TSLA chart above
QQQ chart above
A price above 1500, anyone? As we left off on Thursday, upward pressure had been building on TSLA all week. Monday was a record climb. Tuesday was the street brawl as clever manipulations and profit taking were balanced by buying of all the dips.Wednesday was up in the morning and then a humongous Category 5 tornado dip and recovery in the afternoon. The defeat of the massive bear attack on Wednesday afternoon gave investors confidence going into Thursday, which resulted in Wednesday's 23 point loss being won back on Thursday. Momentum looked positive going into Friday, but this was manipulation day and the hedge funds really wanted to protect those sold calls at 1400 and prevent a frisky TSLA from threatening their 1500-strike sold calls.
What transpired was a thing of real beauty. QQQ opened down in the red and stayed in the red until after 1pm. TSLA showed that it was a strong stock this day by popping into the green about 3 hours before QQQ. Capping of TSLA by the usual suspects kept it below 1420 for two hours, but with the NASDAQ continuing to rise, the pressure grew and after 12:30pm the cap broke and as TSLA started heading higher volume increased and quickened the pace. By 1:30pm TSLA was threatening 1500 and so the cap went into place again. The story played out a second time as the NASDAQ quickened its climb after 2:30pm and the manipulators managed to hold their below 1500 cap for TSLA yet another hour. With a surge of volume, TSLA broke through 1500 slightly before 3:30pm and then rocketed up another 44 points for the day. Bravo! It was a case of upward pressure coming into the trading day, mixed with macros rising from the red to well in the green, and at a quickening pace, in the afternoon.
In the news:
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The fly says TSLA was on track to trade over a million options on Friday, with calls favoring puts by a 3:2 ratio.
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Rob Maurer did a great job on Tesla Daily describing the implication of TSLA at 1500 as well as those for S&P500 inclusion
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In this announcement, Tesla says the Annual Meeting as well as Battery Day will be September 22 in Fremont.
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In this Electrek.co article, Tesla has just lowered the cost of Model Y by $3,000
TSLA shorts were tagged with 56% of TSLA selling on Friday
So, where does TSLA go from here?
Macros will play a role and negative macros are pretty essential for downward TSLA motion. Otherwise, TSLA looks to have more climbing in mind. The biggest threat to cause macros to drop quickly is the COVID19 situation in the United States. Watching both the new cases chart and the Daily Deaths chart are important.
Sunday, July 11, is one week after the July 4 celebrations (family barbecues, etc.). You would expect an upturn in new cases and there are some, but the progression since mid-June is more linear than exponential. As long as big spikes don't occur in the next few days the market will be happier. This evening while I write, NASDAQ futures are up.
Last week was the first week since the peak when we saw a weekly growth of Daily Deaths. Since deaths lag new cases by about 3 weeks and the new cases started climbing in mid-June, expect the Daily Deaths numbers to climb for a while. Still, the New Cases and Daily Deaths so far in July have not spooked the market terribly. If states such as Texas and Florida can see results from changes they make and thereby stop the rise of new cases, the market would remain ok with it. It's really a race against time as antibody therapeutics potential may appear this fall and greatly lessen the carnage. It's all a matter of how much damage is done between now and then.
There's been quite a great amount of discussion in the main investor's thread regarding what comes next. I feel the best clues are to be found in studying the 2013/14 run up (see bottom tech chart). By spring of 2014 TSLA managed to rise into the mid-200s. It had ups and downs but never came close to where it had been before the monster run. I suspect this second run of TSLA will be much the same. What's different between the two runs, however, is that the suprise profit in Q1 of 2013 was a feat that couldn't be equaled by Tesla for quite some time. In contrast, I believe the run higher in Q2 of 2020 is just the prelude for good news coming from Tesla. Let's take a look at the schedule of events:
* July 22- Q2 Earnings Report
* Sept 22- Annual meeting plus battery day
* Oct 2-3- Q3 Production & Delivery report
* Late Oct- Q3 Earnings Report
* Sometime this year (hopefully)- S&P500 inclusion announcement
* Jan 2-3- Q4 P:&D report
* Late Jan 2021: Q4 ER
So, you can see there's not much time between events that should bring positive catalysts. We will probably see a profit-taking dip at some point, and this is normal. I don't expect to see TSLA visiting the lowlands where we spent 5 years, primarily because there are too many people out there right now waiting for a dip so that they can get into this stock.
And so I think TSLA pretty much establishes a trading floor of 4 digits, sees the occasional profit-taking dip, but resumes climbing this year and next as the good news just keeps coming. For those of you who might need some cash from your investments, It's never a terrible thing to take a small amount out along the way during these huge runs higher so that you will be comfortable enough to weather any dip that comes your way.
Regarding date of expiration for leaps, I have mid 21s and early to mid 22s right now and am happy with them. Since I trade in an IRA, I have a knack for using volatility to trade one or two leaps at a time so that if we're in an uptrend or a downtrend I can use that movement to roll my leaps to later expiration dates, usually an low to no cost to me.
Looking at the tech chart, TSLA has climbed above the upper bollinger band again, but with the band so steeply verticle, I am not worried about the band being much of a constraint.Notice that 9 out of the past 10 trading days have closed with a profit.
Comparing the current rally to the 2013-14 rally, you can see that in terms of ability to double your money again and again, the 2019-20 rally so far has been every bit as strong as the 2013-14 edition.
For the week, TSLA closed at 1544.65 (leapfrogging a 1400s close altogether!) up 335.99 from last Friday's 1208.66. Including last week's gains of 248.92, the two week period has seen gains of 584.91. This is why you really don't want to sell all while trying to anticipating the top in a major breakout. Hoping you all had a great weekend!
Conditions:
* Dow up 369 (1.44%)
* NASDAQ up 70 (0.66%)
* TSLA 1544.65, up 150.37 (10.78%)
* TSLA volume 22.9M shares
* Oil 40.55
* Percent of TSLA selling tagged to shorts: 58%