The Visa IPO ended up a disapoint for me. My 5-minute chart caught a bad tick that made it unreadable. The first pullback was orderly on the 15-minute chart, but the candles were too large for me to get decent reward/risk. It happens. V will stay on my daily chart watch list for a setup.

After 10 bars higher on the Nasdaq 60 minute chart, it was due for a rest. Notice how the 200 ma stalled it. I love using that indicator as a target. So this pullback was a little more than I’d like, and a close on the low isn’t pretty. It’s options expiration week though. Crazy volatility can happen. Watch for a buy signal on the 60-min before going long. Oh, and I see that the bull-bear ratio now has almost 45% bears and just 31% bulls. I don’t ever remember seeing a spread like that. Bullish.

Here’s a short trade in TRA - Terra Industries where I used both the 60-minute and 5-minute charts. If you look at the 60-minute chart, TRA has overhead resistance in the 41 area. After heading 5 bars up it basically stayed range bound for 5 more bars. Let’s look closer. The candlestick at point 2 was bullish. In fact it was an outside bar. Bullish. Then there’s a little topping tail followed by an ugly bearish bar at point 3 that retraces 100% of that previous bullish bar at point 2. Red flag. That’s when I actually took a look at the stock.

I switched down to a 5-minute chart for entry. The stock broke down under 39.28. I waited to see how it handled the area. There was a little bounce which formed a lower high pivot which gave the signal to short. A stop was placed .25 abgove the green candlestick at point 1 to give a little jiggle room. 3/4 were covered for a point, as I wasn’t expecting such a bearish day.

The Visa IPO, trading under stock symbol V on the NYSE, will be on my screen today as one to trade. Pricing at the high of it’s range, it’s sure to have the attention of traders today.

“Overcoming the jitters that have battered many of the lenders that issue its cards, Visa Inc. sold 406 million shares at $44 apiece late Tuesday to raise nearly $18 billion and complete the most lucrative initial public offering in U.S. history.

The price topped the range of $37 to $42 per share that Visa set three weeks ago, reflecting high demand to own a piece of a company that’s promising earnings growth of 20 percent despite a credit crunch that’s choking the U.S. economy.”

The great benefit of trading IPO’s is the fact they have no overhead, or sellers looming above. The trading patterns have a chance to take shape. Watch for intraday new highs… I like to buy over the 5-minute high. Also watch for a higher high after the first pullback to enter.

Search for “IPO” here to see how I’ve traded ‘em in the past.