🚨I’ll be live at 3:30 p.m. ET with Nate🚨
We’ll cover where this correction lands and what to watch from here, the asset Nate wants to buy at the lows and more [tap to join us for Closing Playbook]!
There’s a developing situation with the SpaceX IPO that seemed straightforward a week ago but is now becoming less clear by the day.
Here’s what changed: The S&P 500 confirmed they will uphold their rule preventing inclusion in the SPY ETF during the first year of an IPO. Early speculation suggested they might break the rules and allow SpaceX to enter SPY and the Nasdaq 100 (QQQ) within 10 to 15 days — but that is off the table now for SPY.
The Nasdaq 100 (QQQ), however, is a different story. Fast entry rules are still on the table for QQQ, which means we could be looking at something unprecedented.
At the same time, the market is flirting with a potential regime change. Think of regime change in markets as changing road conditions — you don’t want to speed when the road turns slippery. That means controlling your risk and adapting your trading, not hitting the gas.
The First Stock in QQQ But Not SPY
If SpaceX gets included in QQQ, it would be the first ticker symbol to be in QQQ but not SPY. This would be the first time any mega-cap name lands in QQQ but not SPY, introducing a possible divergence between these two indices that we have never seen at this scale.
We could start to see wild divergence between SPY and QQQ — a dynamic that does not typically exist with mega-cap names. That is a layer of volatility and uncertainty most traders are not prepared for.
Not being included in SPY takes some of the fuel out of the IPO excitement, but QQQ inclusion alone could still create significant movement. The question is whether it will be enough to sustain the bullish momentum we saw before the recent breakdown.
Market Sentiment Has Shifted
Here’s the reality: If the IPO had happened last Thursday, it would’ve been clear this market was going higher. But after the breakdown we’ve seen, there is far more uncertainty now.
The excitement around the SpaceX IPO today is not the same as it was last week because we are in a potential regime shift — no longer in the hyper-bullish period that made this IPO seem like an automatic win.
On top of that, volatility has jumped. Options are now both more expensive and less liquid — FedEx (FDX) at-the-money options had spreads as large as $3, making even otherwise good setups unattractive. Elevated volatility means you’re paying more for every trade while getting worse execution, which is the exact opposite of what you want during uncertain market conditions.
The pros use a checklist — SPY trend, gold, the SPY/gold ratio, TLT (bonds), volatility (the VIX) and cross-asset correlations — to spot when it’s truly time to shift gears. Right now, the checklist warns us this is not a moment for big bets.
Bottom line: We’re not getting paid for this extra risk, so I wouldn’t put in extra money and go wild right now. Now is when traders are most likely to confuse luck for skill. Even if you win big right now, that does not make it a good trade — just a lucky one.
Discipline beats gambling in a regime transition.
While my opinion has changed on whether or not SpaceX is a buy or not, that’s just me…
We have a great crew that’s all over this IPO. In fact, you can join Graham, Lance, Alex and Nate along with the great Emily Turner as host at 10 a.m. ET on Friday.
They’ll give you the full rundown on how they’re playing the biggest IPO of all time!
Kane Shieh
Kane Shieh Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
Important Note: No one from The TradingPub team or Kane Shieh Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. I Thought I ‘Retired’ to Be a Full-Time Dad…
Until I discovered a trading breakthrough that dragged me back!
