We've all heard the saying, "buy the rumor and sell the news." Well, Friday's Alibaba IPO (BABA) will finally happen. And it's expected to be the biggest IPO in history, as the Chinese internet company is likely to be valued at around $160 billion or more. The one thing that Wall Street needs to do right now is keep the stock market buoyant and jovial before this debut. After all, who would want to own it if the markets were on the verge of a sell off?
Could It Happen Again?
Remember The Blackstone Group's (NYSE:BX) highly anticipated IPO back in 2007? It was a huge deal for Wall Street and the markets traded just fine ahead of the initial offering. But once the stock went public in June of 2007, the Dow Jones Industrial Average peaked just four months later as America slid into the grip of the Great Recession. Could the Alibaba IPO be signaling the same thing for stocks? After all, the Federal Reserve is expected to end its quantitative easing program in October. Traders and investors must beware of the markets after this IPO. In the past, history has told us to watch for topping signs after such a euphoric event and today's markets seem to be in just such a state.
Bottom line? Beware of the markets after the Alibaba IPO.