Buying Every Share of SPACEX 🚨 IT IS ON ‼️

Key Concepts

• Inclusion Day: The specific date a stock is added to a major index (e.g., Nasdaq 100), triggering automatic buying from index-tracking ETFs.
• Market on Close (MOC) Order: A trading mechanism used by institutions to execute large buy/sell orders at the final price of the trading day.
• Lockup Expiration: A period after an IPO or inclusion where early investors and employees are permitted to sell their shares, often leading to increased supply and downward price pressure.
• DCA (Dollar-Cost Averaging): An investment strategy of buying fixed dollar amounts of a particular asset on a regular schedule, regardless of the share price.
• VIX (Volatility Index): A measure of market expectations of near-term volatility, often referred to as the "fear gauge."
• Capitulation: The final stage of a sell-off where investors give up and sell their positions, often marking a potential bottom.

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1. The Mechanics of Index Inclusion

The speaker argues that a common fallacy among retail investors is the belief that a stock’s price will rise on the day of its inclusion in a major index.

• The Reality: Institutional buying occurs at the very last second of the trading day before the official inclusion date.
• The Process: Institutions utilize "Market on Close" orders to execute massive, automated purchases. Once this liquidity event concludes, the artificial demand vanishes.
• The Aftermath: Without the support of index-tracking funds, the stock often experiences a significant sell-off as institutions offload leftover shares and early investors capitalize on the price spike.

2. Case Study: Rocket Lab

The speaker uses Rocket Lab as a proxy to predict the behavior of SpaceX stock.

• Performance: Rocket Lab saw its price held steady leading up to its June 22nd inclusion.
• The Drop: Immediately following the inclusion, the stock experienced a sharp decline. Within two days, it dropped approximately 11.3%, significantly underperforming the broader market (QQQ), which only dropped about 3–4% in the same timeframe.
• Technical Outlook: The speaker notes that Rocket Lab’s price dropped from $107.24 to $95.00, suggesting a potential further slide toward the $70–$90 range.

3. Strategic Perspectives on SpaceX

The speaker views SpaceX as a massive entity (valued at ~$2 trillion compared to Rocket Lab’s $55 billion) and anticipates a similar, albeit larger, volatility event upon its potential index inclusion.

• The "Bag Holder" Risk: The speaker warns retail investors against becoming "bag holders." He emphasizes that while SpaceX is a strong company, the combination of lockup expirations and the post-inclusion sell-off creates a high-risk environment.
• Employee Selling: Contrary to the belief that employees will hold their shares, the speaker asserts that many will sell due to tax obligations or the desire to lock in long-term gains, which will flood the market with supply.
• Market Sentiment: The speaker monitors the VIX and global market conditions (citing the recent South Korean market crash and AI revenue concerns) to time his entries. He advocates for a "buy the fear" mentality, noting that the current market is approaching "extreme fear" levels.

4. Notable Quotes

• "If they're including them on the 22nd, all the ETFs buy on the day before... It's literally a second. It's a millisecond. And it goes off like that and it's done."
• "I don't want you to be the bag holder. I'm not saying some of these aren't great companies. They are. But if you have an expiration... they're going to flood the market."
• "Change fear for buy and greed for sell."

5. Synthesis and Conclusion

The primary takeaway is that index inclusion is a "sell the news" event rather than a catalyst for long-term growth. The speaker advises investors to avoid buying into the hype surrounding inclusion days. Instead, he recommends waiting for the post-inclusion sell-off and the subsequent lockup expiration to find better entry points. By observing the historical patterns of companies like Rocket Lab, the speaker plans to use a disciplined, data-driven approach to DCA into SpaceX once the initial institutional volatility subsides.