits.

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

With the upcoming election only weeks away, the possibility of a stimulus deal around every corner has caused the markets to swirl.

And early market gains are wiped out in the blink of an eye…

Plus traders who chase stocks are getting shaken out of trades left and right.

Now while traders are struggling to find their trades… I have been absolutely crushing it focusing on only looking for trades in dark pools.

And just the other day when the markets couldn’t find a direction, I managed to squeak out a cool 500% gain.*

Just check out some of my most recent trades*:

  • NIO – 500% gains
  • MSFT – 125% gains
  • UPWK – 100% gains
  • DKNG – 200% gains

You see, this back and forth in the markets is causing tremendous opportunity to trade momentum in these stocks

And that’s why I’ve focused on hunting momentum in the dark pools and have been landing lunker-size profits trade after trade.

Dark Pool Profits

Finding trades is hard to do and many times traders get stuck in “analysis paralysis” until they lose all their money on the account

But not everyone struggles with this

You see, huge institutions have research desks that focus on finding the best ideas for the traders

And that puts us at a huge disadvantage when it comes to doing our own research and trading with limited tools

Then I learned about Dark Pools and everything changed

But when I first started trading I had a limited understanding of what Dark Pools were even used for and knew I had to learn

It’s time where I needed to figure out a way to trade the Dark Pools so I can pull down profits

Now how do I do this?

I started with these 4 questions that I had to answer first:

  1. Have I seen this stock trade in the Dark Pools lately?
  2. Is the dark pool volume larger than its average?
  3. Are there any large single dark pool trades?
  4. Are there any Intermarket Sweep Orders?

Now for me, I found that the more boxes that are checked off the list, the better signal there is for the dark pool scanner.

Recently, I used these four steps to land huge profits in NIO and now MSFT as it approaches earnings!

Check this out to see how I found a 500% winner in NIO just by scanning the Dark Pools

Hunting Momentum In The Dark Pools

When it comes to the basics, two of my favorite indicators is momentum and volume that give me an edge

And my real edge comes down to combining these ideas and reading order flow and finding momentum in the dark pool markets

And this is the exact strategy that I want to share with you, a a strategy that you can follow just by learning from the pros

This strategy is jam-packed with daily research of stocks and monitoring the trading activity on every stock.. 

My goal is to get into trades following the dark pool traders and exit with a 100% profit in just a few days!

Now, I know you are wondering… Does this even work?

Well, I think it does!  

Just check out some of these wins, a one of the highest-conviction trade idea service produced

Moving on to my most recent trade where I pulled in huge returns in just a few short days!

It Comes Down To The Timing

The dark pools may have given away the direction of one of my largest trades WEEKS BEFORE it actually hit

From the scanner, I noticed a few things that were happening that were out of the ordinary for this stock

Something must be going on in this stock that has the hedge funds getting excited to put huge money into this stock

Then I broke down and analyzed this trade using my 4 step process

  1. NIO hit the dark pools repetitively and caused a tremendous amount of momentum on this stock
  2. Increasing volume and consolidating near the highs indicates the stock is ready to break out as buyers and sellers can’t find a direction they want to take
  3. Large trade blocks start to come in, growing in size each time
  4. Intermarket sweep orders, or the “I want it now” order type that traders use to fill their shares started to come in and move the stock around

So right away after looking over the 4 criteria for dark pool trades, I needed a piece of that action in NIO

It’s All In The Charts

Source: Thinkorswim

What Happens Next Is Huge

Shortly after I bought these calls in NIO, the momentum started picking up as more and more institutions and traders entered the stock.

And this demand was causing the price to jump higher

Just take a look at what happened over the course of the next few days and caused my options that I alerted to members to skyrocket for a massive 500% gain

But since all trade information is public information, I’m just riding the coattails of the smart money who spend millions of dollars on research.  

And if they put their money to work they must be doing it for good reason!

As you can see, this stock just soared after the dark pool trades were seen hitting the tapes.

I continue to monitor the Dark Pools for more and more of this trading activity every single day

And I will alert my members of Dark Pool Profits first when more trades like these come around and hit the markets.

So if you don’t want to miss the next trade like this that could land you a 500% profit …

Sign up now to Dark Pool Profits and learn how the dark pools can take your trading to the next level

Click here to get started now

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

How IPO Pricing Works

Companies must go through a rigorous process when pricing and making available an initial public offering on a public exchange market. Once the company goes public, its stock is available to investors to purchase and stake a claim in that company via shares. Here we explore what an IPO is, the process involved with pricing and underwriting an initial public investment, and tips to keep in mind when investing in a corporation’s IPO.

  • Initial public offering (IPO) pricing is the process in which underwriters analyze a number of key performance indicators of a private corporation to accurately price the corporation’s shares that will be offered to the public via a new stock issuance.
  • Factors that contribute to how well an IPO will do include demand, industry comparables, the corporation’s story, and growth prospects.
  • There are several steps involved in the underwriting process, including completing and filing the SEC Form S-1 Registration Statement, advertising the share issuance, and issuing the IPO shares.
  • Risks associated with investing in IPOs include lack of company history and stock history and an uncertain future for the corporation.
  • Tips for investing in IPO shares include signing up for initial public offering notification services, doing as much research as possible, choosing a corporation with a strong underwriter, and practicing skepticism.

What Is IPO Pricing?

Image via Unsplash by markusspiske

Initial public offering (IPO) pricing is the process in which underwriters analyze a number of key performance indicators of a private corporation to accurately price the corporation’s shares that will be offered to the public via a new stock issuance. A private corporation is a company that’s held under private ownership. Because of this, its shares are not available to the public on the stock market. Offering public shares allows the company to raise money from public investors to use towards the growth of the organization.

When a corporation goes from private to public, its private investors often realize the gains made from their investment in that company in full. This is because the transition from public to private often includes share premiums for its current investors. Many private investors of private companies are the organization’s early supporters such as family, friends, angel investors, and venture capitalists.

Companies that choose to go public do so because they have reached a maturity level that will pass the rigorous SEC regulations required to list its shares on a public exchange. This typically happens when a corporation reaches a private valuation of around $1 billion, or unicorn status. Some companies with very solid fundamentals and established profitability may qualify for an IPO before it reaches a private valuation of $1 billion. Whether a company qualifies for an IPO will depend largely on whether they meet the strict Securities and Exchange Commission (SEC) listing requirements and the current market competition.

Initial public offerings are significant moves for organizations and give them access to the ability to raise large amounts of capital from a public investor base. This, in turn, supports the company’s ability to expand and grow.

How Do IPOs and IPO Pricing Work?

The initial public offering’s shares of an organization must be priced via underwriting due diligence. Due diligence refers to an audit performed by an underwriter or underwriters to verify the company’s financial records and other relevant information before it can be listed on a public exchange market. Records and information analyzed during the due diligence process include the organization’s market capitalization, margin trends, revenue, profit, valuation multiples (such as P/E ratios, PEGs, and P/S ratios), and balance sheets.

A successful initial public offering will depend on the demand for the organization’s shares. The more demand there is from the corporation, the higher their stock prices will be.

In addition to demand, other factors that contribute to how well an IPO will do include:

  • Industry comparables: An industry comparable refers to any other publicly-traded companies in the same industry as the company wishing to go public. If there are other comparable publicly-traded corporations, the valuation of the corporation’s IPO will need to include a valuation comparison to those companies.
  • The corporation’s story: A company’s story, or the corporate narrative, can also contribute to the company’s IPO valuation. For example, if the company plans to launch a project or service that will revolutionize a particular industry, this will be taken into account and can sometimes have a heavier bearing on the IPO valuation than quantitative factors.
  • Growth prospects: A corporation’s future growth projections also play a large role in its IPO valuation. A company that’s projected to have significant growth over the next few years will likely have a higher IPO valuation than a company that doesn’t show potential for aggressive growth.

The IPO Underwriting Process

Most corporations will rely on an underwriter or team of underwriters to oversee the various parts of the IPO process.

The underwriters who participate in a company’s initial public offering are involved in performing due diligence, preparing all necessary documents, filing IPO documentation, marketing the IPO, and issuing the company’s shares to public shareholders.

Here are the steps involved in the underwriting process for an IPO:

  1. Underwriters will make private bids to the corporation wishing to go public. These proposals include the services the underwriter offers, the most appropriate security they believe the corporation should issue, the offering price, number of shares, and the time period of the market offering.
  2. The corporation will choose an underwriter or a team of underwriters and sign an underwriting agreement.
  3. The underwriter will devise an IPO team that may include layers, SEC experts, certified public accountants, and other underwriters.
  4. The IPO team compiles various information needed to create the IPO documentation.
  5. The underwriter uses this information to compose the SEC Form S-1 Registration Statement, which is the main document needed for an IPO filing. This form is the initial registration form for new shares required by the SEC, and any corporations must complete this before offering their shares publicly. The S-1 requires organizations to provide information on how they plan to use capital proceeds, a detailed outline of their current business model and current competition, a prospectus of the security being offered, and price methodology.
  6. Underwriters prepare marketing materials for the pre-marketing of the public initial offering of the new stock issuances.
  7. Underwriters and corporation executives advertise the share issuance to determine demand for the shares and set a firm offering price. Original IPO prices or issuance dates may change based on the research gathered during this phase.
  8. The corporation takes the needed steps required to meet SEC requirements and exchange listing requirements for public organizations.
  9. The corporation creates a board of directors.
  10. The corporation sets forth a formal process for reporting accounting and financial information for auditing every quarter.
  11. The corporation issues its IPO shares on the issuance date established.
  12. Capital that is raised from the initial issuance to shareholders is gained as cash and shown as stockholders’ equity on the company’s balance sheet.
  13. Any post-IPO provisions are made if needed.
  14. Underwriters may have the opportunity to purchase additional shares for themselves after the IPO offering date.

Risks Associated With Investing In IPOs

The primary goal of an initial public offering is to sell a set number of shares at an ideal price. Corporations will typically only offer an initial public offering when they know the demand is high for their shares. While this demand may be good for the company, it’s not always good for investors, especially when the demand creates a hype that overrides the company’s fundamentals. This creates an advantageous situation for the corporation, but not for the investors who purchase its shares.

Other risks to keep in mind when investing in IPOs include:

  • Companies offering IPOs usually haven’t been around for long, so there isn’t a solid history of financial information to review before investing.
  • Corporations selling IPO shares are usually young, so the future of the company isn’t certain.
  • Because of the lack of stock-trading history, investors aren’t able to see how the company’s stocks performed in the past.

Tips For Investing In IPOs

If you’re interested in investing in IPOs, there are several things you can do to ensure your investments are as successful as possible. These include:

  • Sign up for initial public offering notification services. Your brokerage firm may offer this option, and setting up these notification services will allow you to receive alerts when new IPOs are available that meet your investment interests.
  • Do as much research as possible regarding the company’s history. This includes research on its competitors, previous press releases, financing, and how the company’s industry is currently performing.
  • Choose a corporation with a strong underwriter. The more reputable the brokerage, the more solid the company offering the IPO is likely to be.
  • Practice skepticism. Skepticism is considered a good thing when it comes to investing in IPOs, especially if your broker is strongly pushing a particular IPO for you to invest in. Brokers and money managers usually have first access to IPOs before individual investors do, so if your broker is passing on the IPO but trying to get you to invest in it, proceed with caution.

Understanding how the IPO process works is important if you plan to invest in initial public offerings. Take time to get as familiar as possible with the corporation before investing and choose a solid brokerage firm to work with to increase your success with IPOs.

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.