Alessio Rastani gives a technical analysis update on SpaceX stock
Trader and market analyst Alessio Rastani reviews the SpaceX stock chart, asking whether it has finally bottomed after dropping 50% from its IPO highs.
Summary
Alessio Rastani presents a solo technical analysis update on SpaceX stock, recorded during a visit to the north of Scotland. He revisits his earlier warning — made alongside a colleague at the time of the SpaceX IPO — that tech IPO stocks typically drop around 50% from their initial highs before finding a base. SpaceX did indeed fall to approximately $112–$113, which represented that 50% level, and has since bounced. Rastani argues that the bounce appears impulsive in Elliott Wave terms, consisting of five waves, and was accompanied by positive divergences on lower timeframe charts — both of which he reads as signs that a probable bottom has formed. He cautions, however, that a break above the $150 resistance level would be needed to add further confirmation, and notes that SpaceX could also remain range-bound between $112 and $150 for some time before making a decisive move higher.
Key Takeaways
FULL TRANSCRIPT
Introduction and context
Alessio Rastani: In this video, I want to talk about the chart of SpaceX. You've probably seen my previous video on SpaceX, and I just want to do a quick update on the stock and ask the question: has SpaceX finally bottomed? Are we about to start a new uptrend?
I'm making this video from Inverness, in the north of Scotland, which I came to recently — actually my second visit here. It's a great place, and a great escape from the heatwave of London. I recently went to see Fyvie Castle. This area in the north of Scotland is where part of the film The Odyssey was filmed.
The original IPO warning and the 50% drop target
Back on the day the SpaceX IPO came out, I warned — along with my good friend Manuel — that it's a really bad idea to just jump in whenever the IPO of a tech stock comes out. In the past, when we see tech IPOs, price typically tends to drop in the initial stages. My personal view is that I'm very cautious when a new technology IPO comes out. Initially it may do well, but over the next several months after the initial rally, these stocks tend to drop and actually go below the initial price action.
The reason is that most tech stock IPOs tend to initially go up because of the hype — a lot of excitement, news media, people jumping on the bandwagon, especially with a stock related to Elon Musk. So when SpaceX rallied all the way to about $225–$226, we were warning that most tech IPOs tend to drop by 50% from their highs. That's usually the pattern. And I gave a warning at the time that there was a probability SpaceX could drop to about 50% from its highs. Here's a clip from that video:
Alessio Rastani: "Usually most tech IPOs tend to drop again in their initial stages to about 50% of their highs following the IPO. And we can see the highs at this level here, about $226. And as we know, if we divide 226 by 2, that gives us this level here at approximately $112.82. And that is a potential level that SpaceX could drop towards if support were to break."
Where SpaceX stands now — support held and an impulsive bounce
As you heard in the member videos, we said the potential target could be about $112–$113 — which is 50% from the highs — and SpaceX has so far managed to hold that level of support.
Given that SpaceX has held that $112–$113 support level and bounced from it, the rally from that support level appears to be impulsive. In other words, it's composed of five waves. If you look at the structure of that rally, it appears to be a five-wave pattern. For those of you who follow Elliott Wave theory, that means the probability has increased that a potential bottom may have formed, because the bounce is impulsive.
When SpaceX was dropping down to those levels, I was also saying in the member videos that we were seeing a number of positive divergences in the lower timeframes — like the hourly chart. Positive divergences in the lower timeframes are usually a good sign that perhaps a bottom may be forming. We also need to see a break of resistance. And we did manage to rally back to the $147–$150 level, which was the breakout point — the key support level. But $147 is now resistance, and SpaceX has stalled at that resistance level at this moment in time.
Conclusion — probabilities, confirmation needed, and the range scenario
Keeping it simple: the fact that SpaceX has managed to hold support at the 50% drop level of $112–$113, with positive divergences in the lower timeframes, and has then rallied impulsively from that base — I think the odds have significantly increased that a potential bottom may have formed on SpaceX stock.
Can we be absolutely certain? No, of course not. There are never any absolute certainties in analysis, because the markets are chaotic, uncertain, and unpredictable. But I would say the probabilities have increased as far as I can tell on that chart. If SpaceX drops again below $112–$113, it may once again go and make new lows. But given what we're seeing on the chart, it does seem to indicate that a likely bottom is potentially forming.
To increase the probability even further, what I would like to see is just a bit more confirmation — another break of that recent high near $150. If SpaceX can rally and finally break through that $150 level, I think that would further increase the probability and bring extra confirmation that a likely bottom has formed. So to play it more safely, I think we could wait a bit longer and see if SpaceX can actually break through that resistance at near the $150 level.
There's also another possibility: SpaceX could simply be stuck in a sideways range between the recent lows and the $150 range. It is possible for SpaceX to go sideways for a while in this $112–$150 range before finally breaking out to new highs.