SpaceX lockup expiry tests buyers; technical levels define risk

A supply test is in store for Elon Musk's SpaceX today.

According to the reported lockup terms, as many as 328.4 million shares can be sold on October 9, allowing some employees and early backers to sell shares that were previously restricted after the IPO.

Does this necessarily mean the stock will decline?

No. Eligibility to sell doesn't force every holder to sell. Some might take profits, others might sell a fraction or keep holding. The unlock doesn't generate new shares; it merely makes current shares potentially tradable.

Still, the scale warrants attention.

SpaceX's average daily trading volume over 65 days is about 92.3 million shares. The maximum release today equals roughly 3.6 times that daily turnover—a notable potential supply, though not equivalent to 3.6 days of assured selling.

The key question is how much actual selling appears and whether buyers can soak it up.

Additional supply lies ahead. A second 328.4 million-share tranche becomes eligible on October 24, a Saturday, so October 26 is the next regular session. An even larger tranche of up to 1.3 billion shares may become eligible on the second full trading day after Q3 earnings, about four times the current release.

That's why the technicals are especially valuable. The calendar shows when holders can sell, while price action indicates if sellers are gaining control.

Technical view

Examining price action since SpaceX's June 12 debut, the stock first surged sharply higher. From the $135 IPO price, the first four trading sessions lifted it to $225.64, a 67.1% gain.

That rally proved short-lived.

The price dropped to around $147 by June 23, then bounced to $172.40 on June 30. Selling later resumed, driving the stock to an August 3 low of $104.83. That low was retested on August 6 before buyers began pushing higher again.

Since August 6, the 100-hour and 200-hour moving averages have served as a useful guide. The price has mostly stayed above at least one of those moving averages since then.

The exceptions were short-lived. On September 28 and October 1, the price dipped slightly below both, but each breach lasted just one hourly bar. Sellers had their opportunity but couldn't maintain the breaks.

The moving averages are currently at the following levels:

• 100-hour moving average: $155.96

• 200-hour moving average: $152.09

These are technically important downside levels. A drop below the 100-hour moving average would warn buyers. A break below the 200-hour average, with a sustained hold below both, would tilt the technical bias toward sellers. For traders and investors, these levels are crucial for the stock's technical health.

The midpoint serves as a near-term gauge

On the upside, the recovery peaked at $176.42 on Tuesday, then turned lower over the next two sessions. The low on the subsequent day was $160.

That drop brought the price below the 50% midpoint of the stock's full trading range, which is about $165.24.

That level now provides traders with a close gauge.

If buyers can drive the price back above $165.24 and sustain it, the outlook brightens. The following upside targets are:

• $172.40: The June 30 corrective high.

• $176.42: This week's high.

If the price fails to reclaim the midpoint with momentum, sellers may feel added motivation to push lower, particularly given the lockup expiration raises potential supply.

Nevertheless, sellers still have a challenge. A failure at the midpoint would maintain corrective pressure. A break below the hourly moving averages that stays below would be stronger proof of a shift in control.

Key considerations for traders

We can't know what pre-IPO or IPO shareholders will do. But we can monitor the price and see how it reacts to any increased volume and the technical levels.

If volume increases and support holds while the price rises, that indicates buyers are absorbing selling. If volume increases, support breaks, and the price stays lower, the bearish case strengthens. Volume alone cannot determine how much selling originates from newly unlocked holders.

There's no need to assume an unlock automatically triggers a decline, but there's also no reason to ignore the potential supply.

Identify the levels. Define the risk. Monitor whether breaks can be sustained.

For SpaceX, $165.24 is the immediate upside obstacle, while $155.96 and $152.09 are the main downside support. Buyers hold an edge above the hourly moving averages. Sellers must break them and keep them broken to gain stronger control.