Short Week (I'd Never Short)
187: The Weekly Selection
Introduction
Hello all and welcome in to another iteration of the weekly selection where I cover my thoughts on where the market is coming from and where it is heading.
Before we jump in I would like to quickly showcase two pieces of recent work to check out as well:
Newest Podcast:
Latest Article:
I highly suggest checking out both of these pieces.
Anyways, lets jump in!
Context
The market traded sideways last week, and has now not made a new weekly all time high for the first time this cycle.
This is not bearish
Even after such a tremendous run on markets, I am still met with questions like:
“do you think this is almost done and the market will go down?”
“There is no volume, surely this cannot sustain?”
Let me start by saying, the market does not just have to go down if it is no longer going up. Periods of sideways consolidation on markets can still offer great individual stock runs to trade. For example, from the start of the year to march, the market went down but photonics stocks maintained a consistent uptrend. Below I have pulled a comparison from 2023, where markets made a strikingly similar run to today, and right about now experienced a multi week consolidation where leadership stocks ran, but indexes cooled off (sideways).
Note the blue pivot, and the lack of volume from 2023. If we continue this analog, we can expect a few more weeks of sideways before moving higher. I would be paying attention to leadership stocks because its likely that they will breakout before the market does.
State of the Themes
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Energy:
XLE energy is about halfway through what I believe to be a meaningful weekly flag. I think that oil can run with tech in this cycle, assuming nothing is solved in the middle east. The nice thing too is that because my portfolio is so technology focused, even if this chart falls apart the market will continue since the standard ideology is that energy down tech up.
IPOs:
The IPO market is seemingly hot, but in total volume is not actually doing too much. See below:
As we can see, the volume for the start of 2026 is slower than years past, indicating that we have not yet reached euphoric levels of public offerings. That being said, over the next few months the following companies are expected to go public:
SpaceX: Targeting $2 Trillion
Anthropic: $1.5-2 Trillion
OpenAI: $1 Trillion
Between just these 3 companies, over 5 Trillion dollars worth of liquidity will be displaced. And to clarify, I do not mean that this money will appear out of thin air, but it will require funds to draw immense capital from other investments to make for the giant on their books. The target as of my writing this is $75B actually raised on IPO day. Not only will this be a monumental capital event, but also doing so at a ridiculous valuation.
Elon Musk’s Tesla has maintained unbelievable financial metrics for years, but that was after a decade plus of customer and investor trust development, something SpaceX does not have. I wonder if it will be able to maintain the 83x sales that it is going for, which for comparison is significantly higher than NVDA at 20x.
All of these factors culminate into the idea that these IPOs will be the top for the market. Throughout history, this has been proven true. On one hand, I want to recognize the historical precedent that has been set by mega IPOs topping markets, but then I remember that the reason the market tops is the actual volume of IPOs, not just the big ones. In the graphic I shared, it is clear that we are not seeing the acceleration in volume yet, which leads me to believe the market may be able to soak these IPOs and continue higher, as it did with Saudi Aramco in 2019.
If the most recent IPO of Cerebras ($60B valuation) is any indication, it might not be as bad as we think, as the stock is barely down after being 20x oversubscribed and IPOing for double the valuation it had just one week prior.
In any case, I hope this gave you all something to think about this week. I will release another article tomorrow covering the finites of my portfolio, and I encourage you all to come along and read.
