Is SpaceX the ‘Trap Door’ to a Global Tech Beatdown… or an Opportunity?

Can you see your reflection
False strength, hollow protection
Run from pain and rejection
The truth stabs again
Till the skin is broken
And the cut is open
And the words once spoken
Just fade away

Too late, standing on the trap door
Too late, standing on the trap door
Too late, standing on the trap door
Too late, standing on the trap door

– “Trap Door” Osburne, Churko (Ozzy Osbourne), 2007

Sold to You?

Take badge 986. The overnight “market feel” certainly stirred some ancient mechanisms deep inside this old dog. What was that? Was it the overwhelming beat-down suffered by SpaceX (SPCX) on Monday?

The shares of Elon Musk’s satellite, rocket, AI and launch services company gave back 16.4% on Monday to close at $154.60, shedding roughly $400 billion in market cap. As I write through the zero-dark hours on Tuesday morning, I can see SPCX down another 4% or so, trading with a $148 handle.

Either SPCX was the canary in the coal mine or just the very first casualty, as global stocks, tech stocks in particular, have come under intense pressure overnight. In Asia, South Korea’s Kospi Index lost a tough-looking 9.99% with those losses led by the tech sector. SK Hynix and Samsung Electronics both suffered losses for the day of close to 12%. Keep in mind that the Kospi, like many tech stocks in the U.S., was ripe for some profit-taking. The Kospi is still up almost 95% year to date. Elsewhere, Japan’s Nikkei 225 index surrendered 3.55% to be followed by European stocks that opened lower across the region.

This has put the U.S. tech sector in a negative place overnight. The Sarge-folio’s beloved “Memory/Storage” basket looks something like a dumpster fire as the raccoons scamper and the snakes slither. Man in the darkened window, any thoughts? He says… good thing we took some profits in Western Digital (WDC) on Monday as that stock hit our target. As for the rest of the group, that’s why we use targets and act along the way and also why we have panic points. We may have to exhibit some grit and make some decisions later Tuesday. We shall soon find out.

How Bad Is It?

Though this selloff is likely algorithmic in nature, AI-driven algorithms are the dominant force in our marketplace in this modern era. Human traders make up such a small percentage of the flow of capital in 2026 that we are no longer a factor to be considered in the process known as “price discovery.” Where humans, in general, tried to broker deals and come to agreements when moving chunks of equity, these algorithms are designed to force momentum (in both directions), intentionally creating market inefficiencies and price overshoot.

Hence, both bullish and bearish activity, when conditions are right, tend to exhibit exacerbated results. The key is to know how one will act and at what prices before the vehicles one is invested in, reach those levels. I am convinced that a disciplined approach to risk management has made me and preserved for me, more dough than stock-picking (though I have been known as a solid stock-picker) ever has over the decades.

Consider that oil prices have continued to fall. WTI Crude traded just below $79 per barrel late last week. Overnight, the sweet stuff traded around $72.50. That’s a positive no matter how you cut the mustard. Treasury yields are higher, though. The U.S. 10-Year Note paid 4.42% late last week and as much as 4.5% overnight.

Why are foreign and algorithmic bond traders selling U.S. Treasury debt securities? Well, that’s easy to figure out, right gang? Think about it. Fed Funds futures markets trading in Chicago have gone from pricing in no changes in short-term interest rates into December last week to now pricing in a 68% probability for a 25-basis point rate hike in September to be followed by a second 25-basis point rate hike in January. That would be a bitter pill for tech stocks, small-caps, and also small businesses across the country to swallow.

If this roadmap is to be followed, then it clearly makes sense for investors and businesses to raise cash levels now. The question I ask is this: Can the Federal Reserve’s FOMC actually follow the roadmap laid out in these futures markets? Sure, Fed Chair Kevin Warsh sounded hawkish last Wednesday. He had to. I am sure that he did not want to be seen as a political puppet of the president as he took office, so it made sense to sound hawkish. Especially while much of the committee is actually showing an evident fear of consumer-level inflation, and while that stance remains only words, did it not?

The fact is this: Unless inflation heats up, which will not happen unless the war between the U.S. and Iran heats up, then the impetus for higher short-term interest rates is removed. Warsh understands this. He also understands that unnecessarily raising rates at a time when consumer-level inflation is more than likely about to fall precipitously, will create reduced demand for labor and damage the viability of the U.S. consumer-led economy. The membership of the FOMC is made up largely of PhD economists with little life experience, so this understanding is probably well beyond their “textbook-limited” intellectual depth.

What Am I Telling You?

I am telling you that I am seeing this tech beat-down as an opportunity, not as a time to panic.

Monday

While, in the U.S., the headline-level indexes were weaker on Monday, the broader markets were not that soft. Breadth was actually somewhat decent. The S&P 500 gave up 0.37% on Monday, while the Nasdaq Composite surrendered a nasty 1.32%. However, the Nasdaq 100, which is made up of the 100 largest non-financial companies listed at the Nasdaq, gave back only 0.19%. Usually, the Composite and the 100 are much more aligned than that.

This was largely because the Philadelphia Semiconductor Index, which will get slapped around Tuesday morning, was up 2.04% on Monday, led by ON Semiconductor (ON) and Micron Technology (MU). Reminder, Micron will report tomorrow (Wednesday) afternoon. On Monday, the Dow Transports and all of the small-to mid-cap indexes closed out the regular session in the green.

On top of that, eight of the 11 S&P sector SPDR ETFs closed out Monday in the win column. Energy (XLE) led for a change. Growth lagged. Defensive sectors, in what may have been a warning shot, did outperform on Monday, but not significantly so. Aggregate trading was lower across the board on a day-over-day basis, but that’s a difficult tea leaf to read as Monday came off of a three-day holiday weekend and last Thursday was a “triple-witching” expirations event that also bore a little index-rebalancing activity.

Perhaps most importantly, on Monday, advancing volume beat declining volume for NYSE listings by little more than a smidgen, but took a 64.5% share of composite Nasdaq-listed activity. That basically tells us that U.S. markets did not sniff out this selloff on Monday, at least not during the regular session.

I Have to Wait…

Until this piece hits publication, but if markets are this weak when this article becomes public information, I intend to buy back the WDC I sold on Monday, while adding to Advanced Micro Devices (AMD) and Intel (INTC). Both of those names are down roughly 6% to 7% while I type.

Economics (All Times Eastern)

08:15 – ADP Employment Change (Weekly): Last 25.5K.

08:55 – Redbook (Weekly): Last 9.4% y/y.

09:45 – S&P Global Manufacturing PMI (June-Flash): Expecting 54.6, Last 55.1.

09:45 – S&P Global Services PMI (June-Flash): Expecting 50.9, Last 50.7.

10:00 – Richmond Fed Manufacturing Index (Dec): Expecting 8, Last 13.

16:30 – API Oil Inventories (Weekly): Last -8.33M.

The Fed (All Times Eastern)

No public appearances scheduled.

Today’s Earnings Highlights (Consensus EPS Expectations)

Before the Open: KFY (1.38)

After the Close: FDX (5.95), KBH (0.46), WOR (1.06)

At the time of publication, Guilfoyle was long WDC, MU, AMD and INTC equity.