SpaceX Has a Solid Launch But Doesn’t Reach Orbit
The next big market event will come from the Federal Reserve’s new chair.
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The indices followed through to the upside on Friday but the largest IPO in history sucked up most of the energy. SpaceX opened at $150, $15 higher than the IPO price, hit an intraday high of $176.52 and then closed weak at around $161. Intraday chasers who were looking for sustained momentum were trapped and some were forced to bail out.
The SpaceX Debut
Overall it was a successful offering. Many on Wall Street were pleased that it didn’t turn into a frenzy and the intraday lows were never tested after the open. Some day traders may not have done too well but that isn’t all bad. The initial excitement will wear off quickly and we will start to hear some critical analysis about valuation.
The biggest danger is that only a small number of SpaceX (SPCX) shares are currently trading. Most of the float will be unlocked in the next six months so there will be plenty of supply. When that is combined with two giant AI IPOs that are coming soon, the issue of liquidity is going to be front and center in the months ahead.
Iran Hopes Help the Market
The other big issue that helped the market was continued optimism that a deal with Iran is finally coming. President Trump indicated that he expects a deal to be signed this weekend or Monday in Europe. Iran continued to issue the usual denials but this time they added they are closer to a deal than ever before. Oil markets seem to believe that a deal is likely as the United States Oil Fund (USO) moved to its lowest levels since April 21.
The big event next week will be the Federal Reserve interest rate decision on June 17. The new Fed head, Kevin Warsh, is stepping in. Lower oil prices will remove some of the pressure on him to raise rates but it will be interesting to see his posture in his first press conference as chairman.
Strategy
The two major events on Friday have the potential to be topping events and when combined with the issue of inflation we need to be vigilant. We need some new positive catalysts if this market is going to keep running.
Have a good weekend. I’ll see you on Monday.
At the time of publication, DePorre had no positions in any securities mentioned.
