Space ETFs Are Soaring Ahead of the SpaceX IPO. Can the Rally Continue?

Now as much as ever, it seems, it’s a narrative-driven market. The conflict in Iran dominates the financial Twitter-sphere, with each statement from the White House and reply from Iranian officials steering oil up or down. As it stands, Brent and WTI are well off their highs from March and April. Stocks also seem to be sniffing out an eventual lasting ceasefire in the Middle East.

Geopolitics usually leans more bearish than bullish. On the opposite side of the ledger, however, is the awe-inspiring size of upcoming IPOs. SpaceX (SPCX), which is expected to begin trading in early to mid-June, has captured intrigue from both bulls and bears; doubters easily poke holes in the enormous 90-plus price-to-sales ratio, while believers can point to space-themed ETFs that have gone up and to the right.

Betting on the Final Frontier

Today, let’s put the spotlight on some of these funds that are taking the market by storm. Will it be a classic “buy the rumor, sell the news” event, with retail investors holding the bag on many unprofitable hope-and-dream stocks? Or are further gains on the horizon?

Whatever the final frontier holds, the charts will likely be the first to signal trend changes. As always, set aside the stories and don’t lean too heavily on valuation multiples if you want to maintain an edge.

Playing SpaceX Through NASA

The Tema Space Innovators ETF (NASA) is the largest space ETF by market cap. Since lifting off on March 31 (well-timed following the market’s low in the previous session), shares have returned 61%. NASA is unique in that it owns privately held SpaceX stock. As what will likely be the world’s largest IPO prepares for launch, traders and investors alike have been itching to get their pre-IPO exposure through this fund.

Technically, I prefer three years’ worth of price history to perform a full chart assessment. Here, we have less than three months to work with. Still, let’s open the hatch on NASA.

Notice in the chart below that the $1.4 billion AUM ETF ascended from $27 to $39 in about four weeks. Last Friday’s action was the most interesting, as NASA gapped up from $36.50 to $37.50, eventually eclipsing its May 18 high. I’m using the 1-minute period on SharpCharts to pinpoint price action. The 50-period and 200-period moving averages are on the rise, which is positive, while the RSI momentum oscillator at the top of the chart is holding above 60.

Keep an Eye on the Volume Gauge

Volume analysis is critical here. There’s a high amount of shares traded down to $34. Thus, I expect dips to be bought into the mid-$30s. Adding to NASA on a gap fill near $36.50 could make for a solid risk/reward setup.

UFO Is No Longer Under the Radar

NASA is arguably the best space-themed trading vehicle. Zooming out, the Procure Space ETF (UFO) has been a winning investment for longer-term speculative dollars. With its inception being some seven years ago, this $1.0 billion AUM fund has a similar makeup to NASA in terms of exposure: heavy in Industrials and Communication Services, with a splash of Info Tech. Both portfolios are top-heavy, as UFO’s largest 10 holdings account for about half of the allocation.

UFO does the best job illustrating how hot space has become in the trading world. Its volume was only about 15,000 shares in 2023 and 2024. Recently, it’s been doing 1.5 million. Given the share-price climb, the dollar-volume increase is even more massive. With high liquidity and a long price history, UFO may be the best space-theme proxy, even if it doesn’t hold SpaceX stock.

A Trend Still on Mission

In this chart, applying a log scale is key to assessing the rate of the trend. UFO troughed at $15 in April 2024, ultimately quadrupling to last week’s settle near $62. The 200-day moving average is down at $42, so price is a whopping 50% above that trend-indicator line. Overall, the rally has actually been orderly, without many large gaps over the last six months, when volume began to swell.

I see support just under $49, with another point of polarity from $41–$42. The RSI, meanwhile, has ranged from 40 to 80 all year, which helps confirm the price uptrend. Like NASA, there’s high volume by price below today’s level and nothing but open space above last week’s close.

Other Space Ideas

There are plenty of other space plays. The ARK Space & Defense Innovation ETF (ARKX) is more diverse than the aforementioned thematic funds. Other ETFs include the Global X Space Tech ETF (ORBX), along with recent high-flyers like the State Street SPDR S&P Kensho Final Frontiers ETF (ROKT), and even the Roundhill Space & Technology ETF (MARS).

The Bottom Line

Space ETFs have taken the market by storm this year. Volume has surged, prices are up and to the right, while the SpaceX IPO could transcend the equity universe in June. Traders should keep their position sizes small with this highly volatile and story-based investment theme, but the charts appear strong. Uptrends are in place across space ETFs, while RSI readings are not yet to the moon. For now, technicals will be your co-pilot as you manage risk leading into and after the SpaceX IPO.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.