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Alibaba IPO demand strong, but it's still early

An employee walks past the Alibaba logo at the company’s headquarters outside of Hangzhou, China.
Carlos Barria | Reuters
An employee walks past the Alibaba logo at the company’s headquarters outside of Hangzhou, China.

Reports indicate Alibaba has received enough orders to cover its entire IPO after just two days of its roadshow in New York and Boston. Given there are several more days left and other cities to visit, this would indicate enthusiasm is very high.

However, there are a few reasons to be very cautious about this. First off, with all high-demand IPOs, institutions routinely put in much more than they expect to get. And underwriters only give clients a part of the shares they ask for.

Second, covering the "book" only one time means very little. It is routine to hear about a book that is five, six, seven times oversubscribed.

Finally, there is still additional stock available. Alibaba is seeking to sell 320 million shares at $60-$66. At the high end, that would be $21.3 billion. However, as with most IPOs, there is an option to sell an additional 15 percent, known as the "greenshoe" which would boost the total sales to roughly $24.5 billion, which would be the biggest IPO of all time, outpacing the former record holder, Agricultural Bank of China, which raised $22.1 billion in 2010.

Will Alibaba increase the price or deal size? Still not clear.

Bottom line: It's a good start, but there's a long way to go.

Elsewhere:

1) Bonds are weaker, yields higher. Yesterday our Steve Liesman noted worry about the possibility the Fed may change the language promising to keep rates low for an extended period; this has again created what Greg Valliere at Potomac Research called "stock market paranoia over Fed tightening."

Read MoreA Fed phrase change could mean rate hikes sooner

The same in Europe, where bond yields are up again today on concerns that the Scottish independence referendum might loosen ties in the EU and encourage similar secession movements.

We have not had a double-digit correction in the stock market since April-June of 2012. On the other hand, we are not seeing particularly robust advances. Jeff Saut at Raymond James notes that a screen of Raymond James's research universe of 1,025 stocks shows the average stock has declined by roughly 23 percent from its respective 52-week high. Many stocks which the firm rates Underperform have declined by over 40 percent.

2) RadioShack (RSH): Sinking ship? RSH will report earning tomorrow...Wedbush says bankruptcy is "imminent". They believe earnings will disappoint big time: They have a EPS loss of $0.66, versus consensus of a loss of $0.36.

Read MoreWedbush predicts bankruptcy for RadioShack

"[B]rick and mortar electronics retailers will see persistent structural decline as Internet sales continue to take share," the analysts at Wedbush say.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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