No Tesla Robotaxi, Deflation and more.
Daily Plan 7.12.24
Traders-
Sometimes what you do not say, says more than what you say and today was a prime example of this. When markets stop making sense, a lot of traders will simply stop trading and the markets will have to reset. The markets will have to either offer down or bid up to where it begins to make sense again. Remember the price is simply an advertising mechanism employed by Ms. Market to attract traders- when the price is right, big traders are attracted. When Ms. Market loses her mind and advertises wrong prices, or unfair prices, traders simply shut down.
The saga today started with that fateful CPI data. A lot of so called “experts” and equally uniformed furus (internet experts) formed an opinion that a weaker or a negative CPI will have been bullish for stocks.
Why? Why will a weak CPI be bullish? Weak CPI means the companies are perhaps losing pricing power (and this will be confirmed tomorrow when that PPI comes out).
We shared this months ago with folks and we were prepared for this eventuality- that a negative CPI, a first negative NFP print will actually be very bearish. And bearish it was. Nasdaq closed down 600 points from its high to the lows in one session. That is about a 3% move, a welcome respite from watching paint dry for so many days now! See below for my post as recent as last night for subscribers where I warned a negative CPI could be bearish.
On top of this tidbit about CPI, I also prepared my readers about the impact of stronger Yen only last night. Yen gained about 300 pips against the US Dollar. In one session! For those of you who are not forex traders, a 300 PIP USDJPY move is huge! Even on very large range, volatile days, you get 300 PIPS in a volatile pair like the $GBPJPY , that is considered a huge move. A 300 PIP move in USDJPY which has a good range of 80 PIPS a day is an extremely large move and often an indirect signal of market distress. See below. Shared as an educational point so our readers are smarter and understand the correlated market dynamics well.
While we share short term ideas quite often and I am sharing more and more option ideas almost every day now, it is my longer term calls that are most juicy.
Even on day like today- when the most commonly held stocks were crashing, some of my ideas did very well: Gold, Silver, Bonds (TLT), Oil, Chinese stocks like BABA and JMIA.
For instance, I shared a bottom call on the NEM stock when it was around 30 bucks. My rationale being that easing inflation will help the miners. This stock closed near 50 today and looks robust (as long as it holds 42).
Smaller miners like KGC are even more. It is like 10 now, shared around 5 bucks.
Obviously, we are not here to BS anyone- right or wrong, I am sharing my opinions as I see them, in real time. Sharing a TSLA PUT when stock is up 50% in days is not easy, it goes against common sense and consensus.
But be rest assured, I share what I perceive as value add. My ideas are never based on a single threaded thinking but if I am sharing something here in the Stack, it is because I have reviewed it from an orderflow perspective, fundamentals, macro and of course not just the charts!
TSLA
Folks, another feather in cap of orderflow as my PUT idea shared on Tuesday with our subscribers. In this PUT, I shared my bullish bias on TSLA 240 PUT when it was sub 3 dollars. This PUT did take some heat and did trade down to $1.5, however, finished strong today near 9 dollars.
The stock is down big today and is actually trading near 230 after hours. I think the PUT could open higher if this stock opens near 230 or lower. May be the PUT could be $20, who knows with all this added volatility. We will see. But what matters is we shared this at 3. Not at 10!
I think the reason TSLA took it on the chin was some reports that the FSD Robotaxi rollout has been pushed out to October. This is classic Elon though. As he says, he is an optimistic person and sometimes his estimates are too rosy. He says the product is eventually delivered but could be behind several years.
Just ask those souls who put hundreds of thousands of dollars to reserve a Tesla Roadster, may be 10 years ago and are still waiting for delivery?
Anyways, my point is that OrderFlow usually always catches unusual flows days and weeks ahead of such “news”. And this showed up on my radar 3 days ago. No one that I can think of was bearish on TSLA (via a short term PUT) as it was viciously making new highs, day after day, perhaps except me.
See below for exclusive post.
On top of this, there was also some tweets by Musk responding to some random guy on X that suggested that TSLA FSD conversion rate is only 2%. Musk brushed aside this claim by simply responding that the “FSD take is much higher than 2%” but did not elaborate if it was much higher by 50% or 100 % which means the conversion rate is 4%. I am not expert on this but I think a 4% conversion rate is inline with most subscription services but a rate above 5% may actually be excellent.
Let me know what you think, have you subscribed to TSLA FSD?
Folks, on a side note, if you find the information helpful, please do me a favor by sharing as it helps me fight censorship algos and helps me put this content out for almost FREE for traders like yourself.
Levels for tomorrow
For the levels tomorrow, I want to be cognizant of USDJPY price action. It is 159 now but I think above 159, it may support equites and if it takes back 160, this could actually be bullish for equities. However, if we lose 157-158, this may be bearish. It is now 159.
This 5628 level has been a source of bear pain and will remain a pain until overcome by the bears.
Scenario 1: The bears want to see USDJPY crumble below 158, the emini take out 5628 then to target 5608. Closes below 5608 may target 5460 weekly orderflow level which could be a key support.
Scenario 2: Due to the NQ weakness, if ES trades 5663 in the session tomorrow, this may prove some residual resistance for a move down to 5640s.
We are now at 5640.
SMCI
In case there is volatility tomorrow as well and if SMCI were to dip lower into 850 or sub 850, I like the 850 Weekly OPEX CALL if it can be had for 10 dollars or less. It is 43 dollars right now. Since the OPEX is tomorrow, I like to see this play out early with about 3-4 hours left in the session for the breathing room.
Longer term, I think SMCI has some juice to squeeze. I think if 790-800 holds on SMCI, it may be headed to 1000. It is now 880.
SMCI earnings are on August 2ND WEEK. August 16th 1000 CALL is right now about 60 dollars. I think it’s expensive but if stock were to sell down to 800, may be 790, this call could be about 12-15 dollars and may just make sense from risk to reward.
This is it for now. Remember: Plan + Preparation + Execution = Win.
~ toc
Disclaimer: This newsletter is not trading or investment advice but for general informational purposes only. This newsletter represents my personal opinions which I am sharing publicly as my personal blog. Futures, stocks, and bonds trading of any kind involves a lot of risk. No guarantee of any profit whatsoever is made. In fact, you may lose everything you have. So be very careful. I guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC, or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. By reading and using this newsletter or any of my publications, you are agreeing to these terms. Any screenshots used here are courtesy of Ninja Trader, FinViz, Think or Swim, and/or Jigsaw. I am just an end user with no affiliations with them. Information and quotes shared in this blog can be 100% wrong. Markets are risky and can go to 0 at any time. Furthermore, you will not share or copy any content in this blog as it is the authors’ IP. By reading this blog, you accept these terms of conditions and acknowledge I am sharing this blog as my personal trading journal, nothing more.