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My guess is GS comes out with a $5 downgrade tomorrow morning to ensure this "head and shoulders" pattern plays out to their liking...
I'm probably going to kick myself tomorrow for not buying puts right now.
bdy0627
Active Member
Makes it hard to wait until the morning dip tomorrow, but that's probably the best approach.
bdy0627
Active Member
Right, it will all depend upon the movement tomorrow it looks like. If it bounces, it's false and may support a strong upward move. If it drops through the neckline, watch out. Option Sniper just bought some at this level so he likes the $336 support level.
MitchJi
Trying to learn kindness, patience & forgiveness
Between now and EOY $330-$380. Mostly closer to $400 (above $350).
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I like it for support too, but we know all too well how much certain orgs like to drop downgrades timed just right to shift momentum.
On a side note/addendum to my previous call of the $330's about a month ago and noting September's to-be ugly monthly candle, October's candle also looks quite ugly now, along with last week's candle that led to this week's ugly candle. Basically, if we don't get back above ~$345 by end of month, ER is gonna have to be amazing to counter the downward momentum.
Also noteworthy, the center bollinger band line on weekly is now sloping downward as of this week, for the first time since 2016.
(leaving aside all macro action in below discussion)
Consider this: TSLA has a market cap of about 55Bil and enterprise value of about 63Bil. Does Tesla deserve that kind of valuation just based on S/X and a few side projects? Of course not.
The valuation fully assumes that there will be Model 3 volume production and sales at some point (soon). So why should valuation go up merely based on fact that 'some point' has arrived? I don't know. That expectation is just TMC bubble in my view. People expect it to happen only because everybody else here expects it to happen.
On the argument of why profitability is important:
Shorts: Chanos said multiple times on record that Tesla is "structurally unprofitable". He even said he will cover when Tesla makes money. A lot of shorts genuinely seem to think Tesla can never make money. If Tesla shows sustainable profits, they may cover, however disheartened.
Longs on sidelines: No doubt there gotta be vast pools of investors who would love to own the stock but fell for the rhetoric that Tesla will never make money and the stock will collapse. If business model sustainability is proven out, it will attract these longs.
S&P index: Once Tesla shows profits it will qualify for S&P 500 membership. That will attract s-ton of passive investors.
Further longs: Once business model sustainability is proven, if Tesla shows not just profits, but "growing" profits, that will attract a whole another round of longs who look for such attribute.
So yes, valuation will indeed go up because of all the buying pressure with proof of sustainable profits.
I can only think of one other thing that will make valuation go up substantially. Proof of solid progress on FSD. If/When FSD is proven to be largely done, then valuation will go up as everyone and their mom will fire up their spreadsheets trying to compute the market opportunity.
Anyone notice the TA guys only speak when the stock is doing well. When all the magical charts and trend lines predicting big upside turn out to be a bust, they all go back into hiding until the next run. When the stock hit $360, they were all predicting a breakout and the exact opposite has happened.
I’m right here bud and so are others. Look at Zdrivers Post.
What that question means to me is will I be buying more trading shares or selling trading shares I've already picked up between now and year end. I'm okay either way as long as there's no fundamental upset to Tesla's business development, and I put almost no energy trying to figure out whether I'll be doing more trading share buying or selling (i.e. closer to $300 or $400). I just watch the "market action" to see if "Mr. Market" is making an offer I like... I don't put energy into trying to predict when or how much "he" will be irrational.
fwiw, I started adding trading shares Friday at $345, and added more today... ready to add through low $320s if it happens (from there I'd sit tight unless there was another ~20% dip or so without any rational cause, at which point, I'd start the use of margin power to start adding more). prior move was selling some trading shares in $350s I'd picked up lower than we are now. As to core shares, still yet to sell any after 5 plus years.
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bdy0627
Active Member
Is it common for a major support level to fall at the bottom of a head and shoulders pattern?
bdy0627
Active Member
It will go up if the potential starts to become reality due to market psychology, especially a stock like TSLA. It is trading where it is now purely on that potential.
bdy0627
Active Member
I actually turn to TA probably more when the stock is declining to try to get a handle on support levels, i.e... when to get concerned vs meh.
Did you happen to see these? They were just a few posts above yours.
As a matter of fact, every post above yours on this page, except @SBenson was TA... and not rah rah rah TA.
bdy0627
Active Member
1 leading to 2. That's the basis for Tesla's valuation currently. If Tesla demonstrates that 1 is happening, I firmly believe the market will continue to support higher valuations of Tesla even before it clearly demonstrates 2. Why would that change now?
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