My short trade has 3 parts to it: 1) technical price action 2) sentiment 3) fundamentals
TECHNICAL PRICE ACTION : As can be seen in the chart, at the end of a bullish move, we've got a final gap up which ends up forming dojis/ hammers/ or simply a big bearish candle. My point is, anything but bullish engulfings have marked the top and given a significant retracement almost EVERY time. This also typically happens on high volume.
SENTIMENT: Retail traders involvement is exceptionally HIGH ! Sentiment is overly optimistic
The link above is from robintrack; which reflects the robinhood trader involvement. Retail buying has gone vertical in May & June; this corresponds to the last $400 of move from $800-$1200. Thus, it's quite likely to see a nice flush out of dumb money in the very near future.
FUNDAMENTALS: Extremely over-valued stock and in the next down leg of the overall market, this should come back down to reality. I don't think the recent Q2 delivery numbers are something to get too excited about (down~5% YoY) as Q2 revenue & EBITDA is probably going to be a massive negative surprise. Further, I think Q3 & Q4 will be dismal which will finally end the hyper growth story for this stock. TAKEAWAYS: 1) I think Q2 earnings coming out in July should be a negative surprise 2) I'm seeing a potential down leg in the overall market in July 3) Target is ~900 (25%) correction sometime this month. And mid 500's (50% correction) before the end of the year.
PS. Of course I could be totally wrong as I have been in the past by shorting this stock at lower levels and its only continued to breakout higher!
@Me_in_hurry haha still kicking but started to cover a part of the short
Javahake
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Very good analysis ..and I fully agree with this analysis
markethunter888
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@Javahake thanks ! Now I just need the price to turn around in my direction lol
maxim77788
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One of the most detailed and wise analysis that I have seen on here, I love that you include fundamental , sentiment and you are one of the few who talks about dumb money which the market is overflown with at the moment(my vision of it for sure). Nevertheless unless a big push towards a downtrend comes we won’t see people panic and start selling the stock in massive quantities. I expect this second quarter to not look as good as it is being positioned in the media at the Moment. I also believe smart money will take profit or have already started doing so at this level. They know better that they will have a much better entry for a long position once the strong price action (downward) begins. I believe it will start soon and we will not have to wait until the end of this year to see the price around 500-580 ish level. Just my two cents. Great work on your end! And good luck sir
markethunter888
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@maxim77788, thanks for the kind words ! Yes, I actually have a target of 550 by sept but just gave myself extra slack on the post.
maxim77788
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@r3anand, very careful and thoughtful approach on your end , at least in my
Book! I am also prepared to wait till September but I see the way things are going faster growth(unhealthy looking almost) , company valuation that makes little to no sense at least for the next year or so..dumb money which will have bulls run like homeless dogs when the Sh.t hits the fan. All that and more in regards to speedy process of bringing new cars to market without doing proper detailing on paint job , software...we can go on and on, autonomous drive which isn’t quite as good or unique as it is being marketed(got to give them credit for the hype which has been created). Let’s see how this unrolls in the next few weeks..very curious
markethunter888
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@maxim77788 yup, the hype that Tesla has been able to create has definitely been a big lesson for a Tesla bear like myself.
maxim77788
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@r3anand, yeah unfortunately the dumb money keeps rolling in...