Stock markets are highly active environments.
A developed market can contain thousands of individual equities and hundreds of thousands of participants, each of which has its own story and factors that influence price changes and sentiment.
The net effect of that is that there is almost always something going on if you know where to look.
The role of a trader is to interact with as many high probability (of success) opportunities as they can, within the boundaries of their risk and money management framework.
However, traders also need to exercise a high degree of judgement from a top-down perspective, bearing in mind that capital preservation is at no.1 in the traders' rulebook.
What I mean here is that we need to be mindful of the market structure and broad-based sentiment.
Currently, technology stocks look and feel stretched, or at least the perma-bid that supported the stocks and drove prices higher over much of the last two years doesn't seem to be present right now.
Trading Down
Source: Barchart.com
Only 4 stocks in the S&P technology sector are up over the last 5-days; many of the others look like this.
Source: Barchart.com
Buying the dip has worked, by and large, over the last 2-years, but to me this feels like a moment in which it might be safer to step aside rather than jump back in.
Why do I say that?
Well, the war with Iran is showing no signs of ending; if anything, it looks like it could escalate once more.
The Korean KOSPI index, which is heavily weighted towards 2 stocks, SK Hynix and Samsung
(two of the world's major memory chip manufacturers), is almost certainly in a bubble.
I think that’s confirmed by posts like this one:
Source: LinkedIn/Natalie Wildstein
I say this even though South Korea was the market I picked to outperform the S&P 500 in 2026.
EWY, the MSCI South Korea ETF is up +89.0% YTD and by +189.0% over 2-years. However, the factors behind the rise have become highly questionable.
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Added to which the largest IPO in history, SpaceX, is coming to the market
This is a listing that’s so large it will literally transform equity markets globally and, in particular, those in the US. Most notably, the Nasdaq has amended its rule book to accommodate the listing and its near-certain inclusion into the Nasdaq 100 index.
During the GFC or Global Financial Crisis of 2007/8 the phrase “Too Big To Fail” was coined in relation to businesses (banks, large insurers, etc.) whose collapse would have presented a systemic risk to both national and global economies.
SpaceX doesn't represent a threat to the world's economies in the same way that the banks did, but anything less than a completely successful listing. That is, a large and sustained premium to the IPO price lots of after-market interest, from institutional and retail clients. And no repeat of the debacle when Facebook (now Meta Platforms) listed more than a decade ago, when the exchanges' trading technology failed under the weight of orders.
Any deviation from a successful outcome could derail bullish sentiment completely.
The markets are navigating waterways at least as complicated and dangerous as those in the Persian Gulf.
I think we need to recognise that fact and take a risk-averse stance; sitting on your hands and doing nothing goes against the grain for active traders.
However, sometimes not trading can be the most profitable decision you ever make.
I don’t think we are facing a crash, but a sharp correction, such as those seen around the introduction of tariffs or the start of the war with Iran, doesn't seem out of the question if the stars align.
One of my mantras is that “sentiment changes on the margin”, and the change spreads rapidly from there.
One way or the other, there are likely to be plenty of trading opportunities post the SpaceX IPO, exercising a bit of patience now might put you in a better position to take advantage of them when they occur.
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