🚨Opening Playbook is off today🚨
Between my travel issues and Graham’s meetings, we have to cancel today. I do however have an opening today where I will be joining Emily Turner, Jack Carter, Jeffry Turnmire and Kane Shieh at 11 a.m. ET for the Summer Stock Roundtable [tap to join us]
I’ve been bullish. I’ve been riding this market higher. I’ve talked about dips being buyable and rallies still having room to run.
And honestly, that’s still where I lean right now. But that doesn’t mean I’m ignoring the shifts happening underneath the surface.
We’re starting to move away from the everything-up environment. Some parts of the market are still pushing higher while others are beginning to hunt for real value again. That’s an important change, because once the market gets more selective, new supply starts to matter a lot more.
That’s where the scenario comes in that would finally make me step back and say, “Okay, maybe this thing’s getting stretched.”
It’s not about the Federal Reserve surprising the market. It’s not about some technical breakdown either. It’s more structural than that.
The setup I’m watching is simple: If major IPOs start hitting early, the S&P 500 rips another 15%, and a big part of that move comes from what I call IPO air, that’s when I’d start getting cautious.
The IPO Air Problem
If companies like SpaceX and Anthropic end up going public sooner than expected, there’s a dynamic here most people still aren’t fully paying attention to.
Because of recent index inclusion rule changes, these massive IPOs could enter major indexes almost immediately. And once that happens, passive funds don’t really have a choice. They buy automatically.
That creates a wave of forced inflows that can push indexes higher regardless of whether the broader market is actually strengthening underneath the surface.
And look, this isn’t me saying those businesses are fake. They’re not. Anthropic especially has real growth and real revenue behind it. This isn’t some repeat of the dot-com bubble where companies were trading at absurd valuations with no actual business underneath.
The issue is speed.
Even strong companies can create instability if too much supply hits too quickly. Markets can only absorb so many giant new valuations at once before things start getting overheated.
If we suddenly stack multiple mega-IPOs on top of a market that’s already extended and the S&P 500 launches another 15% mostly because passive money is forced to chase, that’s when the rally starts looking more mechanical than healthy.
And that’s the kind of environment where sentiment can flip fast.
What I’m Watching Now
Right now, I’m still bullish overall. The trends are intact and the structure still looks healthy to me.
But if we start seeing a rush of major IPOs hitting the tape while indexes explode higher mostly on automatic buying pressure, I’ll be paying very close attention to how much of that move is real versus how much is just passive flow distortion.
This isn’t a prediction I’m making today. It’s a scenario I’m keeping in the back of my mind because knowing when to change gears matters just as much as knowing when to stay aggressive.
If those signs start lining up together, that’s when I’d probably say we’ve pushed this market too far, too fast — and it may finally be time to get defensive.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
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P.S. While Others Are Winding Down for Summer, I’m Going Hard on My Top 3 Buys for May
You might think things would take their usual turn this year, but you’d be in for a surprise.
In fact, instead of “selling in May” I’m kicking things up a notch with my top 3 buys for the month.
