Each bubble has its poster child. Is $TSLA it this time?
I can’t say, but I can spot a buy panic when I see one. This morning $TSLA seems to have peaked for the moment at $940.
Absolute vertical panic buying, it’s basically a reversion train wreck waiting to happen, technically speaking:
People can choose to believe all kinds of things about the fundamentals or growth prospects of any given stock and that’s fine. But there used to be something called discipline and reason when buying stocks.
This behavior here is dot.com type behavior. Get me in an any price. Market cap added by the tens of billions added every day without an actual earnings story behind it yet. It’s all future projections. And hey, maybe the come true, who am I to say.
What I’m saying is that vertical moves like this are not sustainable and there will be reversion pain.
How to define reversion pain? Easy, basic technical reconnects.
So let’s have a look at a couple basic ones of interest.
Firstly the stock we can all agree is ridiculously overbought:
The stock is far outside the daily Bollinger band and massively above its daily main moving averages. Check the 50MA and laugh.
But it gets better. Here’s the weekly view:
The weekly 5 EMA is at 661, the upper weekly Bollinger band at $714. While both are moving higher both are at risk of reconnecting eventually.
Here’s a monthly log chart:
Rational investor behavior? Please. Blow-off topping move? Possible.
Upper monthly Bollinger band is at $656, the monthly 5 EMA at $589.
My main message: If you like $TSLA fundamentally there will be better entry points. If you think it’s a short, best of luck. It’s a beast right now and it reeks of an undisciplined buying panic here n February 2020.
Buying panics in February are not unprecedented. After all that has happened before as well:
Good times. I’m kidding, I’m kidding. Or am I? Maybe we revisit on May 1.
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Categories: Market Analysis