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Propriety Trader Kathy Donnelly and Yahoo Finance's Jared Blikre break down the latest market action.
AKIKO FUJITA: Welcome back to Yahoo Finance Live. The NASDAQ leading the gains in the afternoon session, up by just over 2%. The Dow up about 7/10%, while the S&P 500 is up 1 and 1/2%. Let's bring in Jared Blikre for the very latest. And Jared, your focus here on SPAC and IPO issuance at record highs, along with a special guest there, Kathy Donnelly, veteran trader and IPO expert.
JARED BLIKRE: That's right. You wrote the book on IPOs, Kathy. And, well, before we begin, because I know we've got a couple of tickers that you're looking at today, I just want to address the elephant in the room here. We have this incredible situation with GameStop and these heavily shorted names. A report from "The Wall Street Journal" today that a lot of these SPACs that are coming out have been influenced by Wall Street bets. What's your take on the situation here?
KATHY DONNELLY: Yeah, I feel like we're in unprecedented times, Jared. When we did the research, we weren't even looking at SPACs. And now, that's all we're talking about. I feel like they're very similar to the IPO advanced phase that we studied. They're going straight up, and you need fast rules. And you need to be able to withstand the volatility. So, if that's your style, then I say go for it.
JARED BLIKRE: All right, go for it. Well, let's take a look at Airbnb first. This is an IPO launched last year. It first began trading. What are you seeing in the stock right now as we pull it up here?
KATHY DONNELLY: Yeah, you know, I wanted to talk about this stock because I feel like it has a lot of potential. It's just recently broken out of an IPO base so it could have an IPO advanced phase that I was just talking about. Perhaps it goes up 20%, 30% or more from this recent buy point, that consolidation that it created after basing shortly after.
But I feel like if traveling is going to be picking up this year, this is going to be a great one hopefully six months from now. As you know, [INAUDIBLE] term trader, and I like to wait for that institution due diligence phase that we've talked about and waiting for that first mature base. So it's tradable now for sure, for those fast traders that we talked about. But I'm really hoping for a nice consolidation, good due diligence phase, like I mentioned, and then maybe six months from now, really have a lucrative run where it's able to start an institutional advanced phase.
JARED BLIKRE: Yeah, and I love the way you map out scientifically and with statistics these different phases that the stocks go through. And indeed, it takes a while for institutions to kind of wrap their head around the business model. You need maybe a quarter or two quarters of financial statements into the business after it's traded.
And then, Palantir is another name we're looking at. We're pulling up a chart here. This goes back to the inception of trading. What do you see in Palantir right now?
KATHY DONNELLY: Palantir I really like. I actually did trade it from that IPO base. And unlike Airbnb, it broke out from that IPO base and just had a great run. And one of the rules we talk about in our book is the ascender rule. And I did a quick calculation. If you had traded the ascender rule, which actually takes gains on the way up at rates of the 21 EMA and the 50-day, you'd be sitting on about 160% gain right now and could still be holding it.
What I'd really like to see with Palantir is maybe we get a stairstepper pattern, where it continues basing here or breaking out like it did last week during that volatile week that we had. But if it keeps going, maybe it turns into a stairstepper, and we don't get the due diligence phase. And this is one that we could hold on for a while. It'll be really exciting because as you know, Palantir's got a great story. The liquidity is just amazing.
JARED BLIKRE: Yeah, and definitely, we see so many IPOs coming to market today after they're already well established companies. Like, Airbnb has been in business since, what, 2008. Does that-- have you found that kind of affects the trading at all, just because they are such a larger company coming to market with a capitalization of a few billion dollars? Has that changed the game?
KATHY DONNELLY: Yeah, I mean, I think it has. I mean, we always say, oh, well, if we come out now, we'd do much better. But really, when you look at all this-- you know, when we looked at all the stocks from 1982 to 2017, they all still went through the same patterns. And even, like, Uber, for example, had been around for a long time. It's just now it looks like it's creating an institutional advance phase and finally breaking out into all-time highs from when it first IPO'ed. So, I mean, you think that, but ultimately, it's psychology. The pattern's still up here.
JARED BLIKRE: Yeah, and I think it's important to note, too, that yeah, it takes a while for some of these issues to really get off the ground. I remember Amazon had several 80% to 90% corrections in the '90s and as it was going into the new decade of the new century.
Well, Kathy, you're going to be joining me on Wednesday for a special webinar. We're going to be talking about SPACs, IPOs, outlining the message of your book, and also the influence of this incredible GameStop phenomenon that we've been witnessing here. So you can sign up at our website, YahooFinance.com. Also go to my Twitter feed. I'll have a pinned tweet at the top there so everybody can get that free registration. Again, 2:00 PM Wednesday, going for 45 minutes with Kathy Donnelly here. Thanks. Guys.
KATHY DONNELLY: Thanks.
AKIKO FUJITA: OK, Jared, looking forward to that webinar. Thanks so much for that and--