Wall of Supply VI - SpaceX Post-Mortem
Plus: Rotation Trades and a "Corner of the FT" Event Trade!
The SpaceX IPO has finally launched, closing up +20% and making Elon the World’s first Trillionaire.
As we said in our previous post, a key “tell” of whether the “Wall of Supply” can continue, is to monitor whether the IPOs “pop” on the first day and people make money off them. Well, SpaceX has made a lot of money for employees, VCs and now public market investors so that’s a tick in the box✅. It’s only been a day, so lets see how it goes.
We also review the Rotation Trade setting up with a potential Hormuz re-opening (37th time lucky?!).
Lastly, we present an interesting Event situation using our most advanced ShrubGPT model aka the “Back of the Envelope” (because I didn’t have an FT lying around to use the “Corner of the FT” 🤭).
Checking “Under the Hood” of the Market
With all the excitement of the last couple of days, the MAG7 are down 9% from the highs, since they were used as an ATM for liquidity …
…which keeps us fixated on our “Nasdaq Meme Levels”:
The “Buffett Meme Top” at NQ 30,666
The “Shrub Meme Bottom” at NQ 28,444
The “OpenAI Meme Top” and the “SpaceX Meme Top” at NQ 29,666
(Coincidentally the NQ closed on Friday at 29,662)
If you think this is a joke, it’s because it really is.
Rotation Setting Up
On a positive note, thanks to progress with Iran, which we hope results in a deal this time (37th time lucky!), we saw some “tepid” Rotation into “non-AI” trades with Europe, Copper and other Metals catching a bid and the Russell making new all-time-highs, though Semiconductors were also strong because none wants to sell what’s working. The one sad spot remains China.
Europe in particular looks pretty good. Europe outperforms the US when Crude falls (see chart), for the simple reason that Europe doesn’t have reliable energy supply (with France being the exception thanks to Nuclear). In spite of its problems, this chart makes me want to own more “Europe”, and I know it sounds disgusting but wait until you see the European football teams in the World Cup and you might get excited to.
