KOSPI Breaks Trend. Now What?

1.) KOSPI – As you know, I’ve been paying close attention to the South Korean stock market – KOSPI. I commented a few days ago that it had broken trend, but that one day below those levels doesn’t usually change the trend, at least not right away. What we usually like to see before building an opinion is what the price of that thing we’re tracking does over a 3-4 day period. KOSPI is now 4 days below trend after a -6.37% drop overnight. This doesn’t mean that it has to roll over to the US tech market, but it is worth watching. Currently, US Tech (XLK) is acting fine, consolidating their recent gains and holding above its trend. Remember, trend is a direction calculated by the rate of change of price, volume, and volatility. When that level breaks and holds, like KOSPI currently is, rallies are often met with resistance. KOSPI is currently pretty oversold, so a rally soon would not surprise me. If it does rally up from these levels, it will meet significant overhead resistance at about the 7,800 level. If that occurs, how XLK is acting at that time will give us some good intermediate term recon.

2.) SPACE X – I’m often asked about exciting IPOs (Initial Public Offerings), and there has been no more exciting IPO than Space X, now SpaceXAI (SPCX). But history suggests that this is not the spot to be a buyer. Why? The lock-up schedule. This is a schedule of when insiders' shares can be sold. Those special investors’ shares are “locked up” from public selling for a certain specified period. Here’s the schedule of key unlock timelines and the amount of the float that will be unlocked for sale:

~Late July / early August (after Q2 earnings): 20%

~Aug 21 (day ~70 post-IPO): ~7%

~Sep 10 (day ~90): ~7%

~Sep 25 (day ~105): ~7%

~Oct 10 (day ~120): ~7%

~Oct 25 (day ~135): ~7%

~Late Oct / early Nov (after Q3 earnings): ~28%

~Dec 8–9 (day 180): Remaining standard lock-up shares.

~June 2027 (day ~366): Elon Musk + certain major holders' shares.

That is a lot of stock that has the potential to come to market for sale. It doesn't mean they have to or will sell, just that they can. Oftentimes, as the lock-up shares are made available for sale, the stock price of that company can come under pressure. This has nothing to do with SpaceX being a great company or not. They are! They are likely one of those transformative companies. But it pays to be patient with big IPOs… especially those that brought so much excitement and hype. For now, the average investor in SPCX is underwater.

3.) CAPITAL – Is there a lot of capital in the system? Capital that investors can, and likely will, deploy? Yes. How do we know? Major companies keep asking investors for more, and they keep giving! SpaceX had the largest IPO ever with a $75 billion raise. Then, two weeks later, they went to the bond market for an additional $25 billion raise. Then came SK Hynix, one of the world’s largest semiconductor companies, based in South Korea, I might add. They just raised $26.5 billion in the largest ADR (American Depository Receipts) offering ever. This is where foreign companies can get listed on US exchanges. That offering exceeded Alibaba’s (BABA) that stood since 2014! Google recently raised $80 billion in bonds, and Nvidia raised $25 billion in bonds. We’ll likely see more deals like all of these. As long as investors are willing to write checks, companies will keep asking for more money. That’s how capital markets work. In fact, it’s usually a sign that conditions are healthy. Companies raise money when they can because they know that window won’t stay open forever. But you know who else benefits from capital raises like this? Banks. Investment banks get paid to bring these deals to market. Stock exchanges get paid to list them. The bottom line is that there is a lot of global capital available. Some estimates put global private market funds at over $4.6 trillion. That’s a lot of “dry powder” to keep an eye on. This likely continues to get deployed in these larger, more liquid deals.