Back as if nothing happened

NFPs headline came in great, but hourly earnings were down, participation or unemployment rate not improving – yields duly spiked, but haven‘t made more downside progress (which would have put pressure on equities) – USD though surged to 100, and that‘s been more of continuous source of (unrelenting) pressure in the risk-off environment (FOMC in 10 days is not yet on market‘s mind).

Earlier days, in spite of turnaround and me calling up till (including) Thursday for a bullish reversal after around an hour of opening bell panicked selling, none such development came. Actually, three meaningful intraday supports gave way, and buying attempt into the close was invalidated just as fast and thoroughly.

Is a Black Monday inevitable? It is not. Clear reversal on weekly, high volume, defensive S&P 500 sectors kind of holding while semis, software, all tech take it on the chin. While I wasn‘t looking for a reversal higher in QQQ:SPY ratio, one often given explanation is SPCX (SpaceX) IPO the coming Friday, and the more than red carpet rolled out for retail investors – from huge retail allocation to any account with mere $2K or higher balance being eligible to take part, to making the stock part of Nasdaq or Russell 2000 indices practically immediately instead of a year later.

Is the worry about retail having to raise liquidity so as to take part in what they‘re objectively looking forward for? Are the SPCX growth projections realistic, is it attracting strong enough bid to cover? While I do think that many of these facts were broadly known, the steady and broad-based selling was the most significant element of Friday‘s session, thoroughly.

Would institutions have such a strong reason to sell in sympathy – and crucially, will they keep selling all the week into Friday‘s IPO? Such a selling can be (later on characterized by the extra element of) margin call somewhere, too.

Here is where I have the doubts ($2T price tag is one thing, the real issue is valuation and temptation to snowball the cash-raising being done in great retail-overowned names that had done great lately (MU, MRVL, ASTS, NVDA, AMD and TSLA to name a few) – sending the pre-IPO impression that SPCX with its valuation and no profits is somehow the next greatest early opportunity to get in cheap while the rest sees outflows and multiples contraction (those earnings are still there, rising – bear market can happen only when those earnings and guidance start to fall, and I‘m not talking TPUs here), would be not helpful to the market or IPO itself.

Hence, we got the vocal Trump complaints Friday that stocks should rise on strong NFPs (headline), or administration willingness to buy stakes in AI companies, a Musk appearance Thursday, or Jensen talking what a great IPO is that.

If FOMC in 10 days isn‘t the key reason for the move – and as the day went, I noted in the intraday channel that rate hike odds didn‘t go – is there a creeping realization that rate hike isn‘t though totally off the table? That would explain gold and silver sliding.

Thursday‘s was characterized by solid improvements in market breadth – can the same be said about Friday?

I‘ve opened the detailed thoughts as a free article today, and dive into charts with scenarios ahead in the client sections.