Space companies not named SpaceX got run over on Friday, and I’m sure a lot of you lost money holding names like SPCE and MNTS over the weekend.
But there’s a second leg to the space sympathy-play that is just setting up.
The last time I saw this tape play out in the crypto sector, I printed gains for months using a very simple strategy…
When Coinbase listed in 2021, the crypto names that had run on the hype rolled over the day it started trading.
For weeks they kept trying to climb back, and they kept failing.
So I stopped guessing where they’d bounce. I shorted the spots where they stalled out.
One of those fades was Grayscale Ethereum. It handed me $64,571 on a single red day, and I ran that play for months.
The same thing just hit the space sector. The stocks people bought to ride the SpaceX hype, names like Virgin Galactic, Momentus, Redwire, and Rocket Lab, got crushed the day SpaceX started trading.
If you spent last week buried in SpaceX coverage, you’re not alone. And if you missed the run-up, or you got stuck holding one of these names when it cratered, you didn’t miss your shot.
The setup is lining up again, and I‘m running the same game plan I used on Coinbase.
Don’t Buy The Space Dip
These space names won’t snap back fast. The money that ran them up was never really about the companies. It was traders reaching for a way to own SpaceX before they could.
Now SpaceX itself is trading. That money has a home now, and it’s parked there.
For the space hype stocks to climb again, fresh buyers have to replace the money that is now in Spacex, and that will take time.
Buying these names back at today’s beaten-down prices is a huge risk. Nobody knows which one of them will recover and how fast. So I don’t try to guess.
I wait and see which names bounce, but I’m not interested in them until they reclaim their resistance levels from the initial IPO pop.
When one claws back to that old level and stalls there, I short it. I set my stop just above that level, so if it pushes higher instead of failing, I’m out fast.
How to Build Your New Space List
Virgin Galactic is first on my list.
It got hit the hardest, down about 32% the day SpaceX listed, and there’s almost no business under it. It’s a space-tourism company that barely brings in revenue, so when it bounces, I trust that bounce to fail.
Momentus is the same kind of name.
It jumped about 44% on Thursday’s hype, then rolled over and gave it back.
Redwire is on the list too, just less violent about it.
Rocket Lab is different. It actually launches rockets for paying customers, so it can hold a bounce instead of rolling back over, and I don’t fade it like the others.
That’s just the top of the list. The ones I think are most likely to move again. But nobody knows for sure if any of them will or not. So I’m happy to wait and find out.
Know The Risks
One straight warning before you do anything with this. Shorting carries more risk than buying.
A long can only cost you what you put in. A short has no cap, so if it keeps climbing, the loss keeps growing.
You might not be set up to short-sell in your account, or you’ve never tried one before. I’m running this from an account built to take that risk. DO NOT try to copy my trades.
If you can short (and have the experience to do it), this is my plan: wait for the bounce to stall at the previous highest daily candle level, then short it there with your stop-loss just above.
Watch for one of these names to climb back to where it topped and stall. If it never sets up, you skip it and wait for the next one.
In the meantime you can learn all of my best strategies right here.
Stay sharp,
Jack Kellogg
*Past performance does not indicate future results
