Hello Traders,
I am back from holidays and a lot of action happened during the past month.
The SP 500 Future did hold the 3000 and broke above the 3150 to make a fresh high at 3290.
Dollar weakened due to the colossal amount of money printed by the FED and as a consequences pushed the GOLD to an All time high (Around 1950$).
So inflation is most likely to eat the value of your dollar and smart people are looking at the stock market as a way to protect their wealth.
Tech is profiting big time from this strategy and an outsider is also taking advantage of this fear, tech heaven oriented market aka TESLA .
TSLA
Tesla which is directed by Elon Musk who is seen as a modern hero is profiting from a big inflow of cash which in my opinion is due to several factors.
Fundamentally :
Pros:
1.Tesla is revolutionary in this way of making car as they aim for Powerfull electric driverless cars .
2.Demand for green and sustainable product are increasing after the Covid19 crisis, consciousness in the mass has apparently shifted for a greener economy..
3.Tesla is considered as a tech company even though they produce car, so they are also profiting from the flight to tech observed since march.
4.After the last earnings, it's seem that Tesla meets the requirements to be included in the SP500 Index and will profit of massive flow from ETFs.
Cons:
1.Tesla is barely profitable (Earning Per Share) is 1.14$ vs 1500$ Share Price .. (Source Investopedia)
2. Sells declined this year and might continue to do so if the real economy doesn't pick up
3. Valuation is way too big compared to the other big player in the sector as they are massively invested in EVs and will continue to do so.
4. Trade War with China could slow down the access to the Chinese market which is a huge factors in Tesla's future profitability in my opinion as China need more than anyone else this type of vehicules.
5.Classic Long/short market neutral Strategy becomes attractive to hedge fund to short Tesla and Buy all the others auto companies
6. SP 500 inclusion will take time
Technically :
1.Tesla return of 542.6% over the last 12 months, more than 60 times greater than the S&P 500's total return of 8.9%. All figures are as of July 20, 2020. (Source Investopedia)
2. Tech stocks are in overvalued and Tesla could come down if techs enters in correction or sector rotation.
Levels :
The stock holds on a daily support at 1374 $ and helped by the 20 days MA
On a weekly basis the stock is overextended and we could see a consolidation or even a sharp sell off to 1000 $
On a monthly chart a correction on the 650/700$ could be healthy which would be in line with others automakers market cap but still on top.
Always risk management according to the Trade probability
Speculative Contrarian Trade Idea :
if breakdown Short below 1374$
Stop 1500$ (Above the break)
Target 1000$ (Weekly Support)
Invalidation of the scenario would a break above the al time high (1800$) with the support of the SP500 and Nasdaq 100,
Thanks for reading,
Like if you like and/or leave a comment below to share new ideas,
Peace,
I am back from holidays and a lot of action happened during the past month.
The SP 500 Future did hold the 3000 and broke above the 3150 to make a fresh high at 3290.
Dollar weakened due to the colossal amount of money printed by the FED and as a consequences pushed the GOLD to an All time high (Around 1950$).
So inflation is most likely to eat the value of your dollar and smart people are looking at the stock market as a way to protect their wealth.
Tech is profiting big time from this strategy and an outsider is also taking advantage of this fear, tech heaven oriented market aka TESLA .
TSLA
Tesla which is directed by Elon Musk who is seen as a modern hero is profiting from a big inflow of cash which in my opinion is due to several factors.
Fundamentally :
Pros:
1.Tesla is revolutionary in this way of making car as they aim for Powerfull electric driverless cars .
2.Demand for green and sustainable product are increasing after the Covid19 crisis, consciousness in the mass has apparently shifted for a greener economy..
3.Tesla is considered as a tech company even though they produce car, so they are also profiting from the flight to tech observed since march.
4.After the last earnings, it's seem that Tesla meets the requirements to be included in the SP500 Index and will profit of massive flow from ETFs.
Cons:
1.Tesla is barely profitable (Earning Per Share) is 1.14$ vs 1500$ Share Price .. (Source Investopedia)
2. Sells declined this year and might continue to do so if the real economy doesn't pick up
3. Valuation is way too big compared to the other big player in the sector as they are massively invested in EVs and will continue to do so.
4. Trade War with China could slow down the access to the Chinese market which is a huge factors in Tesla's future profitability in my opinion as China need more than anyone else this type of vehicules.
5.Classic Long/short market neutral Strategy becomes attractive to hedge fund to short Tesla and Buy all the others auto companies
6. SP 500 inclusion will take time
Technically :
1.Tesla return of 542.6% over the last 12 months, more than 60 times greater than the S&P 500's total return of 8.9%. All figures are as of July 20, 2020. (Source Investopedia)
2. Tech stocks are in overvalued and Tesla could come down if techs enters in correction or sector rotation.
Levels :
The stock holds on a daily support at 1374 $ and helped by the 20 days MA
On a weekly basis the stock is overextended and we could see a consolidation or even a sharp sell off to 1000 $
On a monthly chart a correction on the 650/700$ could be healthy which would be in line with others automakers market cap but still on top.
Always risk management according to the Trade probability
Speculative Contrarian Trade Idea :
if breakdown Short below 1374$
Stop 1500$ (Above the break)
Target 1000$ (Weekly Support)
Invalidation of the scenario would a break above the al time high (1800$) with the support of the SP500 and Nasdaq 100,
Thanks for reading,
Like if you like and/or leave a comment below to share new ideas,
Peace,
Trade active:
After yesterday very cautious FOMC, Market participants are taking profit (Dax Futures is at -2,5% without significant pull back) and today's session is likely to be key for the next coming weeks with the publication of the US GDP at the US opening.
Tesla broke the level of 1474 at pre market, which is a good entry point before heading to the 1374 which will signal a deeper sell off on the stock.
Tesla broke the level of 1474 at pre market, which is a good entry point before heading to the 1374 which will signal a deeper sell off on the stock.
