Short-Term TSLA Price Movements - 2014

[DaveT]

DaveT, So ultimately what you are saying is. He is a very smart guy but he is useless for us. Is that correct?
Either we consider him an idiot or useless, the resulting effect is the same, the message is - we should ignore him.
I'm happy to recall my 'idiot' remark and call him 'useless' instead.

Well, I can't speak for everyone here because I don't know everyone's investing philosophies/approaches. But in regards to TSLA, I can definitely say that he's not a good source regarding the stock or company. Rather than "useless" in regard to TSLA, I'd probably use the word "irrelevant".

Many folks like Cramer aren't motivated to learn deeply about a company like TSLA, since it takes a huge amount of time and energy not only to understand the company but also to keep up with it, and their investment approach doesn't reward them for such actions (ie., if you have 100+ positions you're only holding a very small amount in each stock).

Here's a rough breakdown:
1. Diversified approach (ie., many positions in fund) - not interested in doing the inordinate amounts of research required for a stock like TSLA
2. Traders - not that interested in long-term fundamentals, technicals much more important, the trend is king.
3. Concentrated investing approach - long-term fundamentals key, research deeply, keep up-to-date to analyze impacts of certain events/issues on long-term story

 

[SteveG3]

The implication of this phrase “You don’t know how easy this game is until you get into that broadcasting booth.” is - market commentators have zero accountability. They can say whatever they want - either through idiocy or through ignorance. They face zero consequences.

Conversely, we lose real money (or opportunity) if we make wrong decisions. It would be particularly shameful if we do so, per advice we chose to take from those who have zero consequences.

In any case, Cramer and the clowns of CNBC deserve nothing but our indifference. It's one thing to watch these channels for news. It's whole another to watch for their opinions.

strongly agree... Cramer and various other distractions can set one far back from the investor you could be by seeing noise for what it is (fwiw, I suspect spending his career in Omaha rather than Manhattan contributed to Buffett's success). I'd suggest perhaps "hazard" would be a better word for what we've seen from Cramer rather than "useless." I've said more about this regarding Cramer, Damodaran (NYU Prof), and John Lovallo here on TMC (just 3 examples of "hazards" in the world of Tesla investing)

Long-Term Fundamentals of Tesla Motors (TSLA) - Page 168


The thing with Cramer, at any given moment you don't know if he's (in no particular order), acting from his interest in 1) being entertaining, 2) sharing some of his knowledge (he is a bright person with a lot of experience), or 3) his friends from the hedge fund world (he may no longer have a hedge fund, but that does not mean he no longer has ties to that world).

As to 3), if Cramer is at all on your radar screen, I think you really want to spend 2 to 3 minutes watching this video starting from 3 minutes in,

Cramer Manipulation - YouTube

 

[TSLAopt]

So what does everyone think about this price movement? Any concerns?

We were up to 267 and shortly after reaching those new ATHs we tanked back down to 260...on a day when the market is rallying hard too. 7 points sounds like a lot but I try to keep it in perspective...if the stock was 26.70 and fell down to 26.0 I wouldn't be that worried...it's just some more consolidation after a big run up over the past month is my view.

 

[dmunjal]

So what does everyone think about this price movement? Any concerns?

We were up to 267 and shortly after reaching those new ATHs we tanked back down to 260...on a day when the market is rallying hard too. 7 points sounds like a lot but I try to keep it in perspective...if the stock was 26.70 and fell down to 26.0 I wouldn't be that worried...it's just some more consolidation after a big run up over the past month is my view.

More than just the amount of the down move, we have to worry about this today.

Outside Reversal Definition | Investopedia

 

[farzyness]

More than just the amount of the down move, we have to worry about this today.

Outside Reversal Definition | Investopedia

Would be the case if it goes below ~$258.50 no? If we hold at around $260 we should be ok. It would develop an upside-down hammer though if we are going by candlestick patterns.

 

[dmunjal]

Would be the case if it goes below ~$258.50 no? If we hold at around $260 we should be ok. It would develop an upside-down hammer though if we are going by candlestick patterns.

Yes, exactly. Hasn't happened yet but it could in the last 45 minutes today.

 

[Twiddler]

I am seeing a test of the lower end of the trend line drawn today, but I must admit, the MACD and RSI are both looking a little overbought here. I can see us consolidating in a handle for a while before completing the cup and handle pattern.

 

[eepic]

In defense of Cramer...

I'm going to take the opposite side on this. He's a mediocre trader that gives investment advice to mom & pop retail clients (which I find irritating as I would categorize his style as trading and not investing). He has almost no following by any professionals in the finance industry. There are plenty of articles about the actual performance of his stock picks portfolio, they either barely meet or slightly underperform the market for the most part. That is, over the years a monkey with a dart board would have outperformed him.

However, he is well spoken and delivers a great sales pitch. He's done very well for himself from that and is quite a successful showman so I would not categorize him as an idiot, just a really bad investor.

Fortunately, newer generations are becoming less susceptible to his style of sales pitch thanks to the relative ease of objective information on the internet. I find this summed up well by our favourite webcomic How to NOT sell something to my generation - The Oatmeal

 

[DaveT]

I'm going to take the opposite side on this.

Actually, I agree with many parts of the criticism of Cramer here and I've shared my own criticism as well. My original point was simply that Cramer isn't an "idiot" which some folks were assuming/claiming.

 

[chickensevil]

More than just the amount of the down move, we have to worry about this today.

Outside Reversal Definition | Investopedia

I am seeing a test of the lower end of the trend line drawn today, but I must admit, the MACD and RSI are both looking a little overbought here. I can see us consolidating in a handle for a while before completing the cup and handle pattern.
View attachment 56885

Based on the charting and the closing price it looks like it doesn't meet the qualification of the following: "After a large advance (the upper shadow), the ability of the bears to force prices down raises the yellow flag. To indicate a substantial reversal, the upper shadow should relatively long and at least 2 times the length of the body." (that note is taken from here: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks see Inverted Hammer and Shooting Star)

So we should be fine.

 

[Perfectlogic]

What an unexpected downturn movement through the day, looked like a nice breakout forming, oh well, imo it will just be a matter of time before we go higher anyway, these recent developements are too positive for the runup to stop here, Tesla is in a far better position than they have ever been in. I think one of the reasons for the runup to hesitate is the popular bearish and very outspoken opinion of this stock, so many bearish articles and shorts talking down the stock on TV. I think it affects even many of the longs a bit having all this feedback in the back of their mind having them think that is would be a good decision to take some money off the table at this ATH point. Not that I follow the broader market that close but are there any other stocks of Tesla's size with that many strong outspoken bears? I think not, which is actually pretty bullish going forward.

 

[SteveG3]

Think of Cramer as playing a game with 100+ positions in his portfolio, constantly moving around stocks/positions according to which sectors are hot or not. He's very smart at what he does and when he was a hedge fund manager he did very well. I've heard a lot of people on this board dismissing Cramer altogether, which I think just shows people don't understand Cramer's approach. Cramer's approach is completely valid and again he has made very healthy gains over the years. Each investor has their own method and that's totally fine. In regards to Cramer's calls regarding TSLA, I don't agree with how he wasn't behind the stock when it was a huge bargain. However, again spotting early high-growth stocks is not Cramer's specialty. And he's not particularly motivated to do so either, since he's got a methodology that's working for him.

On a final note, it can be irritating when people dismiss a person by calling them an "idiot" without having real understanding. It's one thing to be critical of a particular statement, but to dismiss a very smart person as an "idiot" is well... not very smart to say the least.

(my bolding of Dave's comment)

Dave, I agree that Cramer is bright, and I agree that dismissing someone as an "idiot" is not helpful. However, I really recommend you watch a few minutes (starting about 3 minutes in) of that video I linked of Cramer describing what he did in his hedge funds... I find the picture he describes of how he made his money very different than the one you've described, and anything but "valid."

In the short video, Cramer directly says that the last thing you want to ever do is be truthful, and basically that for hedge funds it's about moving prices by manipulation... not being smart about movements happening on their own in the stock. It may have been a cavalier statement, but at one point he says if you're not willing to play the game (he laid out a 3 part recipe of deception at the start of the video, including getting people at the WSJ and CNBC to repeat stories you've fabricated) he doesn't see you having a place in the hedge fund world.

I appreciate all your contributions here... but when it comes to Cramer and some other vocal actors I think he's more than an irrelevancy... I think he's worthy of pulling out a red flag.

 

[LonghornDub]

Based on the charting and the closing price it looks like it doesn't meet the qualification of the following: "After a large advance (the upper shadow), the ability of the bears to force prices down raises the yellow flag. To indicate a substantial reversal, the upper shadow should relatively long and at least 2 times the length of the body." (that note is taken from here: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks see Inverted Hammer and Shooting Star)

So we should be fine.

Personally--and this is just me, so YMMV--I wouldn't put any faith whatsoever into what esoteric chart patterns say or don't say. Things like that have been statistically shown to have zero predictive value. They subsist only because people selectively remember the ~50% of the time they "work," and selectively forget the ~50% of the time they don't.

Long-term, I really couldn't agree more that TSLA is likely heading to the moon. But in the short or intermediate-term, it's impossible to say. I agree with the previous poster that, at some point, TSLA will consolidate the recent up move, but it could remain "overbought" for a long time before doing that. Maybe the consolidation started today. Or maybe it starts next month. Or maybe the thing shoots up to $400 before consolidating. Who knows.

I get the sense that most folks here are in it for the long haul (myself included)--even though this is the "short term" price movements thread--so with that in mind, I say buckle up and riding the bucking bronco. No stock goes straight up, after all.

 

[Curt Renz]

(my bolding of Dave's comment)

Dave, I agree that Cramer is bright, and I agree that dismissing someone as an "idiot" is not helpful. However, I really recommend you watch a few minutes (starting about 3 minutes in) of that video I linked of Cramer describing what he did in his hedge funds... I find the picture he describes of how he made his money very different than the one you've described, and anything but "valid."

In the short video, Cramer directly says that the last thing you want to ever do is be truthful, and basically that for hedge funds it's about moving prices by manipulation... not being smart about movements happening on their own in the stock. It may have been a cavalier statement, but at one point he says if you're not willing to play the game (he laid out a 3 part recipe of deception at the start of the video, including getting people at the WSJ and CNBC to repeat stories you've fabricated) he doesn't see you having a place in the hedge fund world.

I appreciate all your contributions here... but when it comes to Cramer and some other vocal actors I think he's more than an irrelevancy... I think he's worthy of pulling out a red flag.

Indeed be wary of former hedge fund managers who now work full-time as financial TV anchors and commentators. That includes Jim Cramer at CNBC and Cory Johnson at Bloomberg. They may still have friends in the hedge fund industry that could be influencing them in any number of ways. Of course broadcast comments from current hedge fund managers should either be disregarded or seen as contrary indicators.

 

[EnergyMax]

If I could BS some thoughts on the price movement strictly from sticking my finger in the wind:

I thought during this uptrend that we would settle around the high 240s. I am very happy where we are, and I am always happy to bring extra pain to the shorts. But I would not be surprised to see us re-enter the 240s.

I think it will be 2 months until significant Model X news, and at least 4 weeks until significant GF news. So we could have a momo lull. During that time I think we could go as low as 240.

I would be happy to be wrong, and as I am long with stock only, the price fluctuations, don't change my investment.

 

[SBenson]

Dave, I agree that Cramer is bright, and I agree that dismissing someone as an "idiot" is not helpful. However, I really recommend you watch a few minutes (starting about 3 minutes in) of that video I linked of Cramer describing what he did in his hedge funds... I find the picture he describes of how he made his money very different than the one you've described, and anything but "valid."

In the short video, Cramer directly says that the last thing you want to ever do is be truthful, and basically that for hedge funds it's about moving prices by manipulation... not being smart about movements happening on their own in the stock. It may have been a cavalier statement, but at one point he says if you're not willing to play the game (he laid out a 3 part recipe of deception at the start of the video, including getting people at the WSJ and CNBC to repeat stories you've fabricated) he doesn't see you having a place in the hedge fund world.

I appreciate all your contributions here... but when it comes to Cramer and some other vocal actors I think he's more than an irrelevancy... I think he's worthy of pulling out a red flag.

@SteveG3, DaveT and you actually agree on one core point. Cramer is not an idiot. He knows what he is doing.

Regarding DaveT's point about different methodology, 100s of stocks etc: There is absolutely no way for the viewer to track that. This makes accountability all the more elusive.

Let’s say Cramer, or some other wise guy on CNBC, says 'this stock is a buy (now)'. Do they later, after some number of days, comeback and say, 'On xyz date we said ABC stock is a buy. Now is the time to close that position'?
or alternatively, when the issue the original buy recommendation do they put a time frame on it, saying 'buy now and hold for 12months'.

Without an exit recommendation, how can we ever know if the original buy order was profitable or not?

Think about it, only if they give a matching closing-trade signal for every opening-trade signal, we can tell it their recommendation worked or not.

Atleast a Financial Analyst continually issues price targets and recommendations on the same set of stocks. So if an analyst keeps saying buy for 16 months on a stock and then changes to sell, we know exactly how to measure performance of their advice.

On top of this, tracking 100s of stocks over any course of time, is nearly impossible for a retail investor. You need to work full time on this and have a professional system in place to support that sort of trading (or validation).

Oh well, at the end we come to the same conclusion that I was originally intending with my "idiot" remark: We shouldn't listen to these people.

Does the precise label matter (whether it's idiot or malicious) if they cause you to lose money? If it matters for some reason, I will admit I was wrong. Cramer is not an idiot. He is malicious.

 

[DaveT]

Dave, I agree that Cramer is bright, and I agree that dismissing someone as an "idiot" is not helpful.

Yep, that's my main point. I think it's detrimental for groups like ours to haphazardly call a person an "idiot" without backing it up with thoughtful explanation. If a person is truly an idiot and you can back it up, then I have no problem with calling a person an "idiot"... I just hope it's constructive though.

However, I really recommend you watch a few minutes (starting about 3 minutes in) of that video I linked of Cramer describing what he did in his hedge funds... I find the picture he describes of how he made his money very different than the one you've described, and anything but "valid."

In the short video, Cramer directly says that the last thing you want to ever do is be truthful, and basically that for hedge funds it's about moving prices by manipulation... not being smart about movements happening on their own in the stock. It may have been a cavalier statement, but at one point he says if you're not willing to play the game (he laid out a 3 part recipe of deception at the start of the video, including getting people at the WSJ and CNBC to repeat stories you've fabricated) he doesn't see you having a place in the hedge fund world.

Yeah, I've done my due diligence on Cramer. I've also watched that video a few years ago. Now, I'm not going to defend his morals. But in the video, I took it more as Cramer shedding light on the entire hedge fund industry and the shady games that are played. And yes, he admits to playing those games (ie., he ran a hedge fund from 1988-2000). But to his credit (and again I'm not claiming he's free from any shady-ness completely), he's stopped trading for a personal profit since doing his TV show.

When I said his methodology was valid, I was referring to the more general methodology of extreme diversification (ie., 100+ positions) and moving those positions around quite frequently. I think many hedge funds add to that methodology with other practices and approaches that can be very shady and unethical. But all I'm saying is the general approach of having a lot of stock positions and moving them around is a valid approach, as are other approaches to investing and trading.

Again, my main point isn't that I like Cramer's approach or what he stands for. In fact, I could fill a lot of pages with my own personal criticism of Cramer and his methods. However, my point writing here about Cramer was in response to some claiming he was an "idiot", which I felt wasn't an apt description of him.

 

[Perfectlogic]

As to 3), if Cramer is at all on your radar screen, I think you really want to spend 2 to 3 minutes watching this video starting from 3 minutes in,

Cramer Manipulation - YouTube

Interesting video, doesn't really surprise me though. It is astounding how much opiniated articles and reports from analysts move the stock, just look at Tesla's recent earnings, the stock went up 4-5% in the following days, but the real rally sending the stock up another 10%+ was the analyst upgrades and reports starting ofcourse with our good friends from Deutsche Bank. Stock market manipulation is simply too easy and profitable not to be taken advantage of by some, and probably even possible to do in a way that isn't techinally illegal like Cramer is saying.

 

[SteveG3]

@SteveG3, DaveT and you actually agree on one core point. Cramer is not an idiot. He knows what he is doing.

Does the precise label matter (whether it's idiot or malicious) if they cause you to lose money? If it matters for some reason, I will admit I was wrong. Cramer is not an idiot. He is malicious.

Yes, on that point of Cramer not being an "idiot" I did agree with DaveT... not to give you a hard time, but to suggest that we don't want to dismiss/underestimate him.

- - - Updated - - -

Again, my main point isn't that I like Cramer's approach or what he stands for. In fact, I could fill a lot of pages with my own personal criticism of Cramer and his methods. However, my point writing here about Cramer was in response to some claiming he was an "idiot", which I felt wasn't an apt description of him.

That point as I've said I agree with... it's just that the way your prior posts were written I thought they left the impression that he was a credible resource. Maybe I got it wrong, but I took away from your posts the message ~Cramer's not an idiot, he's just applying a different valid strategy. I look at Cramer, and I think, he's not an idiot, but the only time I've seen him talk in any detail about how he made money (not to be confused with what he does on TV, which is comment about every stock a caller brings up with no accountability on how his calls actually play out as SBenson pointed out) it was him saying the fundamentals don't matter. Fundamentals not mattering not because he's using a different valid methodology... not because he is a TA guy, or just more short term than some of us, but fundamentals not mattering because what you want to do as Cramer laid out is make up a story, use it to move the market, and, make money. He says in that video (after describing the fabrications he would have recommended spreading about Apple and Research in Motion), "that's a fabulous thing. I mean the great thing about the market is it has nothing to do with the actual stocks."

bottom line, like Curt said, Cramer, Cory Johnson... I wouldn't take them at face value (and that's putting it super mildly).

 

[austinEV]

I feel like this is the balancing of potential dread of a slight-earnings-miss Q3 ( Odd tesla quarters, like odd number Star Trek movies, are bad it seems) with the potential news of Model X being real and the new line working well. Huge increases in production capacity and doubling of the product lines are big deals, after all. On one hand there isn't a great reason to be hanging around for the negatives on or around The first week of november (Q3 ER) but you wouldn't want to miss the positive catalysts set to pop, which could be huge.

Good list of positive catalysts (I dropped his excellent list of bad ones cuz I am an irredeemable cheerleader)

Potential Catalysts coming up:

• News about the mixed production line being online and running smoothly (with first Model Xs going through?)
• Model X Alpha/Beta/Production Reveal
• First Model X Order Confirmations (?)
• Gigafactory news (site confirmation, new partners etc.)

At what point does TSLA begin to outsell Porsche? That will take away another venerable old Bear argument, that we have a larger market cap than Porsche. We could say, yeah, TM is bigger in sales and unit volume too.