Why Tesla Shares Are Down By 10% Today?

Tesla Video 05.03.21.

Tesla Moves Lower Amid Broad Sell-Off In EV Stocks

We have recently discussed why shares of Tesla are in a bear market but the situation is developing fast, and Tesla stock moved to new lows.

Today, Tesla shares are down by about 10% while S&P 500 is losing some ground in volatile trading. The main reason for the current downside move is the sell-off in the electric vehicle space. Investors are rushing out of their speculative EV investments as they look worried about valuation of high-flying tech stocks.

In my opinion, the recent rise of U.S. Treasury yields has pushed investors to evaluate their portfolios and focus on the current valuation of the companies.

Valuations have been rich for many months. However, the market has recently started to pay attention to them so valuations may ultimately begin to have a notable impact on the trading dynamics of EV stocks.

What’s Next For Tesla?

In Tesla’s case, the stock continues to trade at very high levels on almost every multiple so the company’s market capitalization depends on the market mood.

The stock has already declined by more than 35% from the highs that were reached back in January, so it may soon attract bargain hunters who will be willing to bet on the leading EV company after the major pullback.

At the same time, Tesla cannot count on any support from valuation-oriented investors as it remains very expensive. Thus, the stock will likely need a change of market mood towards riskier stocks in order to find support and get back to the upside mode.

It should be noted that legacy automakers like Ford or General Motors are trading close to their recent highs so the current sell-off in EV stocks highlights investors’ concern about their valuation rather than any doubts about the future of the auto industry.

For a look at all of today’s economic events, check out our economic calendar.

Tesla Stock Update: Meltdown in Tesla Beginning as Forecasted

In my February Tesla update, I described how Tesla was positioned for an accelerated breakdown if prices slipped below the $780 low. At the time, TSLA was trading just above $800 (see chart below). It appears the breakdown is underway, and this could turn into an outright collapse into mid-March.

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CURRENT CHART (TSLA): Anybody that bought Tesla after they entered the S&P 500 on December 21, 2020 is losing money below $650. A lot of new investors have only seen values go higher – never lower. If prices drop below $600, I think some of these investors may begin to panic out of their positions. The $600 level may be tested soon, let’s see what happens.

Note- Prices could collapse to the price gap near $420 or lower if we enter a waterfall type decline.

MARKET UPDATE (SPY): Prices are very close to testing last week 378 low. The market remains vulnerable to a potential breakdown into mid-March, similar to 12-months ago.

Potential Breakdown Triggers: Senate negotiations over the $1.9 trillion stimulus turn negative or spiking interest rates are the obvious choices.

Note- I’m afraid a breakdown in the stock market could trigger more downside in gold miners, so I’d like to wait a little longer to see if stocks break down before adding to our educational portfolio. Senior gold miners are very cheap, in my opinion.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

For a look at all of today’s economic events, check out our economic calendar.

NIO Shares Slump on Big Q4 Loss, Slowing Sales Due to Global Chip Shortage

Chinese electric vehicle maker NIO’s shares slumped 13% on Tuesday after the company’s loss far surpassed analysts’ expectations for the fourth quarter and warned the global chip shortage would slow the pace of EV deliveries in the first quarter.

The company, which designs, manufactures, and sells smart and connected premium electric vehicles, reported a fourth-quarter net loss of 1.49 billion yuan, way above Wall Street consensus estimates for a loss of 757 million yuan.

NIO’s reported a net loss per share of $1.05 for the fourth quarter, largely missing the market expectations for a loss of $0.16 per share. The firm said its revenue surged over 130% to $6.64 billion from the same period last year but came a little below analyst’s forecasts of $6.71 billion.

“NIO concluded a transformational 2020 with a new quarterly delivery record of 17,353 vehicles in the fourth quarter of 2020. The strong momentum has continued in 2021 as we achieved a historic monthly delivery of 7,225 vehicles in January and a resilient delivery of 5,578 vehicles in February, representing strong 352% and 689% year-over-year growth, respectively,” said William Bin Li, founder, chairman and chief executive officer of NIO.

“Supported by competitive product offerings, outstanding services and innovative business models, we have won increasing recognition from our users and expect to deliver 20,000 to 20,500 vehicles in the first quarter of 2021.”

However, that is slower than the 42% increase the Chinese electric vehicle maker reported between the third and the fourth quarter.

Following this, the U.S.-listed NIO shares, which surged over 1,100% in 2020, slumped 13% to $43.29 on Tuesday. However, it gained 1.6% to $43.98 in extended trading.

“We cut our DCF-based TP to USD91 from USD100 after factoring in our new earnings forecasts while our WACC assumption is unchanged. We reiterate our Buy rating on NIO as we see its technology as ahead of peers with strong sales volume growth ahead. The recent share-price retreat serves as a good entry point, in our view. Key downside risks: lower-than-expected sales volume and margin,” said Daiwa’s Kelvin Lau.

“Our 2021-2023E earnings are more conservative than the street likely as we are more cautious on its EBIT margin outlook. However, we are likely more positive on NIO’s long-run outlook.”

NIO Stock Price Forecast

Ten analysts who offered stock ratings for NIO in the last three months forecast the average price in 12 months of $68.26 with a high forecast of $80.30 and a low forecast of $54.00.

The average price target represents a 57.68% increase from the last price of $43.29. From those ten analysts, seven rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $60 with a high of $122 under a bull scenario and $42 under the worst-case scenario. The firm gave an “Overweight” rating on the Chinese electric vehicle makers’ stock.

Several other analysts have also updated their stock outlook. JPMorgan lowered their target price to $70 from $75. Jefferies set a hold rating and a $60 target price for the company. Nomura set a buy rating and $80.30 target price for the company.

Moreover, Nomura set a buy rating and $80.30 target price for the company. Bank of America boosted their price objective to $70 from $59 and gave the stock a buy rating.

Analyst Comments

“Solid 1Q volume guidance suggests the good trajectory of sales recovery post CNY, corroborating superior market recognition of NIO’s models and brand. The strong balance sheet can finance more aggressive channel expansion and technology investment. Tight component supply will likely cap 2Q sales upside,” said Tim Hsiao, equity analyst at Morgan Stanley.

“We expect higher long-term growth visibility from the software development BaaS initiative. Tesla’s success in China has also attracted fund flows for EV makers, which we think bodes well for NIO’s long-term R&D investment capability and growth potential. Proven scale benefits with continuous gross margin improvement.”

Upside and Downside Risks

Risks to Upside: 1) Progress in planned A-share listing. 2) Stronger-than-expected sales volume. 3) Better-than-expected improvements in operating efficiency- highlighted by Morgan Stanley.

Risks to Downside: 1) Weaker-than-expected sales volume. 2) Lack of signs of efficiency improvement. 3) Lower-than-expected NOP option take rate.

Check out FX Empire’s earnings calendar

Markets Move Higher As Tech Stocks Rebound

Tech Stocks Gain Ground Despite Rising Treasury Yields

S&P 500 futures are gaining ground in premarket trading as tech stocks look ready to continue the rebound that began during yesterday’s trading session.

Shares of Tesla are up by about 4% ahead of the market open while Apple and Microsoft shares are gaining about 0.5%. Yesterday’s trading action indicated that traders were ready to “buy the dip” in tech stocks and rushed to scoop up shares at lower levels despite worries about higher inflation.

Interestingly, U.S. Treasury yields continue to rally today. The yield of 10-year Treasuries is currently trying to settle above 1.39%, while the yield of 30-year Treasuries is testing multi-month highs at 2.26%. However, rising bond yields failed to put any material pressure on stocks ahead of the market open.

Fed Chair Powell Heads To Capitol Hill For Second Day Of Testimony

Today, Fed Chair Jerome Powell will provide his commentary to the Committee on Financial Services of the U.S. House of Representatives. Yesterday, Powell stated that the economy needed additional support and added that the Fed remained focused on reaching employment and inflation goals.

While Powell downplayed inflation risks, bond market traders are not that optimistic as Treasury yields continue to move higher. Today, Powell will likely offer a similar commentary so traders will be mostly focused on Treasury yields.

Germany’s Growth Boosts Global Markets

Germany has recently provided the final reading of GDP Growth Rate report for the fourth quarter of 2020. Germany’s GDP increased by 0.3% quarter-over-quarter compared to analyst consensus which called for growth of just 0.1%. On a year-over-year basis, GDP declined by 3.7%.

Germany’s economy managed to grow despite coronavirus-related problems thanks to strong exports. Germany’s export-oriented economy benefited from strong demand from China which continued to enjoy a healthy economic rebound.

Solid data from Germany provided additional support to global markets as it indicated that Eurozone’s biggest economy managed to adapt to the current environment and delivered growth despite problems on the coronavirus front.

For a look at all of today’s economic events, check out our economic calendar.

Why Tesla Stock Is In A Bear Market?

Tesla Video 23.02.21.

Tesla Shares Move Lower Amid Tech Sell-Off

Shares of Tesla declined below the $700 level and tested the support at $620 before rebounding back to the $700 level amid sell-off in the tech space.

In January, Tesla tested the $900 level so the stock lost more than 20% of value in about one month which means that it has entered into a bear market.

Concerns about valuation of high-flying tech stocks were the main catalyst behind the recent sell-off in Tesla shares. These concerns were triggered by the recent increase in Treasury yields which highlighted rising inflation expectations.

In addition, it looks like investors continued to move out of tech stocks in order to increase their bets on cyclical stocks which tend to perform well in the inflationary environment.

The recent sell-off in Bitcoin put additional pressure on Tesla shares as the company invested $1.5 billion in the cryptocurrency. While Tesla’s position in Bitcoin is not significant enough to trigger huge moves in its market capitalization, the company’s share price dynamics are very dependent on market mood towards riskier assets so they may be sensitive to big moves of Bitcoin.

What’s Next For Tesla?

Tesla stock has quickly managed to rebound from lows near the $620 level which indicates that many traders were waiting for a material pullback in the company’s stock and used the recent opportunity to enter into new positions.

While there are several valid reasons for concern which include increased competition, potential cost inflation and rich valuation, Tesla shares will likely remain dependent on market sentiment rather than on the fundamental evaluation of the company’s perspectives in the near term.

The recent trading action indicated that there is strong demand for Tesla shares at lower levels so the stock will likely need additional downside catalysts to continue the current downside move. In this light, the main risk for Tesla stock right now is the continuation of the sell-off in the U.S. government bond market which pushes bond yields higher and puts pressure on riskier assets like high-flying tech stocks.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Market Wrap and Forecast for Tuesday

Weak price action targeted big tech stocks on Monday, dropping Nasdaq-100 to a three-week low. SP-500 posted smaller losses while the Russell-2000 retraced Friday’s trading range, with the outperformance consistent with positive seasonality.  The WTI crude oil contract surged above 61 after Brazil’s strongman installed an army general to run Petróleo Brasileiro S.A. (PBR), one of the world’s largest oil and gas multinationals. That stock fell more than 20%.

Tesla Breaks Down

Tesla Inc. (TSLA) broke support near 780, completed a double top breakdown, and closed below the 50-day EMA for the first time since November. Dow component Apple Inc. (AAPL) fell nearly 3%, dropping into negative 2021 returns. Boeing Co. (BA) initially shook off the 777 grounding, squeezing short sellers after dropping more than 9%, but still closed in the red. Royal Caribbean Group (RCL) acted like a momentum play despite a billion dollar loss, surging to a 52-week high.

Gold had a strong session while Bitcoin faltered, lifting the yellow metal to the highest high in a week. Bonds slumped at 11-month lows while the 10-year Treasury note lifted above 1.3%, renewing anxiety about surging inflation. Kohl’s Corp. (KSS) rose over 6% as activist shareholders tried to take over the boardroom, just ahead of department store earnings that should confirm miserable conditions in America’s shopping malls.

Homebuilders on Tap

Tuesday’s Home Depot Inc. (HD) earnings will set the tone for mega-caps, with the housing boom likely to translate into a strong quarter. NVIDIA Inc. (NVDA) volatility is surging ahead of its Q4 release later this week. Bears could have the final say, given sell-the-news reactions after other chip reports in the last month. Square Inc. (SQ) could also generate fireworks after its report, with the stock glued to an all-time high after massive upside in the last 11-months

Home Depot will provide just one metric in a week chock-full of housing catalysts.  Home price data will also be released in Tuesday’s pre-market, followed by mortgage applications, January new home sales, and Lowe’s Cos. Inc. (LOW) earnings on Wednesday. Existing home sales wraps up the data flood, telling market players to keep close watch on SPDR S&P Homebuilder’s ETF (XHB), which is trading at an all-time high.

For a look at all of this week’s economic events, check out our economic calendar.

U.S. Market Wrap and Forecast for Friday

Major benchmarks sold off at the start of Thursday’s session while a congressional committee debated the implications of last month’s Gamestop Inc. (GME) frenzy. Risk-adverse instruments surged to monthly highs in the first half of the day, shaking out a few weak hands. An afternoon bounce pushed a few points above opening prints but SP-500 Volatility Index (VIX) held firmly in the green into the closing bell.

Mean Reversion

Traders sold many stocks that had rallied to unsustainable price levels, including Tesla Inc. (TSLA), squaring positions ahead of Friday’s options expiration finale. GME and its companions sold off as well, hitting 4-week lows. High yield plays perked up, attracting buying interest for the first time in 2021.  FAANG stocks ticked lower in unison, displaying none of the leadership that generated impressive 2020 returns.

Marriott International (MAR) closed higher despite a 59% year-over-year revenue decline, with executives hoping vaccines translate into a booking resurgence and travel season that keeps hotels from going bankrupt. Fauci said vaccines were reducing COVID-19 infections this morning, which we assumed long before he reached that conclusion. That now needs to translate into baby boomers leaving their caves and spending billions in their favorite destinations this summer.

Friday Expiration

Friday options expiration is often sloppy and uncomfortable, with position squaring more important to the ticker tape than short-term price patterns. Limited exposure makes sense during this period but stocks that have sold off into popular strikes could offer good trade entries into Monday’s options hangover. Twitter Inc. (TWTR) comes to mind in this regard, dropping three or four points this week before bouncing just above the 70 strike.

Home Depot Inc. (HD) highlights next week’s earnings calendar, with the Dow component grinding through the sixth month of a narrow range price pattern. Macy’s Inc. (M) is also on the schedule, shining a light on one of the fallen angels of last month’s Gamestop squeeze. Sadly, M and the mall anchor group have no future, beyond the lipstick put on the pig in recent months, because e-commerce is an unstoppable monster.

For a look at all of today’s economic events, check out our economic calendar.

Tesla Stock Update – Could Prices Crash Below $100 in 2021?

Recently, famed investor Michael Burry (The Big Short) described how he believes Tesla could drop 90% and settle below $100 in 2021. I could not agree more, and his outlook dovetails nicely with my $75.00 target. The big question in my opinion is when will the bubble burst, not if?


Currently, the trend is rolling over, and dropping below the January $780 low could trigger an accelerated selloff. A lot of novice investors (Robinhooder’s) have considerable profits in this name. When profits begin to collapse, weak hands will rush to the exits, especially if the breakdown is coupled with an adverse news event.


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AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

Tesla’s just another Catalyst for Bitcoin

Michael Stark, analyst at Exness Education, agrees that the outlook for bitcoin is highly positive but doesn’t favour the narrative that this is mainly because of Elon Musk and Tesla having bought in.

For various reasons, bitcoin and Ethereum are really ‘digital assets’ more like gold than currencies in the usual sense of the term. The unique qualities of large-cap cryptocurrencies, especially after last year’s revolution in decentralised finance (‘DeFi’) and interest schemes, are what make them so popular among investors at the moment.

Derivatives like contracts for difference (‘CFDs’) and futures on bitcoin have also become more prominent since last year, especially in the case of futures. Futures on bitcoin offered by the CBOE, ICE and others posted numerous record daily volumes in 2020. For traders of CFDs, generally higher liquidity, lower spreads, removal of swaps in some cases and greater reliability of signals from futures can provide more and potentially better options to speculate without holding any transferable bitcoin.

Bitcoin’s evolution

The first and arguably best cryptocurrency, bitcoin was created over 10 years ago to function as a peer-to-peer electronic cash system. Many other cryptocurrencies have followed, but very few of them have significant utility as methods of payment.

Instead, most cryptocurrencies are used primarily as vehicles for investment with various different approaches. The average person holding transferable bitcoin appreciates it as a store of value, a hedge against inflation, an asset with strong potential for growth and for other reasons. ‘Digital asset’ first started being used widely to describe bitcoin and other cryptocurrencies in 2017: it has remained accurate because of sharp appreciations in prices and for other reasons.

Generally speaking, any asset’s value is linked with three very basic traits:

  • Difficulty of acquisition
  • Limitation of total number
  • Simplicity of verification

While it’s true that in 2015 and before, it was relatively easy to mine more-or-less any coin if you had a powerful graphic card, this is definitely no longer the case. Highly specialised and expensive equipment is required to mine even fairly minor coins now, so bitcoin in particular is extremely challenging to acquire unless you’ve paid for it, given it or purchased it from somebody else.

The number of bitcoins is limited to 21 million, with 18.63 million or 88% of the maximum supply circulating in February 2021. All transactions in bitcoin are verified by blocks, with new blocks created roughly every 10 minutes.

By contrast, the supply of fiat money is unlimited and almost everybody is paid with it. Fiat money is affected by inflation, but the value of the euro or dollar in your pocket doesn’t change significantly from month to month. Huge amounts of new money were created by central banks around the world in 2020.

There’s just no reason for the average person to buy things with bitcoin, gold, Ethereum or really any other non-fiat asset. Why would you pay with something that you think will almost certainly appreciate in price over the next five, ten and more years?

Tesla’s $1.5 billion – a drop in the ocean

Tesla’s purchase of $1.5 billion worth of bitcoin on 8 February was about 0.18% of the cryptocurrency’s total market capitalisation at the time. Against this, approximately 2.3 million bitcoins – nearly 15% of the total current supply – haven’t moved anywhere in the past six years according to data from CoinMetrics. The annual figure for 2020 from Digital Assets Data was nearly 11 billion BTC, about 60% of the total supply.

Now, according to blockchain.com, daily transactions remain about the same as in the aftermath of 2020’s crash. Crucially, they’re significantly lower than in Q2 2019, suggesting that the proportion of participants in bitcoin for the long term is increasing:

It’s clear that large numbers of investors bought bitcoin cheaply in March and April 2020 and continue to HODL. Sentiment rules in crypto markets, so if a very large community of HODLers thinks the price of bitcoin will go up, it probably will eventually.

The unique and revolutionary factor in favour of bitcoin late last year was interest. While DeFi was the source and saw significant interest among enthusiasts, other schemes with lower barriers to entry attracted huge numbers of average investors. Crypto Earn and similar programmes plus superchargers offered by exchanges gave investors APRs of up to 6 and 7% paid in bitcoin on deposits from 0.025 BTC.

This is what really seems to be driving the price of bitcoin upward. With zero or near-zero fiat rates in all major, advanced economies and many popular large-cap shares dramatically overvalued based on price: earnings, there are very few investments available that generate non-trivial cashflow. At the same time, record volumes of new fiat money from ultra-easy fiscal and monetary policies around the world have given many people spare cash to invest even as others struggle with unemployment and uncertainty.

Institutional investment boosting sentiment

Apart from Tesla, Morgan Stanley’s investment unit is also rumoured to be considering further involvement in crypto markets, specifically a significant purchase of bitcoin. Separately, MicroStrategy’s event Bitcoin for Corporations on 4 and 5 February involved about 1,000 CEOs and thousands of other attendees as Michael Saylor and others highlighted bitcoin’s potential as an investment for companies.

Morgan Stanley’s insights point to bitcoin’s increasing popularity as a store of value. However, for the average person who actively follows the price of bitcoin and major altcoins, none of the bank’s recent research is anything new. Bitcoin has been fairly widely seen as ‘gold 2.0’ for some time. It’s also quite obvious that if a large majority of participants are HODLers and have no desire to sell, bitcoin has at best limited practical value as a currency as opposed to an investment.

PayPal, Tesla, Morgan Stanley, Mastercard and any others adding bitcoin as an option for payments and buying relatively small amounts are definitely positive for sentiment. Nevertheless, here’s the bottom line: there’s absolutely no reason to pay with something that you think will almost certainly appreciate in price over the next few years which also pays potentially much higher interest than anything else.

Trading bitcoin at all-time highs

Prophecies came thick and fast last year that the expansion of futures on bitcoin and greater involvement of financial institutions would lead to a reduction in volatility. This hasn’t happened: bitcoin is still one of the most volatile underlying assets for any CFD.

BTCUSD’s average true range (ATR) in February so far has reached as high as $2,160, about 5% of the price at the time and much higher than any other CFD with a roughly equivalent daily volume of trading. Volatility can provide opportunities for traders, but it can also increase risk significantly.

Traditional strategies for setting stops (stop loss) based on ATR multiplied by 1.5 or 2 could lead to very high potential losses if applied in the current environment. Instead, a simpler and potentially less risky approach would be to set stops based on areas of clear support on middle timeframes like hourly (H1) and four-hour (H4).

Crypto sceptics are fond of repeating that bitcoin has no fundamentals, so trying to understand the rationale behind movements with reference to anything other than sentiment is futile. There is an element of truth to this, but in 2021 fundamentals are likely to become more important because of the surge in retail investors looking for cashflow. As average rates of interest across exchanges fluctuate, one might expect strong movements by bitcoin.

Start with $15, not $1.5 billion

With Exness, you can open the smallest trade for bitcoin – a micro lot, 0.01 lot – with less than $5 at the time of writing. This is a quick and convenient way to speculate on the price of bitcoin while limiting the sizes of potential losses.

Equally, if you want to understand the market more before you risk real money, Exness offers free demo accounts. You can use one of these to practise trading bitcoin against the dollar, yen and won with an accurate simulation of real conditions but no possibility whatsoever of losing real money.

One of the unique features of trading CFDs on bitcoin with Exness is the absence of swaps. Having no overnight fees means that you can hold any position as long as you like if your account’s equity is more than the margin requirement. What’s more, Exness Education analyses BTCUSD from a technical perspective most weeks, giving traders the lowdown on areas of possible importance on key charts.

Elon Musk doesn’t directly affect the already highly positive outlook for bitcoin based on both charts and fundamentals: it’s the community of traders and investors who do. You could also join this innovative market with just a few straightforward steps!

Disclaimer: the publication of analysis is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience or current financial situation. Analysis is not prepared in accordance with legal requirements promoting independent investment research and Exness is not subject to any prohibition on dealing before the release of analysis. Readers should consider the possibility that they might incur losses. Exness is not liable for any losses incurred due to the use of analysis.

Risk warning: trading in CFDs carries a high level of risk thus may not be appropriate for all investors. The investment value can both increase and decrease and the investors may lose all their invested capital. Under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs.

5 Reasons Why People Prefer to Trade Options Over Stocks

As technical traders, we know the importance of following the price charts using proven trading strategies and implementing risk and position management. Here at TheTechnicalTraders.com we are stepping things up a notch by adding options to our trading.

By using options, a trader can leverage, hedge positions, and generate income via selling premiums. There are basic options, strategies, and complex, and everything in between. Because of that, I have brought options trading specialist Neil Szczepanski to join our team.
I will let Neil introduce himself.

Hi everyone!  Neil Szczepanski here.  In case you are wondering it is pronounced “Sus’ pan ski”.  Yes, I have roots in eastern European ancestry and I’m first generation.  I love options and have been trading them for many, many years. I like options because you have more ways to be profitable in your trading.  I hate putting on a position and then waiting for the market to go your way.  I want to be in control of my trades and options allows for that.  Also, trading can equal freedom.

Think about this: imagine having a job that you can do from anywhere on the planet, work as much as you want, and make as much money as you want?  Imagine having that same job that has no boss breathing down your neck and you call the shots. Well, that is what options trading can be like if you have the skills or access to someone who tells you what and when to buy and sell options contracts.

You control your own destiny and I have seen traders start with as little as $500.  Options are especially attractive because they can cater to the small guy with smaller accounts via leverage, allowing them to take on big positions with little capital. On the flip side, the more wealthy sophisticated traders use options to protect and hedge positions and can do more complex strategies that provide even more consistent and lucrative returns with lower risk.

No matter what category of options trading you fall into, they work incredibly well, and I will teach you while providing professional trades to execute. Over my next few posts, I am going to explain some more about why trading options can be consistently profitable without having to take on huge risks. Today I am going to talk about why I love swing-trading options and the power of leverage that options provide us traders.


As I alluded to above, options give the average trader ways to break into the trading world because of leverage. A little capital can go a long way, and if options trading is done properly you can have significantly less risk than buying the stock outright. You can start small, make smart bets that generate returns, and continue building your account through sound risk management techniques like position sizing, etc.

For example, when an underlying stock is super expensive, like Telsa for example, it can be prohibitive for the average person just starting out trading to own that stock… let alone 100 shares! Options give you the ability to control those shares for a specific period of time at a fraction of the price. Each individual options contract lets you control 100 shares of Tesla without having to buy the stock.

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Let us take a look at a simple example where you want to buy TELSA with an expectation that it will go up at least 5% in value in the next month. If you wanted to buy and hold 100 shares of TESLA, then you would need to spend $80,482 to own those shares. Since all we want to do is to be able to sell the shares and lock in the profit when they go up by 5% or more.   We don’t need to own them but rather just have the right to control them within the options contract timeframe. When we hit our targets, we can sell the option contract and take profit (or take possession/delivery of the underlying shares on contract expiry).  This is called option assignment.

Below is a sample of a Tesla options chain, where we can see that the price of the stock is $804.82.  Let’s say you could allocate $2,000 to this trade – you would be able to buy almost 2.5 shares of TSLA. But with $2,000, you could buy an option contract at the money that would let you have the right to buy 100 TSLA shares anytime in the next 30 days at a price of $800/share. With options, you have the ability to take your $2,000 trade and have the same controlling interest in an underlying stock as the person that just spent over $80,000 to buy the stock.

So to continue with the TSLA example, let’s say on March 12th TSLA was trading for $844 (the 5% gain you were expecting).  If you bought and sold the stock, you would have made a 5% return of $4,000. If you had bought the option, and then take on the assignment (let it expire) you would have the right to buy 100 TSLA shares at $800 and then turn around and sell them for $844.  Your profit would be $4,400 (less the cost of the option contract), a little more profit than had you bought the shares outright. However, if you look at your return it is more than 225% using options!!!

Options enable the small players to trade stocks that would normally be outside of their price range, and this is one of the reasons we have seen an increase in options trading popularity over the last year. In fact, options trading volume has more than doubled since the start of the pandemic.

Of course, the above trade is a dream, but the reality can be quite scary. If you took the options trade and TSLA dropped below $800, then your liability starts mounting, however, the loss with owning the stock could be over $80,000 while the total loss with buying the options would be the price you paid for the option which is $1,950.  A big reversal of the stock would be catastrophic in both cases but can be much worse for the stock owner.  So it is important to make sure you trade with proper risk management and protections in place. While the adage “with great power there comes great responsibility” was popularized within a different context, I feel it applies to trading options.

I know at this point you are probably thinking what the heck is he talking about and options are WAY too complicated for me.  Don’t worry, I’m going to teach and show you in a very simple and easy way how to trade options.  I am also going to provide trades that limit the max loss per trade, and reduce risk so get ready for some excitement!


I love teaching, technology, and trading. I knew early on that these were the things that would drive my career path. At the same time, I had kids to feed so I needed to supplement my income to support my growing family. I was able to achieve this through swing trading options. This allowed me to focus on my career and family while making modest yet consistent income, without having to be glued to my screen every day since swing trades last a few days or weeks.

We have all seen the traders with 10 monitors looking at charts all day, making trades, and watching and waiting on every single turn in the market.  I can tell you this is NOT my idea of trading.  I prefer swing trading, where I can set up trades to enter and exit every couple of days or even weeks.  Swing trades are meant to be short duration, and they are not intra-day, so you can set up your trades and manage them when you have time to yourself.

I once got advice from a great old friend that sometimes it is wise to look at the animal kingdom to learn how we can improve and live our lives.  There is a lot we can learn from the animal kingdom.  Some of the necessities we need as a human being is food shelter, social acceptance, and security.  As such, we should always have back up plans. Going back to the animal kingdom, if we look at say prairie dogs, for example, we know that they always have two holes.  One is for the main entry and exit and the other is for emergency exits.  Side hustles are just that and swing trading can be a really useful back-up/extra income plan.  It is your second hole!

Swing trading is also a great way to gain entry into the world of trading.  It is like dipping your toe in the water to test it before you jump in head first.  With swing trading, you can learn all about options and other financial instruments like futures, CFD, and currencies. The best part about swing trading is it can eventually turn into a full-time job, replacing your regular job.  Now, instead of trading during your free time, you can trade when you don’t have to be at work, leaving you with even more time to enjoy life and family. This is the ultimate freedom.  That is what I have done using several strategies that generate consistent, low-risk gains for 20+ years.

One of my favorite strategies that I have developed is called the C-LEAP strategy.  In this strategy, you enter and exit positions once every two weeks.  It is one of the least risky strategies I have ever developed, and I use a simple checklist to follow it. I have had past students generate tens of thousands of dollars every month using this strategy, and I have found it to be easy to learn and very consistent.

As you may or may not know, I am preparing some options courses where I will teach basic options trading as well as more advanced strategies. Anyone can learn how options work but the most important thing is what strategy you use.  You also need to know how and when to use the right strategy.  I love teaching people how to trade options and live by two principles when doing so: “Trading can be simple but it is not easy” and “I want EVERYONE to win not just me and in fact, I have no desire to win if everyone else loses.”. I am really excited to get to know some of you soon when I launch my LIVE options courses and get you on the path to winning trades!

I will also be running The Technical Traders’ new service – Options Trading Signals – where I will share my knowledge, model portfolio, a weekly trade, and opportunities report, and trade alerts with subscribers. Look for the launch of my newsletter and courses at the end of February! Make sure you sign up now to keep informed of the launch of my newsletter and courses. You can sign up at www.thetechnicaltraders.com/options-trading.

In the next article Neil will keep giving you reasons to love trading options, including how you can trade options with less risk than stocks, how you can better react to volatility with options compared to stocks, and how you can attain consistent profits with lower drawdowns by trading options. So come along with me for the ride and change your life with a new skill trading options!

All my best,

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen and Neil Szczepanski

U.S. Market Wrap and Forecast for Tuesday

Major index benchmarks traded above Wednesday’s highs at the close of Friday’s U.S. session while market players waited for Congress to wrap up the second Trump impeachment trial and get back to handing Americans the greenbacks needed to bankroll struggling Robinhood accounts.  Crude oil futures posted another round of new highs while the WTI contract closed in on 60 and bonds rolled over, testing 11-month lows.

Disney Lower After Earnings Pop

Dow component Walt Disney Co. (DIS) reversed after spiking above 195 in Thursday’s post-market, drifting into the red when analysts struggled to understand why collapsed movie, theme park, resort, and cruise ship revenue hasn’t weighed more on results. Disney+ added over 20 million subscribers during the quarter but a sweet Indian deal lowered average income per user more than 20%, suggesting the mouse is using the majority of free capital to hire accountants.

Tesla Inc. (TSLA) sold off within five points of range resistance and bounced back over 800 but this support test may continue next week. Many analysts believe the stock is over-priced at current levels and weak performance so far in 2021 could signal an intermediate correction that drops into strong support near 500. Whatever happens in coming weeks, the first quarter’s risk-free market probably won’t define the ‘2021 market’ by the end of December.

Holiday Weekend

U.S. markets are closed on Monday for President’s Day. That means mid-quarter options expiration will evolve over four sessions, instead of five. Small cap short interest plays that went crazy during Gamestop’s ramp are finding some buying interest, suggesting higher volatility than usual into next Friday’s closing bell. Congress will interrogate Robinhood, Melvin, and Reddit executives on Feb 18, ensuring the topic will impact trading through end of the 1st quarter.

Beyond the democratization of world financial markets, traders are squarely focused on free money in the form of $1,400 stimulus checks. The bar has been set so high by Democrats that any disappointment could drop major benchmarks 5% to 10%, despite the complacency you’re feeling right now. Smart money is not only pressing momentum plays at the moment but they’re also hedging bets, waiting to capitalize on the sheer stupidity of the immature trading crowd.

For a look at next week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Has Tesla Topped Out?

Tesla Inc. (TSLA) sold off more than 5% in Wednesday’s session, turning tail just two days after disclosing a $1.5 billion bitcoin investment. The EV manufacturer has plans to accept the cryptocurrency as legal tender, subject to local jurisdictions. The news wasn’t cited after the decline but could signal investor discomfort, which will expose income to a volatile financial instrument that’s risen more than 650% since the end of 2019.

Chinese Battery Fires

On the same day, CNBC reported that Chinese regulators held a meeting with Tesla to discuss quality issues after multiple complaints from customers about battery fires. This issue doesn’t sound like a big deal but other fires have been reported on a sporadic basis, leaving open the possibility of a recall that costs the company millions of dollars. Beyond that, February has been a good month, with Piper Sandler raising the firm’s price target to a Street-high $1200.

However, not all analysts are bullish on Tesla’s outlook. JMP securities analyst Joseph Osha downgraded the stock to ‘Market Perform’ two weeks ago, noting “even looking at other category-killer technology companies, we cannot justify higher target multiples than 7x revenue and 35x EBITDA, which is where we have been. Discounting those outcomes to the present at 8%, which again is consistent with our previous approach, suggests the stock is fairly valued”.

Wall Street and Technical Outlook

Wall Street consensus has deteriorated after historic 2020 share gains, with a mixed ‘Hold’ rating based upon 8 ‘Buy’, 1 ‘Overweight’, 15 ‘Hold’, and 2 ‘Underweight’ recommendations. More importantly, 8 analysts now recommend that shareholders close positions and move to the sidelines.  Price targets currently range from a low of just $67 to a Street-high $1,200 while the stock is trading more than $130 above the median $687 target.

Tesla topped out at 884.47 at the start of 2021 and failed a late January breakout attempt after posting an all-time high at 895.90. The subsequent pullback to 780.10 now marks support in a rectangular trading range that could decide the stock’s fate well into the second quarter. The 50-day EMA near 750 could act as a line-in-the-sand after a range breakdown, giving bulls a final opportunity to retake control of the ticker tape.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Oil Set to Snap 8-day Advance while Consolidative Tone Emerges in FX

The settlements were just inside Tuesday ranges, though the Dow Industrials set a record close. Yet, the spillover to equity trading in the Asia Pacific region and Europe today. Most of the large Asia Pacific markets, including Japan, China, South Korea, and Taiwan, were closed. Europe’s Dow Jones Stoxx 600 is up about 0.35% in late morning turnover, though momentum is absent. US shares are trading with a firmer bias.

After seeing strong demand at the 10-year note auction yesterday, the US benchmark is yielding about 1.14% today. European yields are off 1-3 bp, with the Italian yield at a new record low below 50 bp. The dollar is narrowly mixed against the major currencies.

The dollar bloc and the euro are slightly higher, while the Scandis, yen, and sterling are somewhat heavy. Emerging market currencies are mostly higher, and the JP Morgan Emerging Market Currency Index is extending its advance for a fifth consecutive session. On the other hand, oil is threatening to snap an eight-day rally, leaving the March WTI contract in a narrow range above $58. After being rebuffed near the 200-day moving average yesterday (~$1855.5), gold is trading in about a $5-range on either side of $1840.

Asia Pacific

If the US-China relationship is the most important in the world, as has often been claimed, one would not know it from the communication over the past few weeks. President Biden has indicated that there “has not been an occasion” to talk to China’s leader Xi. He added that there “was no reason not to.” The highest communication so far has been a telephone call between Secretary of State Blinken and the top Chinese diplomat Yang Jiechi at the end of last week.

It was like two alpha dogs marking their territory and jousting over democracy and human rights. Biden found his occasion to talk to Xi for China’s New Year holiday, and not coincidentally, the call followed the first formal meeting between Biden and Taiwan’s de facto ambassador to the US (who, as we have noted, was invited to the inauguration for the first time since the one-China policy was adopted more than 40-years ago).

Biden and Xi apparently are engaging in subtle diplomatic messaging, like how partners in a bridge game may communicate. Biden promises a different kind of relationship with Beijing than the Trump administration, and of course, he has to say that. Some tactics may be different, perhaps it will be more multilateral, but it is not like a coalition of the willing just waiting for US leadership.

Europe’s willingness to block Huawei might have been somewhat less enthusiastic if it did not have homegrown alternatives. As the EU demonstrates with Russia, it can maintain trade ties while being critical of human rights violations. It also imposes sanctions to express its disapproval. Despite reports in the popular press about shifting supply chains out of China, German companies appear more likely to expand there than leave, according to recent surveys.

Perhaps, President Biden himself may have let the proverbial cat out of the bag about the lack of a call with Xi until now. Despite Biden being the most experienced President since Nixon, who was also the vice president, and his claim that he may have spent more time with Xi than any foreign leader, Biden has yet to formulate an operational policy as opposed to declaratory policy (rhetoric).

Yesterday, Biden announced a new Pentagon task force to review US defense policy toward China. The mandate looks broad and will extend well beyond military strategy to include technology and US alliances and partnerships in Asia. Biden has also ordered another policy review of Trump’s tariffs and efforts to block or force the sale of other Chinese companies (e.g., Tiktock and WeChat).

However, efforts to force the sale of TikTok have reportedly slowed. We had argued that the US’s bipartisan attitude toward Beijing changed when Xi suspended term limits and, in word and deed, pulled away from many of the liberalization efforts that had been evolving since the late 1970s. Until proven otherwise, the take away is that investors and businesses should expect greater continuity in the US stance toward China.

The dollar held support near JPY104.40 yesterday and is trading quietly about a fifth of a yen range below JPY104.75. Around $1.1 bln of options expire today at JPY105.00-JPY105.05. Tomorrow there are $2.7 bln in options at JPY105 that also expiring. The Australian dollar rebounded after briefly and marginally slipping below yesterday’s low (~$0.7715). The bounce stalled in front of yesterday’s high (~$0.7755), which is also roughly where the downtrend line off last month’s highs is found. With the onshore market closed, the focus is on the offshore yuan. The dollar finished yesterday near CNH6.4290 after falling to almost CNH6.4125. It has been mostly within yesterday’s range today.


The EC has formally rejected the UK request to reset the post-Brexit trade relationship and opposed delaying border checks. This has been tipped previously. Separately, but related, Bank of England Governor Bailey said that the requirement for EU access for UK financial services was unrealistic and that no other country could agree. Financial services, a key comparative advantage for the UK, were not covered in the trade deal struck at the end of last year. Meanwhile, figures out earlier today showed that Amsterdam overtook London last month in European share trading. Roughly, turnover in the UK fell by half.

This chapter of Italy’s political drama appears to be winding down. The Five Star Movement is holding an online vote today to determine if Draghi will receive its backing. There are almost 120k members, and the results may be known in the North American afternoon. The party’s leadership is encouraging members to support Draghi. Regardless of the outcome, Draghi is expected to meet with President Mattarella tomorrow to confirm that he has majority support in parliament, and most importantly, present a list of ministers in the new government.

The euro is in about a 20-tick range above $1.2115 and inside yesterday’s range ($1.2110-$1.2145). We had anticipated a move into the $1.2100-$1.2150 range this week. The euro’s decline from early January through early February may have run its course, but it is not yet clear. Although the five-day moving average is about to move back above the 20-day moving average for the first time in a month, we suspect it requires a move above $1.22 to confirm the euro’s downside correction is complete.

Sterling set a new high yesterday since May 2018 near $1.3865 but is consolidating, like the euro inside yesterday’s range. Initial support is seen in the $1.3790-$1.3800 area. Tomorrow, the UK reports December trade., industrial production, and service figures, but the highlight is Q4 GDP. The UK economy is expected to have grown by 0.5% quarter-over-quarter, which would leave it about 8% smaller year-over-year.


The first two legs of the US quarterly refunding were well received, and today, the conclusion with a $27 bln sale of 30-year bonds. Yesterday investors learned that headline and core CPI converged at 1.4% rather than1.5%. We don’t think that is a significant deviation and reiterate that the base effect means that US measured inflation will rise after the February CPI. Headline will likely rise above 2% in Q2.

However, while not breaking new ground in his assessment that the labor market remains distressed, Federal Reserve Chair Powell continued to play down the risk of sustained elevated inflation. Today’s weekly initial jobless claims will bear out his point. Even though they may decline for the fourth consecutive week, more than 750k people are expected to have filed for benefits for the first time. Lastly, reports suggest that the White House may soon formally nominate Professor Lisa Cook from the University of Michigan to the Fed’s Board of Governors’ open seat. Note that over the next year, the leadership terms of Powell, Clarida, and Quarles end.

Yesterday we mistakenly had Mexico’s central bank meeting, but it is today. The analysis is the same. A 25 bp rate cut is widely expected, and it will bring the target rate to 4%. With January CPI at 3.54%, its perceived room to maneuver is limited. Before the outcome of the meeting, later in the North American session, it will report December industrial output figures. A marked slowing after the 1.1% gain in November is anticipated.

Tesla’s announcement earlier this week that it purchased $1.5 bln of bitcoin and may buy more and accept bitcoin payment for cars, as well as willingness to buy gold and gold exchange-traded funds, drew a great deal of interest. If it is going to be something other than an oddity, it has to be duplicated. Yet, there is a reason why most corporations are not going to follow suit.

Corporate treasurers would generally recognize that taking on a volatile asset that does not grow out of business is speculative, and that is not their function. What if Tesla accepted bitcoin for payment? That is something corporate treasurers know about: fx risk. You receive payment in one currency, yet costs of production are in a different currency.

And what about paying bitcoin for a new car? It might be a nice marketing plug, and crypto fans like it, but will anyone really do it? Telsa will not be the first to let a customer pay with bitcoin, and it begs the question of why bitcoin is not used for consumer transactions. The answer is one word: volatility. Imagine paying in bitcoin only to see it rise by nearly 100% like it did from the middle of December to the middle of January. It is like the urban myth of the unlucky fellow who bought a pizza with a bitcoin back when.

The US dollar is trading heavily against the Canadian dollar. There was not even an attempt of follow-through greenback buying after yesterday’s firm close. A break now of CAD1.2660 could signal a return toward the multi-year low set last month, a little below CAD1.26. For the first time in two-and-a-half weeks, the greenback is being sold below MXN20.00. The MXN19.95 area represents the (61.8%) retracement objective of the dollar’s bounce off the MXN19.55 area on January 21. Initial resistance may be seen in the MXN20.00-MXN20.10 area.

This article was written by Marc Chandler, MarctoMarket.

For a look at all of today’s economic events, check out our economic calendar.

Mastercard Joins Tesla, PayPal in Crypto Revolution

Payments giant Mastercard Incorporated (MA) announced Wednesday via a company blog that it plans to start supporting select cryptocurrencies directly on its network later this year. The decision comes three months after rival PayPal Holdings, Inc. (PYPL) said it would add select cryptocurrencies to its platform and several days after electric car maker Tesla, Inc. (TSLA) announced in an SEC filing that it has invested $1.5 billion into Bitcoin and plans to accept the pioneer crypto as payment.

Although Mastercard did not disclose which digital currencies it will support, a source familiar with the matter told CoinDesk that digital currency payments would settle in cryptocurrency at participating merchants. Mastercard already has existing partnerships with prominent crypto payment firms Wirex and BitPay but currently requires a conversion of digital currency payments back to fiat currencies on its network.

“Our change to supporting digital assets directly will allow many more merchants to accept crypto — an ability that’s currently limited by proprietary methods unique to each digital asset. This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases,” wrote Raj Dhamodharan, the company’s executive vice president of digital asset and blockchain products.

Through Wednesday’s close, Mastercard stock has a market capitalization of $332 billion, issues a modest 0.53% dividend yield, and trades 6.37% lower since the start of the year.

Wall Street View

Last month, Jefferies analyst Trevor Williams upgraded the stock to ‘Buy’ from ‘Hold’ and raised the firm’s price target to $415 from $315. Williams argues that the company’s cross-border payments division, which accounts for around 25% of total revenues, sits well-positioned to benefit from a recovery in travel after the vaccine rollout.

Mastercard also racks up positive coverage elsewhere on Wall Street. It receives 29 ‘Buy’ ratings, 4 ‘Overweight’ ratings, and 9 ‘Hold’ ratings. Currently, no analysts recommend selling the shares. Look for further brokerage research in the weeks ahead after the company’s latest pledge to brining digital currencies to its platform.

Technical Outlook and Trading Tactics

Mastercard shares have formed a short-term inverse head and shoulders over the past two months, with the pattern’s head finding a confluence of support from the 200-day simple moving average (SMA) and a horizontal trendline. Furthermore, the relative strength index (RSI) sits just above 50, giving the price ample room to test higher prices before consolidating.

Those who buy here should consider setting a take-profit order near the stock’s all-time high (ATH) at $367.25 while managing risk with a stop placed beneath the pattern’s right shoulder at $330.

For a look at today’s earnings schedule, check out our earnings calendar.

Bubblicious Asset Prices, Debt Dependency, Economic Collapse

And, while some might be more stringent in their terms of definition and applicability, investors in stocks, bonds, real estate, etc. – pretty much anything with a $ sign in front of it – might want to rethink the current state of affairs as it pertains to valuation of their financial assets.

According to Merriam-Webster, a bubble is “a state of booming economic activity (as in a stock market) that often ends in a sudden collapse”.

More accurately, though, the bubbles to which we are referring have more to do with price valuations, not economic activity.

The economy of the United States has improved considerably since April 2020; but it hasn’t recovered fully. Nor, has it exceeded its previous level from prior to the pandemic. So, the term bubble probably isn’t applicable to current economic activity.


However, in the case of prices for stocks, bonds and other financial assets, those prices are already discounting years of profitability.

Even allowing for a highly generous application of price-to-earnings ratios, current prices far exceed the most favorable expectations for future growth.

The problem is much worse, though, than simple overvaluation of assets. The US and world economy is debt-dependent. The excessive valuations showing in financial asset prices are a result of an abundance of cheap credit.

One example is bond prices, which have risen to excessively high prices as interest rates fall to unsustainable historically low levels. Financial risk appears to be non-existent amidst the clamor to own debt at almost any price.

Economic activity is funded primarily by cheap credit; whether it be mortgages, business activity, even retail consumption. Without the access to unlimited amounts of credit the world economy would come to a standstill. The situation is precarious.


The economy is not in a bubble, but it is very fragile and could collapse at any time. We saw how quickly this can happen last March.

Some are too quick to assume that the Fed will step in and take whatever steps are necessary to arrest the hellish descent when it occurs. Of course, they will try. But they likely won’t be successful.

We have advanced too far down the primrose path of money substitutes and cheap credit. And let’s not forget, that whatever the Fed’s intentions are (or were), they caused the Great Depression of the 1930s.

The Next Great Depression will be worse and last longer.

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT  and  ALL HAIL THE FED!

GM Sharply Lower After Profit Warning

General Motors Co. (GM) has sold off nearly 6% in Wednesday’s session after beating Q4 2020 top and bottom-line estimates while lowering 2021 earnings-per-share guidance. The automaker earned $1.93 per-share in the quarter, $0.32 better than estimates, while revenue grew 21.7% to $37.5 billion, beating consensus by more than $1 billion. 2021 EPS is now expected to range between $4.25 and $5.25, about 20% below previous guidance, due to a global semiconductor shortage.

Quantum Leap Into Electric Vehicles

The company warned about the chip shortage on Feb. 3 but the bearish guidance still caught market watchers off-guard, contributing to an aggressive ‘sell-the-news’ reaction. Rally momentum had kept GM trading near all-time highs in the last three weeks but bears could now reload aggressive short sales. However, downside in general has gotten harder to predict, with hedge funds under the gun and piles of stimulus money sloshing around the equity markets.

General Motors has benefited from that capital flood, which triggered a quantum leap into the electric vehicle era on the heels of Tesla Inc.’s (TSLA) historic uptrend. GM spent years and billions of dollars defending its gas guzzlers but has now gotten religion and is investing $27 billion in EV products through 2025, when it expects to have 30 fully electric vehicles in production. In turn, the automaker could capture the highest EV market share in North America.

Wall Street and Technical Outlook

Wall Street consensus has risen to a ‘Buy’ rating in the last year, based upon 15 ‘Buy’, 1 ‘Overweight’, and 2 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $48 to a Street-high $80 while the stock opened Wednesday’s session about $5 below the median $60 target. The warning may not do too much technical damage, given this humble placement.

General Motors struggled to overcome resistance in the 40s for almost a decade, reversing in that price zone in 2011, 2014, and 2017. Slightly higher highs during those peaks generated a rising highs trendline that was mounted on heavy volume in January 2021. Breakout support could get tested several times this year. potentially offering low risk buying opportunities in the upper 40s and low 50s while a breakdown ends the uptrend that started at the March 2020 low.

For a look at this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

BTC/USD Analysis: Yet Another Symmetrical Triangle

Mr. Musk in his latest tweets backed Bitcoin and other currencies, in one of his tweets he said “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.” The question which remains is if other companies follow the lead of Tesla in accepting cryptocurrencies.

Bitcoin set a new All-time-high yesterday hitting $48188, the coin still has plenty of room for growth as the long-awaited $50000 is closer than ever.

There is a great support of the uptrend clearly traced on an hourly BTC/USD chart.

Bitcoin price on Overbit

The pair has also formed a symmetrical triangle and a breakout from the triangle will signal the bullish continuation. The coming resistances if the breakout is confirmed are at $48920 and $51050, though panicking sellers might sell Bitcoin at levels near $50900. MACD also nears the signal line and will cross when BTC escapes the triangle trap.

Bitcoin’s 4 hour chart on other hands has another story to tell. The level where BTC/USD is currently is very wild as Bitcoin has tested yet another resistance.

Bitcoin price on Overbit

As the chart above suggests, Bitcoin might touch the dynamic resistance once again at $4900 – $49200 levels and retrace. The price action similar to the February 8ths jump was seen on January 4th. Such price action suggests that as stronger the impulse wave, the deeper the correction.

Bitcoin price on Overbit

The best price action would be to test $49000 – $49450, retrace to $41400 and go for another bullish run towards $55000. Breakout from the triangle will signal the short-term trend continuation of the pair.

Bitcoin is still bullish, notwithstanding the mid and short-term corrections, as more companies invest in Bitcoin and accept it as a payment method that drives value to the cryptocurrency.

U.S. Market Wrap and Forecast for Monday

January’s Non-Farm Payrolls report added 49,000 new jobs while the unemployment rate fell from 6.7% to 6.3%. December jobs were revised sharply lower, continuing a bleak employment scenario as the Western world works through the last stages of the winter’s second pandemic wave. The equity market yawned and bonds sold off after the news, squaring positions into the weekend so that short-term options market makers get paid.

Ford vs. Tesla

SP-500 Volatility Index (VIX) fell to the lowest low since early December. GameStop Inc. (GME) shareholders declared their loyalty in a widely read Reuters article, ready to become the bagholders of a new generation. Ford Motor Co. (F) CEO Jim Farley (no relation) declared the new Mustang Mach-E will compete successfully with Tesla Inc.’s (TSLA) Model Y, forgetting that brand is everything in the third decade of the new millennium.

Snap Inc. (SNAP) recovered after a 9% post-earnings decline, lifting to an all-time high. Fitness juggernaut Peloton Interactive Inc. (PTON) fell into the 140s despite beating top and bottom line estimates and raising first quarter guidance. The company has to compete with real fitness centers in coming quarters, lowering expectations about their vertical growth trajectory. Wynn Resorts Ltd. (WYNN) hit an 11-month high despite a 58.5% year-over-year revenue decline, offering shareholders an opportunity to get out with their capital still intact.

Heading into Monday

Fourth quarter earnings season draws to a close next week, with reports from Dow components Cisco Systems Inc. (CSCO) and Walt Disney Co. (DIS) as well as Twitter Inc. (TWTR), and General Motors Co. (GM). Disney is trading near an all-time high even though their wildly successful streaming service has done little to replace income lost from empty movie theaters, dry-docked cruise ships, and socially-distanced theme parks.

Sky’s the limit for U.S. equities, at least until the Biden administration hits a brick wall with their massive stimulus bull. At least to the point, left-leaning politicians have avoided most of the logistical mistakes made by the Obama administration in 2009.  The Republican Party is trying to rebrand itself after the departure of Donald Trump and their infighting has allowed the Democratic-controlled Congress to move aggressively on economic policy.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Market Wrap & Forecast for Tuesday

U.S. equity bulls took control on the first day of February, lifting the Dow Industrial Average back above 30,000. SP-500 and Nasdaq-100 indices recouped short-term losses, closing at or above Friday highs after holding support going back to November. Short squeezes on beaten-down small caps faltered, dropping GameStop Inc. (GME) more than 40% while silver stocks and futures picked up the slack, lifting the less-loved precious metal to an 8-year high.

Monday Wrap-Up

Tesla Inc. (TSLA) bounced above 800, gaining around 6% on the session. Alphabet Inc. (GOOG) and Amazon.com Inc. (AMZN) booked strong gains ahead of Q4 reports after Tuesday’s close. SP-500 index bounced at the 50-day EMA, completing the first test since the November breakout. Moderna Inc. (MRNA) gave back gains booked after Dow component Johnson & Johnson (JNJ) disappointed investors with 66% vaccine efficacy last week.

Silver replaced Gamestop as a media obsession on Monday, with retail traders ‘allegedly’ pouring into equity and futures plays. Rather, it feels like big money is now moving the small fry, giving them the illusion of ‘democratization’ while hanging them upside down to shake out quarters. A history lesson might help at this point, with Net bubble survivors recalling that 95% or more young ‘market wizards’ blowing out their accounts in the 2000 to 2002 bear market.

The Week Ahead

This is January jobs week, with the ADP employment report in Wednesday’s pre-market and Non-Farm Payrolls on Friday morning. It’s been a terrible winter in the United States due to the pandemic so little improvement in the weak employment situation is likely. However, the market is discounting at least six months into the future and analysts expect dramatic improvement in the second half of 2021, after vaccines work their way through the population.

Market seasonality shifts to ‘bearish’ after the first day of a new month, predicting consolidation of Monday’s gains into mid-week. It feels like short squeeze momentum is winding down, with Reddit pumps hitting an invisible wall of inertia, driven by regulators and brokers seizing control of the ticker tape. You have to worry about Robinhood traders hanging onto exposure at this point because their market days could be drawing to a close.

For a look at all of today’s economic events, check out our economic calendar.

Tesla Declines After Missing Earnings Estimates

Tesla Video 28.01.21.

Tesla Stock Moves Lower After Q4 Report

Tesla has recently reported its fourth-quarter results. The company reported revenue of $10.74 billion and GAAP earnings of $0.24 per share, beating analyst estimates on revenue and missing them on earnings.

The company reported solid production growth but its automotive margin was 24.1% which was below analyst consensus of 27.2%. Tesla stated that it was planning to grow its manufacturing capacity as quickly as possible. The company commented: “Over a multi-year horizon, we expect to achieve 50% average annual growth in vehicle deliveries”.

Interestingly, Tesla shares found themselves under pressure after the release of the report although they have managed to gain some ground from recent lows and are down by about 2.5% at the time of writing. This is an interesting development as the S&P 500  managed to gain solid momentum after the release of better-than-expected economic reports on Thursday.

Will Investors Focus On Tesla’s Profitability?

Tesla shares had a great run in 2020 and also had a strong start in 2021 so investor expectations were very high.

As usual, Tesla’s management remained focused on the big picture as it positioned the company for the future. However, investors may start to focus more on the company’s financial results.

While Tesla is finally profitable, the level of this profitability may become increasingly important as Tesla is trading at about 200 forward P/E which is an extremely rich valuation.

While such valuation can be explained by aggressive growth forecasts, Tesla will still have to deliver solid results in the near term to please the market. At a market capitalization of about $800 billion, Tesla cannot rely on retail traders’ cult following to move higher as it clearly needs additional institutional money to get above the psychologically important $1 billion market cap level.

At the same time, the market remains hungry for growth stories so Tesla shares have good chances to test the $1,000 level if the company continues to actively expand its customer base around the world.

For a look at all of today’s economic events, check out our economic calendar.