The 2000 Comparison Is Tempting, but Imperfect
The SpaceX IPO on Friday will be a catalyst for a major market shakeup.
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On Friday, the Nasdaq dropped 4.18%, its biggest single-day decline since April 2025. The S&P 500 fell 2.64%, its biggest one-day drop since October 10, 2025, when President Trump’s 100% China tariff threat hit the market. The S&P suffered its first losing week in 10 weeks and the semiconductor sector fell hard enough to be in a confirmed correction by most definitions.
The trillion dollar question is whether Friday was a meaningful shift in character or a single bad day in an ongoing bull market. The magnitude of the move and the breadth of the damage that occurred support the argument that a significant shift in character is occurring. However, that doesn’t mean that we should expect a sudden and swift downtrend.
The 2000 Comparison Is Tempting but Imperfect
The surge in volatility last week reminds me of what happened when the internet bubble started popping in March and April 2000. There were big swings in both directions with some large one-day losses followed by quick rebounds. Eventually a nasty downtrend developed and continued into 2002.
The problem with historical comparisons of that sort is that the market is never exactly the same, but it is always similar in some respects. Cycles of ups and downs are inevitable, but those cycles are always different. While this market may be due for some downside action, it is a mistake to think that the 2000 internet bubble is going to be a template for how it happens.
One of the big differences we have this time is that economic conditions are still strong and valuations are not crazy. There are always some pockets of excess, and recent economic strength combined with the AI frenzy has likely created an overshoot to the upside that needs to be digested.
4 Catalysts Stack Up This Week
I’m not ready to conclude that Friday’s action was a meaningful shift in the market, but what it does is add more weight to the schedule of catalysts. Iran is still an uncertain mess, CPI and PPI hit Wednesday and Thursday and the SpaceX IPO prices Friday. That is a calendar of events that can produce a follow-through to Friday’s move or a sharp reversal depending on the emotional reactions that develop.
The SpaceX IPO on Friday is going to be a significant catalyst not only because of the huge amount of liquidity involved but because it is going to signal how strong the appetite is for speculative investments. There has been increased caution about the SpaceX valuation but this is a historic event that is going to generate significant emotion. If it is a frenzy of buying then you can be certain that some folks will see it as a significant topping event. If it is a dud then it will also be viewed as a topping event due to the failure.
Strategy
No matter how things develop from here we have a very tricky market. I’ve been urging higher levels of cash and tight trading for a while now and many of the stocks outside of chips and technology did not suffer too much on Friday.
My game plan is to keep tight stops on existing positions while watching for some stocks with strong fundamentals to find some support levels as we head into second-quarter earnings reports. I’m happy to buy some smaller names that are struggling due to liquidity issues.
My primary view is that rotational action will be strong enough to hold up certain areas of the market regardless of what happens with semiconductors, AI and SpaceX.
At the time of publication, Rev Shark had no positions in any securities mentioned.
