No Bell to Be Found

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Want to guess what this stock is?


Tesla, you say? No, no, it’s not. I can understand why you’d say that, though. Here, let me give you Tesla:


Kind of similar, don’t you think? Such is the nature of pure momentum stocks.

See, the top one is Intel back in the late 1990s. The one just beneath it, as you well known unless you have an exceptionally short attention span, is Tesla.

No one knows when Tesla will ever top. Maybe Friday was the highest point it’ll ever reach in our lifetimes. Or maybe Tesla is heading to $10,000 per share. Not even “Papa Elon” knows.

Intel, however, can give us a little perspective on how clear a given topping signal is. I present to you, by way of an arrow, the point in early 2000 when INTC peaked, and it would not match this level again for 19 years. Here ya go, as I reveal the secret:


Let us note some things about this major, multi-decade top:

  1. There’s nothing the least bit unusual about this price bar;
  2. The price isn’t doing anything in particular that would draw attention to itself;
  3. The stock didn’t instantly start plunging. Indeed, it lingered around doing absolutely nothing for several more trading days;
  4. Most important, there was no little stock elf running around the screen shrieking and ringing a bell. It was, as all tops are, completely stealthy about what was about to happen. Like a thief in the night.

One glance at my portfolio reveals no Tesla at all. I think it’s insanely, crazily, and astronomically overvalued, but this permabear isn’t touching it. I haven’t bought puts. And Lord knows I never sold calls. I just stare at it, slack-jawed. I have 57 short positions, all in the green, and none of them have the letters T-S-L-A

$TSLA week of 7/5/2020 from r/wallstreetbets

In fact, just for the hell of it, when I was glancing at our oh-so-spiffy Super Summary page, I divided by market cap (now over a quarter of a trillion bucks) by the number of employees. The result? Almost $5.4 million for every single employee. The guy in the mailroom? $5.4 million. The secretary who pops her bubble gum? $5.4 million. Same for the guy who glues the logo to the trunk lid.

Of course, the stock isn’t distributed anything like that. But it’s a fairly incredible metric. I would offer you the P/E ratio too if I could, but since there is no “E” at all, I can’t do it. Suffice it to say, this company, now far and away the most valuable auto maker in history, is not profitable.

So what’s the trade? For me, zilch. Nothing. Some lucky so-and-so is going to make a killing on his put options at some point. But all the poor bastards who have been buying puts for the last $500 of price ascendancy (that, umm, would be the past few trading days) have nothing but devastating losses to show for it.

So it’s an utter and total gamble at this point, and with an IV near 100, I suspect there are some fascinating options plays going on right now, but I’m going to be standing way over there at a safe distance from this eye-popping beast. One day this thing is going to pull and Intel and enter a vicious bear market, but there will be no stock elf forthcoming.