Tesla Breaks Triangle Resistance After S&P-500 News

Tesla Inc. (TSLA) is trading higher by more than 10% in Tuesday’s U.S. session after being added to the S&P-500 index, effective at the open of trading on Monday Dec 21. The move caught market players and true believers asleep-at-the-wheel after the S&P Dow Jones Indices committee snubbed the EV manufacturer in September. CEO Elon Musk is currently in quarantine after testing positive for COVID-19 and hasn’t commented on the inclusion.

Tesla Bulls Hoping For New Highs

Bulls hope the addition marks the start of a breakout but index changes usually trigger one-day ‘events’, rather than sustained trends in either direction. It looks like price action has already settled into a trading range between 440 and 462, which has technical implications going forward. In addition, the stock has just reached the midpoint of the two-month trading range, lowering odds for a rapid ascent, especially after mixed Q3 earnings in October.

Tesla’s SEC-mandated 10-Q recently disclosed that capital expenditures will increase to the $4.5 billion to $6.0 billion range in the next two fiscal years while cash flow is expected to exceed spending. As the document notes “our business is now consistently generating cash flow from operations in excess of our level of capital spend, and in the third quarter of 2020 we also reduced the use of our working capital credit facilities. We expect our ability to be self-funding to continue as long as macroeconomic factors support current trends.”

Wall Street And Technical Outlook

Wall Street consensus has deteriorated in reaction to historical share gains and uneven quarterly performance, with a ‘Hold’ rating based upon 9 ‘Buy’ and 10 ‘Hold’ recommendations. A stomach-churning 9 analysts now recommend that shareholders close positions and move to the sidelines. Price targets currently range from a low of just $40 to a Street-high $578 while the stock is now trading about $60 above the median $382 median target.

Tesla posted an all-time high at 502 just one session after the Aug. 31 five-for-one stock split and entered a symmetrical triangle pattern. The news gap triggered a triangle breakout but price action has already entered a test at new support so we’ll have to wait because a failure swing is possible. The 435 to 440 zone marks the line-in-the-sand between bulls and bears in this scenario while resistance at the September high near 462 has already repelled buying interest.

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

Stocks Pull Back Amid Fears Of New Anti-Virus Restrictions

Coronavirus Is Back Into Spotlight As States Announce New Virus-Related Restrictions

S&P 500 futures are losing ground in premarket trading as traders turn their attention to new virus-related measures in the U.S.

Some states have announced their decisions to limit public gatherings while California decided to close non-essential businesses in many counties.

Yesterday, U.S. reported more than 160,000 new cases of the disease, and the current trend is worrisome. If the situation does not improve in the upcoming days, more restrictions could be introduced.

The market hopes that vaccines from Pfizer/BioNTech, Moderna and other producers will be able to solve the problem, but mass vaccination is still months away.

Meanwhile, negotiations regarding the new coronavirus aid package have completely stalled, and the economy may lack the necessary support during the challenging winter months.

Still, there is plenty of money on the sidelines waiting for a pullback, and it remains to be seen whether short-term virus-related worries will be sufficient enough to put real pressure on stocks.

Tesla Is Set To Join S&P 500

It’s a great day for Tesla bulls as the stock will join S&P 500 before the market open on December 21, 2020.

Tesla had a market capitalization of almost $400 billion at yesterday’s close, and index funds will face a challenging task rebalancing their portfolios to include Tesla.

Not surprisingly, Tesla shares are gaining more than 13% in premarket trading as investors prepare for a wave of forced buying from index funds.

Tesla’s strength also helps other tech stocks, and Nasdaq futures are up in premarket trading while S&P 500 futures are losing more than 0.5%.

Retail Sales Increase By 0.3% Month-Over-Month

The U.S. has just reported Retail Sales data for October. Retail Sales grew by 0.3% month-over-month compared to analyst consensus which called for growth of 0.5%. On a year-over-year basis, Retail Sales increased by 5.7%.

The slowdown in Retail Sales growth may put additional pressure on stocks as the U.S. economy is heavily reliant on consumer activity.

The virus situation got worse in November, so the market may wonder whether Retail Sales will continue to grow in the last two months of the year.

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

Few US Stocks That Could Brighten Up Your Portfolio

Markets are really quiet recently and that is why we will shift our focus towards the American Stocks, coming in right on time as Axiory have increased their product offering by introducing CFD stocks on MT4. This can significantly help you diversify your portfolio and take advantage of more trading opportunities.

Apple is testing the upper line of the symmetric triangle.

Home Depot locked in the sideways trend, waiting for a breakout.

McDonald’s defending the neckline of the H&S formation.

Netflix aiming for the lower line of the rectangle.

Pfizer with a false bullish breakout.

Prudential enjoying the buy signal after the breakout of the upper line of the triangle.

Tesla testing the lower line of the triangle.

Western Digital with a fresh buy signal coming from the breakout of a major resistance.

Micron Technology enjoying a proper buy signal after making new long-term highs.

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

Tesla Gains Evaporating After Strong Open

Tesla Inc. (TSLA) is trading higher by less than 2% in the first hour of Thursday’s U.S. session after posting a Q3 2020 profit of $0.76 per-share, $0.16 better than expectations, while revenue rose an impressive 39.2% year-over-year to $8.77 billion, beating estimates by about $500 million. Results marked the fifth consecutive quarterly profit for the EV manufacturer, with sales of regulatory credits marking the difference between a profit and a loss.

Credit Sales Underpin Tesla Profit

The company insists it will deliver a half million vehicles in 2020 but that lofty goal will require blowout sales in the fourth quarter. CEO Elon Musk hedged his bets during the post-earnings conference call, stating they should have the capacity to produce those vehicles but achieving the sales goal has become more difficult. In addition, a China industry report recently noted that Tesla Model 3 sales remained flat between July and September, after a second quarter surge.

Needham’s Rajvindra Gill delivered a skeptical post-report analysis, noting “while we are encouraged that automotive margins have improved since Tesla’s factories returned to normal operations, if you exclude credit revenue, the company is still showing consistent GAAP net losses. Moreover, we believe there’s a high bar set for Q4 deliveries as Tesla would have to grow deliveries 30% quarter-over-quarter, well above historical patterns of 13%, in order to hit the 500K target.”

Wall Street And Technical Outlook

Wall Street has grown more cautious in recent months, despite two modest upgrades after the report. Consensus now stands at a ‘Hold’ rating based upon 9 ‘Buy’, 11 ‘Hold’, and a stomach-churning 11 ‘Sell’ recommendations.  Price targets currently range from a low of just $19 to a Street-high $578 while the stock opened Thursday’s U.S. session more than $90 above the median $346 target. This lofty placement suggests that overly-aggressive short sellers are keeping a floor under the stock price.

Tesla broke out above the February high at 194 at the start of July and took off in a powerful trend advance that posted an all-time high at 502.49 exactly two-months later. Price action then eased into a symmetrical triangle pattern that’s still in force as we head through the fourth quarter.  Support at 400 and resistance at 460 define the edges of this classic pattern, with odds now evenly weighted between bullish and bearish outcomes.

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

 

 

Tesla Posts Fifth Straight Profit in Q3 with Record Revenue of $8.77 Billion

Tesla Inc, an American electric vehicle and clean energy company, reported a profit for the fifth consecutive time in the third quarter with record total revenue of $8.77 billion, largely driven by substantial growth in vehicle deliveries as well as growth in other businesses, sending its shares up over 5% in pre-market trading on Thursday.

The manufacturer of high-performance electric vehicles said its total revenue rose about 40% to an all-time high of $8.77 billion, up from $6.30 billion registered a year earlier. That was higher than the market expectations of $8.36 billion.

“Tesla will need to have demand to keep plants utilized but demand continues to not be a problem with third-quarter deliveries up 43.6% to 139,593. Free cash flow for the quarter was solid at about $1.4 billion, up about $1 billion year-over-year, but got help from $397 million in emission credit sales. We calculate Tesla’s pretax income at $158million excluding credit sales,” said David Whiston, sector strategist at Morningstar.

“Still, thanks to the September $5 billion equity offering, Tesla’s second of the year, cash at quarter-end was very strong at $14.5 billion and management guided for 2021 and 2022 capital expenditure to be incrementally higher (we assume from 2020 levels) by $2 billion to $2.5 billion. We don’t see Tesla in a liquidity crisis next year and if it was running short of funds, we think it can easily raise capital. Possible inclusion to the S&P 500 index remains a catalyst to the stock in our opinion, but we do not think it’s a sure thing due to credit sales and Tesla’s small profits for a company with its large market capitalization.”

Excluding items, Tesla registered a profit of 76 cents per share. It reported net income of $331 million, or $874 million excluding stock-based compensation awards given to Musk, Reuters reported.

Tesla said its revenue from the sale of regulatory credits were $397 million and without that the electric car maker would have been difficult to see a profitable quarter.

Tesla shares closed 0.17% higher at $422.64 on Wednesday and rose over 5% in pre-market trading on Thursday. The stock is up over 400% so far this year.

Tesla Stock Price Forecast

Thirty equity analysts forecast the average price in 12 months at $335.54 with a high forecast of $578.00 and a low forecast of $19.00. The average price target represents a -20.61% decrease from the last price of $422.64. From those 30 equity analysts, even rated “Buy”, thirteen rated “Hold” and ten rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $333 with a high of $716 under a bull scenario and $108 under the worst-case scenario. Tesla received a $450 price objective from analysts at Goldman Sachs Group. The firm currently has a “neutral” rating on the electric vehicle producer’s stock.

Several other analysts have also recently commented on the stock. Independent Research reiterated a “sell” rating and set a $114.00 price target on shares of Tesla in September. Citigroup lifted their price target to $117 from $110 and gave the company a “sell” rating. JMP Securities cut Tesla from an “outperform” rating to a “market perform” rating. At last, New Street Research upgraded Tesla from a “neutral” rating to a “buy” rating and set a $578.00 target price.

Analyst Comments

“We are positive on Tesla’s leadership across: EVs, Batteries & FSD and see an opportunity for TSLA to further penetrate these key TAMs. Why not OW? At its current valuation, we believe the market has already discounted a large part of Tesla’s growth potential. Further, competition in the EV market continues to intensify from traditional OEMs, startups & mega-tech firms,” said Adam Jonas, equity analyst at Morgan Stanley.

“We also continue to harbour concerns over the long-term efficacy of an auto business commercializing advanced tech that is economically sensitive within China. As Tesla expands production, they will likely need to raise more capital. While there is a strong appetite in the short-term, it will dilute shareholders in the long run,” Jonas added.

Upside and Downside Risks

Upside: 1) Tesla China profitability surprises to the upside. 2) Europe Giga success. 3) Model Y margin accretion. 4) Software margin accretion. 5) Tesla the Supplier? 6) Cybertruck – highlighted by Morgan Stanley.

Downside: 1) May never make the leap to a shared mobility model, limiting itself to niche OEM status. 2) Execution risk / COVID-19. 3) Openness of capital markets to funding Tesla’s strategic ambitions. 4) Large & better-capitalized technology firms emerging as competitors.

Check out FX Empire’s earnings calendar

Earnings Preview: Tesla in Focus

Such mouth-watering gains have made it the best performer on the Nasdaq in 2020 and golden child of the automaker industry.

This is incredible stuff, especially when considering how the coronavirus pandemic has severely punished the majority of stocks across the globe. Although the phenomenal rally witnessed over the past few months make Tesla one of the star performers in 2020, the upside has lost momentum recently with shares on their longest losing streak since mid-March. Stocks tumbles as much as 2.4% on Tuesday, bringing losses to losses to as much as 8.3% over the past four days – the biggest fall over such a period since September 25.

All eyes will be on Tesla’s latest earnings report which is scheduled to be released after US markets close on Wednesday. Wall Street is expecting earnings of $0.56 a share, up from the $0.37 seen in the same period last year. Revenue is pegged at $8.26bn, a hefty 31% increase on last year’s $6.3bn. If the company is able to dish out an upside surprise, this could inject Tesla bulls with enough inspiration to elevate prices back to all-time highs.

Digger deeper, Tesla already offered an appetizer over what to expect for its earning after revealing that it produced 139,000 cars during the third quarter of 2020. This was over 50% more than Q2 thanks to a jump in demand for the Model 3 and new Model Y. While such a performance would be a welcome development for stocks, investors are more concerned whether Tesla will be able to deliver 500,000 vehicles this year.

The million dollar question is whether Tesla can deliver 500,000 cars in 2020. 318,777 cars have already been created during the first three quarters of 2020. This means that Tesla needs to sell at least 181,223 cars during the final quarter of 2020 to achieve this ambitious target. Whatever the outcome of the pending earnings report, it will certainly have an impact on Tesla stocks.

Talking technicals, prices have been under pressure on the past few weeks after investors reversed from Tesla stocks following Elon’s Musk’s flat Battery Day. A sense of anticipation is mounting ahead of the earnings report. Will Tesla bulls be instilled with enough inspiration to send prices back towards $500 or will a disappointing report bring bears back into the picture? Time will tell.


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Volkswagen Expects 90% Electric Car Sales in 2021; Target Price $159

Volkswagen AG, a German multinational automotive manufacturing company, said on Wednesday that its electric car sales will probably account 90% of total sales in Norway in 2021 and replace polluting petrol and diesel engines by 2023, Reuters reported citing the auto maker’s local importer.

An all-time high 61.5% of new cars sold in Norway in September were powered by fully electric engines, registration data showed, up from 42.4% last year. The debut in September of Volkswagen’s highly anticipated ID.3 model vaulted it to the top of the Norwegian sales ranking, outselling California-based Tesla‘s Model 3 and Geely‘s Polestar 2 from China, according to the Norwegian Road Federation, Reuters reported.

At the time of writing, Volkswagen’s shares traded 1.43% to EUR139.44 on Wednesday; however, the stock is down over 20% so far this year.

Volkswagen stock forecast

Fourteen analysts forecast the average price in 12 months at EUR 159.31 with a high forecast of EUR 190.00 and a low forecast of EUR 135.00. The average price target represents a 15.72% increase from the last price of EUR 137.67. From those 14, nine analysts rated “Buy”, three rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley target price is EUR 135 with a high of EUR 180 under a bull scenario and EUR 90 under the worst-case scenario. Volkswagen has been assigned a EUR 145 target price by stock analysts at Jefferies Financial Group. The firm presently has a “neutral” rating on the stock.

Other equity analysts also recently updated their stock outlook. Barclays set a EUR 155 price target and gave the company a “buy” rating. Deutsche Bank set a EUR 170 price target and gave the company a “buy” rating. Royal Bank of Canada set a EUR 175 price target and gave the company a “buy” rating. Warburg Research set a EUR 190 price target and gave the company a “buy” rating. At last, Nord/LB set a EUR 135 price objective and gave the company a “neutral” rating.

Analyst view

“Volkswagen (VW) is the No. 1 global auto OEM. Strong positioning, a strong SUV model cycle, and improved cost management have all supported the recent earnings streams. The upside is capped by peak cycle demand, slowing China demand, European cycle risks, and European and global emissions legislation forcing VW to reduce CO2 and accelerate BEV development,” said Harald Hendrikse, equity analyst at Morgan Stanley.

“Volkswagen is the leading BEV legacy OEM -but it remains a very small proportion of sales and capital, with a very large legacy cost base. Ex FY20E, EPS has been near record highs, and VW remains the consensual Buy in the European sector for now. On lower FY20E EPS, valuation is not cheap.”

Upside and Downside risks

Upside: 1) Volkswagen margins and FCF recover more fully in FY21E than we forecast. 2) BEV sales accelerate more sharply in FY21E. 3) Volkswagen’s rating starts to reflect some BEV sustainability as BEV sales accelerate – highlighted by Morgan Stanley.

Downside: 1) Emissions regulations impact through further regulatory fines & or other liabilities. 2) Sharp decline in global demand/pricing could undermine margins more significantly.

Tesla Sells Off Despite Strong Q3 Deliveries

Tesla Inc. (TSLA) fell more than 7% in Friday’s U.S session, closing at the weekly low, after quarterly delivery numbers failed to beat recently raised expectations. The company delivered 124K Model 3s and 139.3K total vehicles during the third quarter, slightly above consensus of 122K and 136K, respectively. However, CEO Elon Musk had primed expectations prior to the release, leaking metrics to industry publication Electrek that suggested even stronger results.

Musk Promotion Efforts Backfire

Musk’s attempts to manage investor expectations and stoke buying interest have backfired in recent weeks. In addition to Friday’s tumble, the stock tanked just one day after the highly anticipated 5-for-1 stock split at the end of August, trapping late-to-the-party shareholders in a 34% 5-day decline.  It dropped like a rock once again when the colorful CEO admitted the highly-touted ‘Battery Day’ on Sept. 23 would not feature a game-changing announcement.

Canaccord Genuity analyst Jed Dorsheimer agreed that Tesla results will come as a “material disappointment” to bulls, “effectively cementing a miss” to the 500K annual guidance. He also warned that Q4 guidance is now at risk, noting “current consensus of 480K for 2020 would put the Q4 bar at 161K deliveries. As we look at 161K for Q4 to meet Street, it would suggest delivery figures are likely to come down and thus a risk of lowering expectations generally across the board”.

Wall Street And Technical Outlook

Wall Street has grown extremely cautious about Tesla’s lofty stock price and high valuation, issuing a consensus ‘Hold’ rating comprised from 6 ‘Buy’, 14 ‘Hold’, and a phenomenal 10 ‘Sell’ recommendations. Price targets currently range from a low of $19 to a street-high $566 while the stock closed Friday’s session $109 above the median $302 target. This placement raises odds for a high-percentage decline if Oct. 21 earnings fail to exceed expectations.

Tesla posted an all-time high at 502 on the first trading day of September and rolled into a symmetrical triangle pattern that’s now carved two lower highs and one higher low. A selloff to 370 would reach range support once again, potentially triggering another upturn. However, the lows have narrowly-aligned with 50-day moving average support, warning that a breakdown would expose further downside into the 200-day moving average, now crossing the 240 level.

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

Tesla Delivered Record 139,300 Vehicles in Q3; Shares Could Plunge Over 30% to $302

Tesla Inc, an American electric vehicle and clean energy company based in California, said on Friday that it produced just over 145,000 vehicles and delivered a record 139,300 vehicles in the third quarter, shrugging off the good news shares fell over 5% in pre-market trading.

The manufacturer of high-performance electric vehicles slightly beats the market consensus of 134,720 vehicles deliveries.

Tesla delivered 124,100 units of its new Model Y sport utility vehicle and Model 3 vehicles in the period as U.S. production recovered after being suspended from the end of March to early May due to the COVID-19 lockdown. That was below expectations of 128,000 Model 3 and Model Y vehicles combined, Reuters reported.

Tesla’s shares closed flat at $448.16 on Thursday; the stock is also up over 400% so far this year. However, it plunged 5.61% to $423.03 in pre-market trading on Friday.

Tesla stock forecast

Thirty analysts forecast the average price in 12 months at $302.56 with a high forecast of $566.00 and a low forecast of $19.00. The average price target represents a -32.49% decrease from the last price of $448.16. From those 30, six analysts rated ‘Buy’, 14 analysts rated ‘Hold’ and ten rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $272 with a high of $527 under a bull scenario and $102 under the worst-case scenario. Tesla has been assigned a $400 price objective by stock analysts at Credit Suisse Group. The brokerage currently has a “neutral” rating on the electric vehicle producer’s stock.

Several other equity analysts have also updated their stock outlook. DZ Bank reissued a “sell” rating on shares of Tesla. Jefferies Financial Group reissued a “buy” rating. At last, Cfra raised shares of Tesla from a “sell” rating to a “buy” rating.

Analyst comment

“We are positive on Tesla’s leadership across: EVs, Batteries & FSD and see an opportunity for TSLA to further penetrate these key TAMs. Why not OW? At its current valuation, we believe the market has already discounted a large part of Tesla’s growth potential. Further, competition in the EV market continues to intensify from traditional OEMs, startups & mega-tech firms,” said Adam Jonas, equity analyst at Morgan Stanley.

“We also continue to harbour concerns over the long-term efficacy of an auto business commercializing advanced tech that is economically sensitive within China. As Tesla expands production, they will likely need to raise more capital. While there is a strong appetite in the short-term, it will dilute shareholders in the long run,” he added.

Upside and Downside Risks

Upside: 1) Tesla China profitability surprises to the upside. 2) Europe Giga success. 3) Model Y margin accretion. 4) Software margin accretion. 5) Tesla the Supplier? 6) Cybertruck, highlighted by Morgan Stanley.

Downside: 1) May never make the leap to a shared mobility model, limiting itself to niche OEM status. 2) Execution risk / COVID-19. 3) Openness of capital markets to funding Tesla’s strategic ambitions. 4) Large & better-capitalized technology firms emerging as competitors.

LG Chem Shares Jump Over 4% After Report of Tesla’s Interest in Battery Unit; Target Price KRW 800,000

LG Chem Ltd, which is the most diversified and vertically integrated chemical company, climbed over 4% on Tuesday following a media report that Tesla was interested to buy a stake in a battery unit the South Korean company wants to dispose off, Reuters reported.

“Tesla is said to be exploring taking up to a 10% stake in LG Energy Solution,” the Korea Times reported.

“While China’s CATL is also one of the top battery suppliers to Tesla, given Tesla’s deep partnership with Panasonic, Tesla’s equity purchase of LG Energy Solution would come and it’s no surprise to see that,” one of the Times’ sources added.

Following this announcement, the company which supplies batteries to Tesla, LG Chem shares ended 4.5% higher on Tuesday. The stock is up over 100% so far this year.

LG Chem stock forecast and analyst views

Morgan Stanley target price is W800,000 with a high of W1,000,000 under a bull scenario and W580,000 under the worst-case scenario.

The investment bank said “W800,000: base case value, sum of the parts valuation in view of LGC’s various business segments. We apply target EV/EBITDA multiples, based on average peer comparisons, to 2021e EBITDA. Peers have been selected considering similar product profile, customer bases, growth prospects and geographic operations to LG Chem’s.”

“Risk-reward now more attractive: Despite our constructive view on LGC’s EV battery business outlook, valuation was the primary reason for our prior downgrade. However, after a correction from the peak, we believe its valuation has turned more attractive,” said Young Suk Shin, equity analyst at Morgan Stanley.

“We believe the shares have reflected some of the key overhangs (Tesla Battery Day, split-off announcement, litigation) while another round of earnings estimate increases should also make its risk-reward profile even more appealing. Time to reengage: With P/B back to +1SD from average (since 2011), valuation is still not cheap; but as we expect robust battery earnings growth, we see room for further upside,” Suk Shin added.

Upside and Downside Risks

Upside: 1) Stronger-than-expected EV sales/penetration in the EU. 2) Stronger cylindrical battery sales in China. 3) Improving macro environment for chemical demand, highlighted by Morgan Stanley.

Downside: 1) Yield issues at the EV battery plant in Poland. 2) Intensified competition in the EV battery market. 3) Worsening macro environment for chemical demand.

Tesla: Lithium Phase

Tesla signed a 5-year deal to take lithium from Piedmont – in addition to its other plan to extract the metal in Nevada. Piedmont’s stock surged by almost 300%. Tesla’s stock is still in a downturn though.

The daily chart below shows that Tesla is consolidating around the current level of $420. The heights of $500 were left in the dust a month ago but may turn into a bullish target soon – once we see the downtrend capping the upside broken. In the long-term, it’s unlikely that Tesla will go down because fundamentally, it keeps expanding its horizons. Even though its P/E ratio is way beyond 20 as Warren Buffett liked to warn, the business outlook for Elon Musk’s business looks positive and full of opportunities. And sales – including in China. So let’s wait where the bottleneck of the current fluctuation to exhaust and see where the stock goes.

This post is written and submitted by FBS Markets for informational purposes only. In no way shall it be interpreted or construed to create any warranties of any kind, including an offer to buy or sell any currencies or other instruments. 

The views and ideas shared in this article are deemed reliable and based on the most up-to-date and trustworthy sources. However, the company does not take any responsibility for accuracy and completeness of the information, and the views expressed in the article may be subject to change without prior notice. 

Tesla Stock Price Crash Update

Tesla stock prices rebounded into yesterday’s battery day. I think the rebound is over, and a breakdown below $329.88 could trigger a sharp collapse to $180 – $220 before the next multi-week bounce. Longer-term, I continue to target a drop below $75.00.

A close up of a map

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Currently, I do not own TSLA – I’m very bullish long-term.

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.

U.S. Stocks Set To Open Higher As Nike Smashes Earnings Estimates

Nike Easily Beats Earnings Estimates

S&P 500 futures are up in premarket trading as traders cheer great results from Nike which beat estimates on both earnings and revenue.

Nike reported revenue of $10.6 billion and GAAP earnings of $0.95 per share which were much higher than the analyst consensus which called for revenue of $9.15 billion and earnings of $0.48 per share.

Nike achieved strong growth in its online sales and managed to offset the negative impact of the coronavirus pandemic. Not surprisingly, Nike shares are gaining more than 10% in premarket trading and look ready to open at all-time highs.

Tesla Set To Open Lower As ‘Battery Day’ Failed To Live Up To High Expectations

Tesla shares are down by about 5% in premarket trading as investors were disappointed to hear that they will have to wait several years for new batteries.

In addition, Elon Musk did not offer any specific guidance on the cost and the driving range of the new batteries.

He stated that Tesla could produce a $25,000 car that would be ready to compete with comparable gasoline cars in three years, but investors clearly wanted him to be more specific.

Tesla shares are up more than 400% year-to-date so it was really hard to live up to such high expectations. That said, a continuation of correction in Tesla shares may put some pressure on investor mood in other high-flying tech stocks.

All Eyes On PMI Reports

Today, the U.S. will provide flash readings of Manufacturing PMI and Services PMI for September. Manufacturing PMI is expected to stay unchanged at 53.1 while Services PMI is projected to decline from 55 to 54.7.

PMI reports from other parts of the world indicated that the market should be ready for a negative surprise on the services side. In Euro Area, Services PMI declined from 50.5 in August to 47.6 in September.

Numbers below 50 show contraction so it is clear that Euro Area services segment is already suffering from the second wave of coronavirus. In the UK, Services PMI declined from 58.8 to 55.1.

If the U.S. Services PMI report is better than expected, stocks may get additional support. In the opposite case, the market may find itself under pressure due to worries about the sustainability of economic recovery.

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

Will Tesla Deliver on “Battery Day” Hype?

For months, CEO Elon Musk has been teasing the world about the company’s potentially game-changing developments in battery technology. Even as recently as September 11th, he tweeted saying that “many exciting things” will be announced at the event. Such has been the excitement that Tesla has even become the world’s most-read about company over the past one month!

And so far this month, shareholders have been taken on a wild ride. Since Tesla posted a record high on August 31st, which also coincided with its 5-for-1 stock split, its stock has been buffeted by moves either way that averaged over six percent per trading day. Despite the volatility, Tesla’s market cap is still 437.12 percent higher compared to the start of the year!

What’s so exciting about a battery?

Investors are now speculating that the world’s largest maker of electric vehicles (EV) could unveil their “Million-Mile” battery on Tuesday. This is a monumental development, given that the batteries that are currently in Tesla vehicles has a warranty that lasts 150,000 miles or eight years, whichever comes first.

You would clock up a million miles if you circled the globe 50 times! However, before you get your hopes up over such a feat, although the million-mile battery promises to hold up during the journey, the other parts of the car would likely wear off well before you can conclude such an epic road trip.

Still, EV makers have taken giant strides in bringing down the cost of these batteries, chipping away at the premium over their counterparts with internal combustion engines. Although the battery accounts for roughly about half the total EV’s cost at present, it is expected to make up just 20 percent of the total EVs cost by 2025, according to a BloombergNEF estimates.

The US Department of Energy has also set out a target to ultimately lower the cost of EV batteries down to $80/kWh. Such a benchmark would guide investor expectations on Tuesday, and they’ll be eager to see if Musk could even announce cost parity for its batteries, while gleaming for clues over Tesla’s road map towards incorporating these new batteries into its production vehicles.

Ultimately, any major improvements to this crucial component in electric vehicles could make the cars more affordable, boost the company’s fundamentals, and potentially even whip up more positive sentiment towards Tesla’s stocks.

Musk to markets: Hold your horses

Aware of the risk of misaligned expectations, Musk has already, pre-emptively, poured some cold water on the frothing frenzy.

On the eve of “Battery Day”, he tweeted that whatever Tesla announces on Tuesday “will not reach serious high-volume production until 2022”, while still aiming to ramp up battery cell purchases from its partners such as Panasonic, LG and CATL. He also forecasted “significant shortages” beyond the next two years, unless Tesla also takes action themselves.

The pair of tweets injected another bout of volatility into Tesla’s shares, which fell by as much as 8.4 percent in extended trading, after posting two consecutive days of gains during the regular session.

So, all that remains is to be seen now is whether months of pent-up hype, surging stock valuations, and a rumour mill that’s gone into overdrive will reach a climatic ending on “Battery Day”, or risk disappointing shareholders into booking their profits and heading for the exit door.

Written on 09/22/20 08:00 GMT by Han Tan, Market Analyst at FXTM

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Gold Forecast – Are You Ready for The Bubble in Gold?

Asset bubbles are a repeating theme. In 2017, bitcoin entered a bubble driving prices from $1000 to $19,000. The recent Bubble in Tesla marked a rally from $70 (post-split price) to over $500 in less than 6-months. Our work supports a bubble in gold and precious metals later this decade. This article will explore the various aspects of a bubble and how one could prepare.

Below are the three ingredients often associated with bubbles.

  1. A disruptive force that triggers speculation.
  2. A believable story that gains mass appeal.
  3. Widespread adoption and the fear of missing out.

Disruptive Forces

The internet fueled the 1990s Dot.com bubble. Blockchain technology stoked Bitcoin, and the Electric Vehicle (EV) revolution triggered the recent bubble in Tesla. Next, I believe a global currency crisis could trigger a bubble in gold that sends prices to unthinkable levels.   

Governments around the world have made it clear they will continue to print money. Eventually, they will have no choice but to default and restructure their debt. A new monetary system (likely digital) will emerge, and I believe this will be the driving force behind the bubble in gold.

Velocity of Money

Inflation and supply shortages will only get worse. In the latter phase of the monetary crisis, the velocity of money will increase sharply. Instead of hoarding currency, people will spend their dollars quickly – fearing widespread shortages and higher prices.

Physical Bullion Coins

Finding quality bullion products could become difficult. Partly because of resource shortages but more likely because of a demand shock. What is a demand shock? That is when a rapid influx in demand overwhelms supply for months or even years. Any supply that hits the market is quickly gobbled up – no matter how high the price. We are seeing some of this now.

I prefer government minted coins over bars or rounds. Why? They are recognizable and harder to counterfeit. There will likely be numerous fake coins and bars circulating near the end of the bubble – you will want to have something dealers and individuals recognize and trust.

When to Sell

Timing the exact top of a bubble is difficult. Towards the end, prices will often double in a month or less. People who have never bought gold or silver will be panicking to get some (fear of missing out). You will overhear conversations in the grocery store about a mining stock or a new “gold-backed” cryptocurrency…that is when you know we are getting close. I spotted the final bubble phase in Bitcoin and Tesla about two weeks before they peaked.

How to Prepare

I prefer a long-term accumulation strategy – trying to trade volatile markets is a recipe for disaster. Sure, you may have a good trade here or there, but eventually, you are going to get stung. I learned this the hard way. After adopting my long-term approach, I sleep better at night and have almost zero stress. Our gold cycle indicator was designed for just this.

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Conclusion

I think gold will enter a bubble later this decade – it probably won’t be until after 2024, so you have time to prepare. Consider physical metals and try to reduce stress. You may find our Premium educational metals portfolio helpful.

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

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 visit here.

Tesla Stock Crash Targets $75.00

In my article, Will Tesla Stock Price Crash, I laid out the likelihood for a 50%+ decline. Tesla shares peaked just after the stock split, and the initial breakdown is underway. I don’t foresee a bottom until prices drop below $75.00 in 2021.

TSLA DAILY CHART: Tesla peaked just after the stock split, as I suspected. The initial crash is underway, and prices could test the 200-day MA (currently $182.94) before the next multi-week bounce. Longer-term, we expect prices to remain under pressure into 2021 and 2022 before prices carve out a bottom below $75.00.

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I am very bullish on Tesla longer-term and believe it could become the next Apple. Currently, I do not own the stock.

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 Under Pressure After SP-500 Snub

Tesla Inc. (TSLA) fell 130 points, or about 26%, after posting an all-time high at 502.49 on Tuesday, battered by a broad-based tech selloff and bull trap following the stock’s 5-for 1 split on Monday morning. CEO Elon Musk’s controversial electric vehicle manufacturer sold off another 6% in Friday’s post-market after an SP-500 committee defied popular opinion, choosing not to add the $390 billion company to the venerable index.

Tesla Share Games

The stock topped out and reversed on Tuesday after Musk tried to capitalize on historic gains with a secondary offering of up to $5 billion. Public offerings typically yield lower prices because they attract less experienced investors while diluting share value, encouraging smart money to step in and trade against them. Along with the recent split, market watchers are shaking their collective heads, recalling similar games in the heyday of the Internet bubble in the 1990s.

The decision will have an immediate impact on buying power because SP-500 membership would have forced tracking funds to buy more than 120 million shares of Tesla stock. Index components must have a market cap of more than $8.2 billion and report four profitable quarters in a row, according to standard accounting principles. The company has come under persistent criticism from skeptics who insist that profits rely on accounting tricks and these alleged practices may have been factored into the exclusion.

Wall Street And Technical Outlook

Wall Street consensus highlights major caution about the long-term outlook, with a ‘Hold’ rating based upon 5 ‘Buy’ and 15 ‘Hold’ recommendations. Ten analysts, or one-third of the total, recommend that shareholders take profits and move to the sidelines at this time. Price targets currently range from a low of just $17.40 to a ‘street-high’ $566 while the stock closed Friday’s U.S. session $126 above the median $292 target.

Tesla may have completed an Elliott 5-wave pattern off the June 2019 low, raising odds for an intermediate correction or bearish change in trend. However, it could be weeks or months before the technical outlook becomes more transparent because, despite last week’s downside, the stock has not broken short-term support levels. That could change if the SP-500 exclusion drops price through Friday’s low at 372 when U.S. markets reopen following the Labor Day holiday.

Telsa Stock Price Crash Update

A week ago, I penned an article titled, Will Tesla Stock Price Crash? I felt prices were in a bubble that could pop any day, probably around the time of the coveted stock-split.

I have often compared Tesla to the chart of Apple during the late 1990s. Studying the final parabolic advance in APPL reveals a potential price target for TSLA, if price crash as I suspect.

AAPL CHART (1984 – 2004)

The late 1990s parabolic run in Apple to new all-time highs unfolded in a power 3-wave (ABC) 10x advance. Prices peaked at C and then crashed below the terminal parabolic starting point of B. I expect something similar in Tesla.

TSLA (2012 – NOW)

Expecting a repeat of Apple’s post-bubble crash – Tesla could collapse below $75.00 before starting the next major advance. In my opinion, that could present the buying opportunity of a lifetime…if you want to own Tesla.

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Here is what happened to Apple’s chart once prices bottomed in “D.”

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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 Announces its Biggest Capital Raise of $5 Billion Amid Sharp Rally

Tesla Inc, an American electric vehicle and clean energy company based in California, announced to raise $5 billion capital in new share sales to ease some future debt burden, taking advantage of its recent rally in stocks and soaring investors’ interest.

The largest company in the U.S. by revenue said in a filing with the Securities and Exchange Commission that the extra shares will be sold “from time to time” and “at-the-market” prices.

“We intend to use the net proceeds, if any, from this offering to further strengthen our balance sheet, as well as for general corporate purposes,” Tesla said, reported by CNBC.

This move comes just a day after a stock split of five-for-one brought into play. In February, Tesla had announced plans to raise $2 billion in a stock offering.

Tesla shares have gained more than 500% so far this year; it rose over 7% in pre-market trading on Tuesday.

Tesla stock forecast

Thirty analysts forecast the average price in 12 months at $278.84 with a high forecast of $566.00 and a low forecast of $17.40. The average price target represents a -41.54% decrease from the last price of $477.00. From those 30 analysts, four rated “Buy”, 15 rated “Hold” and 11 rated “Sell”, according to Tipranks.

Morgan Stanley gave a target price of $272 with a high of $527 under a bull-case scenario and $102 under the worst-case scenario. Independent Research lowered their target price to $109.00 from $540.00.

Other equity analysts also recently updated their stock outlook. Canaccord Genuity raised the target price to $442 from $325, Jefferies upped their price target to $2500 from $1200 and Wedbush increased their stock price forecast to $1900 from $1800.

Analyst view

“We are positive on Tesla’s leadership across: EVs, Batteries & FSD and see an opportunity for TSLA to further penetrate these key TAMs. Why not OW? At its current valuation, we believe the market has already discounted a large part of Tesla’s growth potential. Further, competition in the EV market continues to intensify from traditional OEMs, startups & mega-tech firms,” said Adam Jonas, equity analyst at Morgan Stanley.

“We also continue to harbour concerns over the long-term efficacy of an auto business commercializing advanced tech that is economically sensitive within China. As Tesla expands production, they will likely need to raise more capital. While there is a strong appetite in the short-term, it will dilute shareholders in the long-run,” he added.

Upside and Downside risks

Upside: 1) Tesla China profitability surprises to the upside. 2) Europe Giga success Model Y margin accretion. 3)  Software margin accretion. 4) Tesla the Supplier? 5) Cybertruck – highlighted Morgan Stanley.

Downside: 1) May never make the leap to a shared mobility model, limiting itself to niche OEM status. 2) Execution risk / COVID-19. 3) The openness of capital markets to funding Tesla’s strategic ambitions. 4) Large & better capitalized technology firms emerging as competitors.

Blame it on The Nasdaq

US data announced this week showed a significant recovery in building permits and housing, building permits (MoM) for July surged to 18.8% compared to the previous 3.5%, Housing Starts data revealed 22.6% which is 5.1% higher than the previous month, existing-home sales data were as well positive reported beyond expectations.

Despite the negative Jobless claims and Philadelphia Fed Manufacturing PMI reported on August 20, Manufacturing PMI and Services PMI demonstrated a significant improvement, which led major US Indices to surge whereas S&P500 and Nasdaq100 reached the all-time high.

US stocks continue hitting records, Tesla surged by 24.19% breaking the significant $2000 per share value, and is now worth more than $382 billion surpassing Walmart by nearly $10B. Nasdaq’s top company by market cap – Apple gained 8.23% hitting the $2127B in capitalization. Tesla and Apple remain the top popular shares last week based on Robinhood data.

S&P500 closed above the all-time high, some might think that there is a possible double top pattern, economic recovery of the US indicates that the index may continue the run towards $3500.

Nasdaq owes its gains not only to Tesla and Apple, but there are also other tech companies that surged last week and during the pandemic, such as NVIDIA, AMD, Qualcomm, Microchip Tech, Texas Instruments.

An hourly chart demonstrates that the correction is most likely will happen as the price touched the dynamic resistance and the fifth wave of an ending diagonal is about to complete at 11600. Ending diagonal is a trend reversal pattern, which usually demonstrates exhaustion of bulls, note the evening star doji, though the closing is above the previous close, it still shows uncertainty and exhaustion.

NDX chart by TradingView

How is it related to cryptocurrencies and Bitcoin?

Bitcoin and Ethereum price actions are considered as cryptocurrency market movers. Since Bitcoin is nowadays considered as the digital Gold and Ethereum as a digital Silver, their price action now is correlated to US data which effect Gold. Gold was ever since used as a safe-haven to hedge funds during the uncertain times and inflation, so is Bitcoin now.

An hourly chart of Bitcoin indicates that the price could decline further to towards $11200 – $11160 to complete the Head and Shoulders pattern, another pattern to watch is an ending diagonal which is yet to be completed as well. Bitcoin remains below the major resistance level of $11700 an in order to show another bull run it must break the dynamic resistance (ending diagonals upper edge) and close above the 11700, however testing 11200 might bring another stimulus for bulls.

BTCUSD price on Overbit

Ethereum plummeted to $380 after reaching the year’s maximum at $446.67, loosing 9.7% this week only. Digital Silver price is following a similar ending diagonal pattern, and if the upper dynamic resistance and a static resistance of 397 is not overpassed, ETH might continue the drop towards a major support at $380, and if that support is broken, towards $370 – 369.

ETHUSD price on Overbit

Unlike Bitcoin, Gold lost only 0.20% in price for the week. A significant drop was on Wednesday August 19 ahead of US data announcements, where the precious metal lost 3.67% after gaining 2.97% on Monday and Tuesday.

Head and shoulders pattern is identified on an hourly chart of Gold and the price might continue the drop down to $1881.60 – 1880, where if the support laid on those level withheld the price might retrace towards 2014 and if above towards 2046, where the bearish pattern will be completed.

Gold price on Overbit

Since Gold and Silver prices demonstrate similarities in their price action, the same Head and Shoulders is visible on an hourly chart of XAGUSD. The price is below the dynamic support of August 12 which might signal to a further decline down to $25.30.

Silver price on Overbit

The price continues the short-term downtrend move inside a descending channel, which in other had forms another controversial to the H&S pattern of Bullish Flag.

Silver price on Overbit

If bulls are able to push the price above the dynamic support and if the dynamic resistance is overtaken at $27, the bullish run might proceed towards $28 – 28.50.

Key takeaways for the upcoming week would be announcements from Eurozone, Great Britain, China and the US.

Important announcements to watch:

Tuesday, August 25, 2020

German GDP (YoY) as per Second quarter data is expected to be -11.7%, 9.8% lower than the previous -1.9%

German GDP (QoQ) as per Second quarter data is expected to be -10.1%, 7.9% lower than the previous -2.2

US CB Consumer Confidence (August) is expected to be 93, 0.4 points higher than the previous 92.6

US New Home Sales (July) is expected to be 786K, 10K higher than the previous 776K

Wednesday, August 26, 2020

US Core Durable Orders is expected to be 2.1%, 1.5% lower than the previous 3.6%

Thursday, August 27, 2020

US GDP (QoQ) as per 2nd Quarter is expected to be -32.6%, 0.3% higher than the previous -32.9%

US Initial Jobless Claims is expected to be 1,000K, 106K lower than the previous 1,106K

US Pending Home Sales (MoM) as per July is expected to be 4.5%, 12.1% points higher than the previous 16.6%

Asides from the data to be announced, there are other important events to trace.

Republican National Convention, which will be held on Monday, in which delegates will determine the nominees for the upcoming presidential elections. Markets will be watching this event closely as during the current campaign Democrats are having an edge over republicans.

Source: Yahoo Finance

Another major event would be an annual Jackson Hole conference this Thursday, August 27, where FED Chairman Jerome Powell will speak about current economic situation, inflation targets and possibly share preliminary focus on interest rate change.

The economic state and inflation in the US once again are an important constituent of the Global economy and global markets, all these events will be decisive for the mid-term price movements for the US Indices, commodities and cryptocurrencies.