Tesla's Problems Pile Up.
Daily Plan 7.24.24
So what went wrong with Tesla?
The answer depends on “wrong” from whose perspective?
If you read finance media, its been declared that Tesla is finished now and its problems are piling up. Even as the stock gains 35% in a month. But let us do a deeper dive into some of the levels where TSLA begins to take some real heat, not this 6-7% sell off on arguably some really bad earnings numbers in recent quarters.
If I have bought this stock at 250 today, I am down 7% today.
If I have bought it a month ago, I am up 30%. If I bought it at 137, then I am up about 65%.
From my perspective, I have maintained that I am a Tesla Bull. But this is not really a new position. I have been a TSLA bull from last quarter when this stock was 137!
Only last night I shared 220 support level on TSLA which at least at time of this post has not yet hit but we are coming perilously close to it and are now trading 224 at time of this post.
I think folks who got burned most on TSLA ER today were those in the weekly calls which may have been bought when the stock was 250 this morning. Depending on PUT strikes, you may also have some casualties on the bear side as well as the stock was expected to move 12% but has fallen about half of that.
So come tomorrow, if the stock remains unchanged here at 224, these premiums should also rapidly evaporate with only 2 days left to expire.
From what I gathered, I am actually very surprised (in a good way) that the stock did not sell off even harder, after that big miss on the EPS. I sat thru the earnings call almost in its entirety and noticed noticeable lack of enthusiasm when it came to the C suite- a departure from prior such calls which tend to be much more flamboyant. At any rate, the stock is down 8% after hours and I also suspect a lot of this is to do with folks not believing Musk when he talks about Robotaxi and the Humanoid robot, which Musk claims to sell 20 billion units of, or the Dojo supercomputer.
Where critique is due, this is a lapse in Musk’s judgement regarding that sub 25K Model 2. A lot of effort was spent on developing the Cyber truck which arguably is a niche product and will remain a niche product. If we had a Model 2 on sale today, I reasonably believe this stock will be closer to 300 rather than close to that 217.
At end of the day, it is the investors’ personal decision- do you wait it out when some of this what Musk claims, actually materializes or you take the chance on Musk now. Personally, if the stock was below 170, I think this earnings would have been devastating for TSLA and we may be witnessing a 20% decline, rather than a 8% one. But the stock is not below 170.
It is not even below 200. Or even below 220.
From my perceptive, the bullish bias on TSLA is not going to change unless I begin to see some back to back closes below that 210. This will remain my main Line in Sand.
Again this is not something new, I have mentioned this for many days now. I still think if we hold that 210, this stock is attractive for a move higher into 260s. Look at the bearishness on this stock- about 30 Wall-street analysts cover this- out of those 30, 20+ have either a SELL or a HOLD (Fancy way to say SELL) rating on this stock. Now don’t get me wrong- I feel for anyone caught off-guard to the downside. But at end of the day, this is the nature of short term options game. This is why I never share any options ideas more than 1-3 dollars. I know that the short term options are more likely to go to 0, rather than to the moon! So it is better for a 1 dollar option to go to 0, than a 5 dollar one!
As far as the methodology goes, it is working as intended- the stock is performing thus far within the price parameters which I envisioned it will. Now I steer clear of short term options’ calls in such high stakes events like the earnings. I mean there will always be someone who bought far OTM PUTS or CALLS and they will understandably not be happy at turn of events in TSLA today - however, if we begin to change our methodology whenever the stock does not do what we want it to do in the 0DTE options, then very soon we do not have a methodology. The market sooner or later will go where the fair value and line of least resistance is.
While 210 is my key support level, I do want to add that if TSLA can take back 230 in next 2 days or so, I think this will be an encouraging turn of events for longer term bulls.
Emini levels
On the S&P500 side of the house, both 5580 and 5630 were my key levels for the session today.
While we did not even come close to trading that 5580 in the cash session, we did trade unto 5630 and sold off. This has been a key level for many days now and I am not surprised at this turn of events.
For tomorrow’s session, the recent lows near 551 on SPY, 5567 on e-mini remain my key levels. 5567 is an important VWAP level from Friday and Monday session and the bears need to take it out to raid next support which may be around 5530.
If we do not slice below this zone and hold it I think we could retest the 5610-5611 levels from today.
5530 if traded, could offer support for a move back into 5560.
~ tic
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.