SpaceX and Iran Are Set to Squeeze a Skeptical Market
Two big catalysts, one big question. Here are my thoughts and strategy on a notable day for the market.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Following solid action on Thursday, the combination of progress toward an Iran deal and optimism about the SpaceX IPO is producing a strong open Friday morning. Oil is down sharply, bonds are up, gold is bouncing, and the iShares Bitcoin Trust ETF (IBIT) is recovering. Asia closed strong overnight with Korea up 4.6% and Japan up 2.81%.
The mood is upbeat after Thursday’s powerful session, and there are high hopes for two major catalysts.
Iran Deal Takes Shape
Iranian state media reported overnight that a 14-point memorandum of understanding has been drafted with the United States. The U.S. side commits to lifting oil sanctions and Iran commits to reopening the Strait of Hormuz. Final negotiations do not begin until three Iranian preconditions are met: the release of half of Iran’s frozen funds, the suspension of oil sanctions, and the lifting of the naval blockade.
President Trump said Thursday the U.S. “just made a great settlement of the war with Iran” subject to “finalization of documents.” Whether the documents get finalized this weekend is the big question, especially after dozens of failed attempts at progress.
This is the most credible deal possibility so far, but it is still preliminary rather than a signed agreement. The market has nearly 40 times rallied on hopes of an Iran deal without an actual settlement, so the natural skepticism is that another delay is in store. The difference this time is that oil is reacting in a way it has not before, which indicates that the energy market is taking the deal more seriously than it has in the previous attempts.
The SpaceX Launch
SpaceX starts trading on the Nasdaq today under the ticker SPCX. The IPO priced at $135 a share for 555.6 million shares, raising approximately $75 billion at a valuation of $1.77 trillion.
This is the largest IPO in history, more than three times the size of Saudi Aramco’s 2019 offering. The order book is more than two times oversubscribed with roughly $150 billion in orders, and the retail allocation is 30% of the offering, which is much higher than the typical 5 to 10%. That means significant retail emotion in the action Friday, which is sure to draw criticism from traditional Wall Street. It will take some time for the order book to balance so don’t expect trading to start until an hour or two after the open.
The big question for traders is how the SpaceX action spills over into the broader market. The classic worry is that a massive IPO drains liquidity from the broader market and signals a market top. There is some historic basis for that concern, but the math does not support it this time.
S&P 500 companies issued roughly $1.7 trillion in equity in the 12 months to September 2025, which is around $140 billion a month. A $75 billion offering is half of one month’s typical absorption capacity. The market has plenty of liquidity to handle the supply that will hit Friday. The longer-term picture, when millions of additional shares get unlocked, may not be so simple but there is plenty of liquidity Friday to handle this offering.
The more immediate concern is the heavy retail allocation. Retail investors who received an allocation at $135 have an incentive to flip on the open if the stock opens meaningfully higher. That will create some supply pressure, especially since many of these retail investors aren’t worried about being shut out of future IPOs and will be thrilled with a quick gain.
Conversely, retail investors who did not receive an allocation may chase the stock if it opens strongly. Whichever emotion dominates will set the tone for the rest of the session and for the speculative action in adjacent names.
A strong SpaceX day is bullish for space stocks, AI infrastructure names with rocket-and-satellite exposure, and broader speculation. A weak SpaceX day creates the sell-the-news narrative that many pundits have been predicting.
Strategy
Both catalysts have been well anticipated for weeks, and the market has been nervous about them. The sell-the-news worry is already built into positioning, which means the skepticism may create FOMO and a short squeeze. The bears who have been hedged against a deal failure and an IPO dud will have to cover if those scenarios do not play out, and the covering can easily extend the rally beyond what the fundamentals would otherwise justify.
The PPI report from Thursday should not be forgotten, even on a day with two big positive catalysts. Producer prices rose 1.1% month over month against the 0.7% expected, putting wholesale inflation at 6.5%. The inflation story has not gone away. It is being overwhelmed Friday by the oil decline and the SpaceX excitement, but the Fed-hike worry that drove last Friday’s selling is still lurking in the background.
The technical setup favors a continuation of the rally, but any buying I do will be incremental, and my cash levels remain fairly high. I’ll be watching to see how SpaceX and oil trade, and react to what the close looks like rather than chasing the open. I’m inclined to reduce some positions into strength if there is a frenzy.
At the time of publication, Rev Shark had no positions in any securities mentioned.
