TSLA is Tesla, the glorified golf cart maker, that is topping out on the weekly basis. The best fade on Wall Street are the guys that pick the stocks that enter and exit the major indexes. They are always incorrect. If a stock is booted from an index, it is sure to rally to the moon over the following year. If a stock is taken into an index, it folds like a cheap suit, and instead of the index receiving the phony bump higher or at least receiving support to remain elevated, the new stock creates a negative weight on the index.
The big news is Tesla driving into the S&P 500, the US stock market, the SPX, come 12/21/20 (12/21 is a palindrome). TSLA tags 599 this morning on the news that the addition will occur all at once rather than in two tranches. Sounds like a date CEO Elon Musk would prefer and perhaps he will make a statement the night before at 4:20 (420). By the looks of the chart, humorously, that is where TSLA is likely headed, down to 420, as the S&P 500 bulls will watch in horror during the coming weeks and months.
TSLA has exploded +40% higher since the 11/16/20 announcement that Tesla would be included in the S&P 500. Flags are waved, banners raised, dogs and cats are living together. TSLA enjoys a +580% rally this year making Musk a wealthy man. TSLA is the biggest company ever added to the SPX and will be the seventh largest company in the index. Market liquidity and TSLA liquidity is a concern when the 12/21/20 inclusion date rolls around.
The bulls cite China sales, along with US sales, as strong drivers of bullish stock prices going forward. On the bear side, do you think all the folks that wanted a Tesla already ran out and bought one? Maybe. Why would you buy an electric car when there is a gas station on every corner? That's stupid. And do not say for environmental reasons since fossil fuels produce the electricity that is its fuel and a boatload of chemicals, resins, plastics, paints and metals go into producing the car.
In China, Musk is in the wine and roses phase right now just before the filthy communist's b*tch slap him as they have all other US companies. The only reason the commies lay out the red carpet for Musk is the technology. China is handing all of Tesla's factory know-how to the Chinese rivals; that is why they wanted the plant built there. Duh. In a few weeks or months, once the dirtbag Chinese IP thieves feel they have raped all knowledge from the Tesla plant possible, they will send in the regulators to start nitpicking the plant. Tesla will experience shutdowns of a few days at a time. The hassles against Tesla will increase as the other Chinese electric carmakers gain share and takeover.
A couple years from now, Tesla will be an empty shell tossed upon the Chinese shore. Musk is not that dumb, so he must either plan to skate away from Tesla asap so he is not around for what he knows will happen as well, or, perhaps he is that stupid, like Cook at AAPL, laying in bed with China thinking that the playing field is fair and everyone can benefit. Never lay in bed with a filthy communist; they will slit your throat in the middle of the night.
The red rising wedge is ominous since the collapses from these patterns can be quite dramatic. The stochastics, money flow and RSI are overbot or coming off overbot levels. The red lines show negative divergence across all chart indicators, sans the MACD, as price makes the matching and higher highs. A neggie d smackdown is on the come but the long and strong MACD line adds a little drama. Considering the MACD, TSLA should pullback on the weekly basis but perhaps only for a week or two, then back up for another matching or higher price high and, at that time, the MACD should be neggie d, so a longer multi-week down move will begin. The other outcome is that TSLA simply begins falling now and the MACD will follow it down.
The TSLA inclusion will cause disruption with money managers selling other positions to buy TSLA since many are obligated to own the major stocks in the indexes. It is dicey how it will work out over the next 3 weeks but regardless, the charts are not pretty for the future.
Price tagged the upper standard deviation band right now at 568 so the middle band, the 20-week MA, at 413, and rising, is on the table, as well as the lower band at 257. Price is extended above its moving average ribbon so a mean reversion lower is needed.
The Aroon green line is at maximum overbot levels and the red line is at maximum oversold levels both indicating that the party is in full swing with maximum euphoric bullishness occurring with Tesla. Analysts tout the stock as a glorious buy that will grow to the sky but when you ask them if they own a Tesla car they say, "who, me?" The Aroon lines will converge creating a negative cross (red circle in margin) which will verify the ongoing selloff on a weekly basis.
The ADX is at 54 indicating that the rally this year is verified as a strong trend higher. When TSLA rolls over going forward, the ADX will likely roll over as well and likely negate that strong trend when the ADX drops below 30. The ADX is only flat as price rockets higher which indicates that the strong trend is waning.
TSLA should top out and roll over on the weekly basis starting anytime. Perhaps the shorter-duration charts can pinpoint when. Looking at the TSLA daily chart, it is displaying neggie d and agreeable to a pullback on the daily basis going forward. Price is above the standard deviation lines for 9 days running; that's wild. It represents off-the-charts euphoric bullishness. The 2-hour chart topped out yesterday on negative divergence and should remain weak in the hourly time frame.
TSLA can be shorted right now and going forward butt it is likely best to scale-in because of the MACD line. If prices continue floating higher, simply add to the shorts. Of course use physical or mental stops depending on your risk tolerance but this puppy is about to become soggy and begin a multi-week down move. S&P futures are up +36 before the Tuesday open so the bulls want to do more partying today.
On the TSLA monthly chart, the MACD remains long and strong so after the multi-week pullback, Tesla may launch another rally to bring price back up to current highs one or two months out. At that time, the long-term multi-month and multi-year top is in for the much-hyped Tesla. In other words, Tesla is topping out now over the next couple weeks, on the weekly basis, so a multi-week down move will occur, but the door remains open for price to come back up on the monthly chart, say in late December or early January, and that should be THE top, if THE top is not occurring right now for months, and perhaps years to come, on a long-term basis. Keystone is not long or short TSLA and will probably not play it since it is a psycho stock. If you dabble, only do so on the short side. It may be a wild ride all over the place into the 12/21/20 inclusion.
The S&P 500 is booting a stock from the index since TSLA is coming in and will announce that stock on 12/11/20. That is the stock you want to go long. Those folks are the best fades. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 10:36 AM EST: Wheee! Whoopie! Powell and lame-duck Mnuchin are testifying to the Senate promising that more easy money is on the way. TSLA is up +1.5% to 576.34. HOD 597.85 not as high as the pre-market.
Note Added Thursday Morning, 12/3/20, at 4:30 AM EST: Musk is telling employees to find ways to cut costs so the company can become more profitable going forward and meet Wall Street expectations. GS says TSLA will jump +30% next year from 455 prior target to 780. Of course they do; they probably own a boatload. They want everyone else to remain excited so they can distribute the shares as price moves higher on hype, if it does. TSLA sits at 568 down -3% this week thus far with a low at 541.TSLA bounces +3% on the GS news to 584.
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