Well, it’s a day that ends in “y”, so I’m bearish on TSLA again. I’m sure none of you are surprised. This is the turd that simply won’t flush. I think we are at a nexus point, however, as decisions will be made by investors going into the end of this year as to whether this is worthy of the high valuation which the market continues to bestow upon it. I shorted it (again) as I think the decisions will be to finally give up on rose colored glasses in the medium term. I have mostly technical reasons, but I also have behavioral reasoning behind my decision as well.
I specifically shrunk the chart to only show 2020 onward as this is where the key movements can be seen. In late 2020 this moved from $208 to test $300 in a matter of 2 weeks (spot 1). This was the end of the incredible straight-up run that essentially began in 2019 (not shown, and not without hiccups). The speed of this move was ferocious and important to note as it was the last time this was going to give investors an easy run like that.
There was pullback to $182 and volatile consolidation for the next 7 months before this finally turned back up for yet another terrific run to new highs of $413 where this finally saw an all-time high (spot 2). Ever since then, there have been failed attempts to recapture this glory to run to new all-time highs based on the idea that this is still THE growth stock to own. Attempts at spots 3 and 4 were just as quick to run up as to turn down (spot 4 yielded the largest drop to test $100!). The run-up at spot 5 was significant as it was a double whammy bounce off $100, consolidation under $200 then another straight up run to $300 yet again.
After the mini-repeat top this dropped to $140 most recently in April. All only to attempt yet another straight up squeeze run towards $270. Finally, this gave up the significant gains to test $180. This ride has to have given quite the heartburn to those who’ve been riding this wave. The significant price I am seeing, however, is $208. Tracing this horizontal line back since late 2020, we can see several times that this line specifically acted as both support and resistance (green and orange circled areas, respectively). This level also has basically acted as a magnet each time this bounced off lows or dropped from highs.
From this zoomed out perspective, we can see that despite the incredible run-ups, this has been generating lower highs since late 2021. This last squeeze was painful for shorts I’m sure (I’m one of them), but this still can’t manage a real continuation tells me of the waning hype on this rusty piece. My technical reason for shorting rests on a combination of relative strength to the indices, failure to escape these $200 range, and the failure to breakout on the last run up to $270. The only bullish argument I can say is that this latest monthly candlestick is not one I’d like to see (high open/close, long lower wick). So, this has the opportunity to fuck me over once more, but my next argument against a bull run is based on the behavioral response I’m expecting.
The average investor loves a good growth story. TSLA benefitted from that in the run up between 2013 and 2014 and then again between 2019 and 2021. Now everyone is looking to catch lightning in a bottle for a third time. But the question is, how much bigger is their growth story from here? The P/E ratio on this is about 100 as of December. Earnings are on deck and, if they’re good I’m sure the public will eat up shares. But the bigger sellers are still there slamming the door shut above $270. The next moneymaker is being advertised as robo-taxis (possible? Yes, lucrative? Remains to be seen). And Elon is further trying to sell it as an AI company. All are…ideas, to be sure. One of them will stick. But how long are investors going to wait around for that?
The company seems to be run like it’s still a start-up. However, start-ups have the benefit of the doubt when it comes to having so many diverse ideas with a “hey let’s see what sticks to the wall” kind of approach. Late-stage investors after the money has already been made won’t have that kind of patience. At this point, for this to really begin a bull run I’m thinking first that they need to either blast it out of the park with their sales (and I mean really surprise with current markets and with growth opportunity markets) and to have several ideas already being tested with a real plan for implementation. Otherwise, investors are going to get tired of waiting for this stock to pop when this is still negative on the year.
Steel stocks look interesting, and I wish I saw this sooner. I had actually been long NUE earlier this year with quite shitty results. This looked like it had a chance for a breakout around 180. Once I saw this failing, however, I exited for a loss. What’s interesting is the other steel sector stocks are behaving the same way. I see STLD and RS showing a similar trend breakdown, bounce to retest and continuation. Picture perfect really. There is possibility to real pain to come.
NUE, if it can’t support here, has potential to drift to the next support level at about $100. STLD, similarly, has a shot at $100 or $90. RS, finally, has a really nice setup consolidation. It’s trying to hold $278 but can’t break back above $286. If this can successfully break down here, $240 is very much within the realm of short-term possibilities. If that breaks, then the big round $200 number comes into play with a 200-week MA there. That being said, I don’t know a lot of the fundamentals of material stocks like this. There could be some kind of news that simply reverses these back up because of some weird special interest rates deal this industry has. But the stock weakness is there, and further potential weakness is definitely what seems to be in store for these.
