The biggest IPO in history just opened, and here is how I am actually trading around it.
SpaceX opened for trading this morning at $150, above its $135 IPO price but shy of the $165 it was indicating before the bell. The whole market is bending around it.
The S&P is up, the Dow is up almost 500, and the Russell 2000 is leading, which tells me this rally still wants to go. But I am watching one thing more than the green on the screen.
SpaceX sucks all the air out of the room.
To buy a $75 billion offering, money has to come from somewhere, and you can already see where. The space-related names are getting sold to fund it.
Rocket Lab and EchoStar are both down around 11-15% today. That is not those companies breaking. That is capital being raided to make room for the new kid.
I have seen this movie before. When Facebook went public, names like Zynga ran hot into the event and then rolled over for a week straight.
I am not saying these space stocks are that exact story, but the pattern rhymes.
The selling to fund SpaceX plays out for a few days, and once it clears, there is real opportunity to trade back into the names that got knocked down for no reason of their own.
Here is the bigger thing I am watching into next week. Stack a few forces together and you get a recipe for a sharp pullback. SpaceX pulls money out of the big equities.
A peace deal with Iran gets signed, oil backs off, and the dollar corrects. Everybody who is overweight stocks rushes back toward a normal sixty-forty, so money leaves equities for bonds.
Put those together and you can blink and find the market down three to five percent on news that looked positive.
That is the map.
It does not mean run for the hills. It means know your levels and have a plan, because a day like today is where the opportunity lives if you are ready for it.
The open is in the books, but the real trading starts now.
At 2:00 pm ET I am going live with Tim and Andrew to break down the biggest IPO in history while it is fresh, the first print, where it goes from here, and what the selling in the space names sets up next. In real time, together.
Your only option,
Mark Sebastian