r/options
Treating SPCX as an index
Author argues SPCX is an overvalued retail-hype stock facing textbook capitulation as macro headwinds hit space sector first.
- SPCX is a ludicrously overvalued hype stock dominated by retail FOMO traders with predictable psychology
- Space exploration is the lowest priority in economic downturns, making space stocks the first to be dumped
- Macro headwinds including rising inflation, weakening dollar and economic instability will trigger textbook capitulation from paper-handed retail
I have a weird tingling feeling, that the spcx chart is surprisingly easy to read. Here's why:
King Elon is holding majority of the stock, and until now, big players are not part of the play. It's only retail, trading on hype and fomo. Meaning that the volume is majority "average Joes" and thus average psychology and trading mentality. This means that every "usual pattern" should play out as textbook examples, as we have a perfect representative of average traders.
Volume is artificially low, as the king himself is not touching the buttons, nor are employees (yet). Only retail IPO'er or late-coming bagholders. Everyone fearful for their hard earned money and savings accounts. Which should underline that typically mentality-based trading patterns should play out as textbook examples.
The volumes traded intraday in spcx is comparable to most index funds, eve surpassing huge index ETFs. Thus we are working with a volume float that make all of the above points statistically significant as the pool is big enough to matter.
And lastly. Economies are based on prioritization. First everyone need food, shelter, water, safety, ... And the absolutely last thing on that list of necessities is space exploration. Thus if the going gets tough, the first thing we sacrifice are the futuristic space endeavours.
Since trump is doing whatever he can to pump and dump the US economy for his own enrichment, and he has been chickened out on middle eastern killing spree and surrender-like peace deal (which didn't even hold a weekend), plummetting dollar, rising inflation and bonda, i think it's safe to say that the US is facing difficulty ahead.
Thus the first sandbag to dump are the space stocks.
Hence, spcx, being a ludicrously overvalued hype stock, should be the first one to abandon by paper handed retail, at any sign of trouble ahead.
And since every second household is trading it, the patterns of capitulation should play out exactly as anticipated. Predictable.
TLDR; short spcx, going to try intraday puts to play the inevitable downturn between blips of hopeful recovery.