TSLA base building for 6 to 9 months projected

1275 16 9
September 17, 2013             Comments:
The run up in TSLA             from the 30's to 170 occurred in dramatic speed due to the tremendous doubt about the ability of the company to put a product to market that would be successful. The value of the company is now close to $20 billion and is at a level where investors just need time to see how the company will execute in a few quarters to see if they can grow into their "boots", so to speak. While we wait, we have nothing technically to work with because the ascent is at such a severe angle. In this situation, it is best to utilize trendlines called "speed lines". It is also wise to assume that trendlines drawn across previous lows will be violated often and cause fake, weak moves that technical traders will get caught in for awhile until the price drifts down or sideways to the 50% speed line drawn in blue (also 38% and 62% speed lines are drawn).

The way to look at SPEED LINES:
The rally is 100% speed, the actual speed of the rally.
There will likely be some general support of a strong trend at a rate that is at references to that fast speed. Quite often, half the speed of the advance will generate the most useful line of support. The standard way to look at it is 25%, 33%, 50%, 66%, 75% reductions in that speed but Fibonacci is just as effective with 23.6%, 38.2%, 50%, 61.8% and 76.4%. Both techniques will work just fine. What you want to do for half the time of the advance is to avoid getting caught up in the short term trendlines .

As always, invest with your head and not over it. Don't over-invest your capital or your ego on any idea, no matter how big or small, unless it means your life is on the line. I'd like to see TSLA             succeed as I like the idea of what they are doing - providing a better means of transportation for all of us.

A great way to make money in TSLA             is to sell contracts to purchase TSLA             shares at lower prices and receive "insurance premium payments" up front. I would contract to buy TSLA             at 100 for the next 9 months in return for a 5% return. I see the March 2014, 100 strike puts are $5.35 bid. That's a 5.35% return for 6 months. If TSLA             is below 100 on March 22, you will be sold 100 shares per contract. You will pay $100, but your cost basis will be $94.65. The market cap at that price will be $10 billion (+/-). By that time we can see two more earnings reports and will have a much better sense of what the company is doing.


Tim West 9/17/2013 10:53AM EST
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I just see on Bloomberg right now that GM plans a $30,000 electric car that can travel 200 miles on a single charge. That is terrific. These are the kinds of stories that will keep a lid on TSLA shares for the next 6-9 months, and frankly probably forever.
Hi Tim ,

Thank for sharing the chart. I want your opinion on the fact that Dealer Association around the country are on a which hunt with TSLA. TSLA cannot sell it's car directly to consumer in the state of Texas thanks to the Texas powerful car dealers laws, do you see other states doing this ? if yes , how much of an impact will it have on the stock ( In your opinion)

It's just another speed bump and a sign that dealers take Tesla serious and see them as a threat to their business. If they didn't care at all, then that would be saying something. All great technologies have plenty of naysayers trying to stop it from reaching its full potential. People from Texas can buy a Tesla from California, drive it back to Texas and register it. Texas will still receive its sales tax. The "brokers" wont receive their commission. Buying a car will just change. Perhaps you will go on a car-buying-vacation like we did back in the 1980's when cars were cheap in Europe when the dollar was strong. You would buy a BMW in Germany. Drive it all around Europe. Ship it back to the US and sell it for $5000 more than you bought it for. You'd earn a free vacation and have a great time too. People are inventive. If they really want a Tesla, they will go buy it anywhere. Check the website. It is easy to order the car online. If you see a showroom or see anyone else's Tesla, then you will just order one. It's that simple, really. The car is the most beautiful combination of technology and style you can imagine. Apple really missed the boat by not buying Tesla when they had the chance. iCar. Maybe they still could buy Tesla. Who knows.
AAPL could still buy TSLA , if they want to ! I mean what are they going to do with $ 145 billion in cash ? TSLA is market cap is $20 Billion i think. Would be a great match.
JayRoubini timwest
LOL, I saw that Bloomberg report also, you've been conned as TSLA also has plans for a 30k vehicle that will actually succeed as GM will fail ridiculously as it always does. To think GM has a clue how to proceed in the electric car market is indeed laughable as they are perhaps as many as 4 years behind and unlikely to ever catch up at this point. TSLA rules this market GM is as lost as ever.
timwest PRO JayRoubini
Thanks for the comment. The National Geographic program available on YouTube shows the entire Tesla operation and discusses their IP and their beautiful manufacturing facility with automated frame-building robots. Their IP rests mostly in the battery technology and how to align the batteries (small lithion ion ones used in laptops) in such a way to yield the best recharge-discharge function. The aluminum frame is impressive, which keeps the body weight down. At least GM had an electric car that was successful, yet before its time in the late 1990's before it was killed off. There is plenty of room for participants in the EV market. In fact, the more producers of EV's will mean a more rapid adoption and therefore an even greater opportunity for TSLA. The bigger the pie, the bigger the slice (to use an old phrase).
You seem to ignore the November Earnings Report. Because of the volatility of the stock it would break out of the pattern you illustrate in either direction.
Anything is possible, that's for sure. At least this is a picture of what I am thinking and expecting. Earnings can always make a stock volatile, but what will move this stock more is changes in sales or production capacity, together with any news about the roll out of their next generation model X. I think earnings are far less important for the next few years while it builds its reputation and builds out production capacity. I think implied volatility will decline from the currently high levels. If IV gets low enough, I may buy it, but for now I will forecast a decline in the volatility of the shares. Thanks for your comment.
thank you for the update Tim!
Your suggested side way range to eventually break to the upside for new high seem to agree with my EW counts, in that I am expecting near term top around 190 and either abc zigzag pull back before continuing higher or as you suggest just mark time by horizontal move til ready to move in wave 5 on my chart. Wave 5 could go lot higher than what I have indicated on my chart but from which upon completion there could be a substantial retracement.
Thanks DanV. If you take a look at "Mastering Elliott Wave" by Glenn A. Neely, you will see some finer points to refine your wave counts. There are some illogical elements to your count. 1) Wave (i) is longer in time and more complex than higher level wave 1. 2) Wave (iii) drifts across the (ii)-(iv) trendline. 3) Wave (i) is slow an more time consuming than 2. Impulsive waves are faster and stronger. Just some thoughts. I am not an "elliottician" any more but Mr. Neely's book is truly the text book to go to. It is very complex material, but clear. Take care and good luck.
Thanks for your observations. I will check it again. Though I think visually my labels might look different as the price is on log scale. EW to have time relationship as well as you point out, but not in the same way as price relationship. Anyway, thanks again.
Hey Dan - it looks like your wave 4 just happened :-)
What are you thinking now? All the best, Tim
We are still in wave 4 and potentially we could drop to 110-120 area, ie previous wave iv on 1 lesser degree. Here is updated chart.
TSLA is back to the range of my "sideways" forecast from September 17th.
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