If you have been watching the IPO market, it is hot currently in terms of number of IPO in pipeline and number of stock which have IPOed recently. When there is demand, there is supply. The investment bankers and IPO companies time these thing very smartly, when the gullible public is in buying mood. I always keep a close watch on this indicator.
Couple of months ago, thee were hardly 2-3 IPO coming in the market. Many IPO were withdrawn. Now if you have been watching for many weeks there has been an upsurge in IPO. In fact the first clue of market change direction you will find is when some big brand name IPO are about to debut. The backers of IPO have some inkling about likely market direction and always look for sweet spot where they can distribute share easily in rising markets. If you see a weak market and if there is forthcoming big good quality IPO, it possibly indicates rally ahead.
As a rally progresses more and more speculative IPO start entering the market. It is easy to pass off junk when everyone is in euphoric mood. So many people are holding on to their ethanol and alternative energy IPOs, which was palmed off to them during the energy rally. The tricks on Wall Street remain the same. They work because there is constant supply of new gullible fools.
Expecting a very volatile few weeks ahead as earnings keep coming.