The Big Picture This weekend is all about Tesla, but first a very brief reference to the bigger picture. Despite 600 Dow pt move up last week, the next major leg will be down. However, there isn't much more room for further upside in the major market averages before that forecast comes into question. It is the purpose of counter-trend up moves to suck everyone all-in, and leave as few people on the down escalator as possible. According to the vast majority of analysts on CNBC and Fox Business, the V-shaped bottom is in, i.e., Wave 2 up is absolutely doing its job. Tesla Speculation is rampant on what Elon Musk is going to unveil at Tesla's, "Battery Day," later this month. While a game changer new development is expected in car battery technology, what may be slipping through the speculative cracks is the energy storage angle. Musk maintains that revenues from Tesla's energy storage business will eventually surpass revenues from its automobile sales. This could be at the core of what Musk was referring to when at the Q1 earnings call he made the following statement: "...we don’t want to preempt Battery Day. We want to leave the exciting news for that day, but there will be a lot of exciting news to tell. And I think it would be one of the most exciting days in Tesla’s history and we’re just trying to figure out the right timing for that.” The shares have run up 134% since the late March low with some advantageous entries along the way from both our, "System," and "Stochastic," Buy Signals. The pattern recognition principle in both strategies is to wait for any downtrends in the stock price to end and buy the next turn up in price momentum. To identify those patterns the System-based trades use trend lines and channels, the Stochastic-based trades use a simple stochastic oscillator. Add to that arsenal the ability to view trends and turnarounds across multiple time frames and the probabilities of catching a tradable, sustainable uptrend in the stock increases with each trigger. All the while in the background there is that long term core position, either shares (increasingly my preferred long term strategy) and 2021 calls. TESLA TRADING BUYS SINCE THE MARCH LOWS Trading Notes (1) These trades depict only the TSLA Trading Buys generated since the March 23rd market lows. We got our heads handed to us on TSLA trading positions held during the 35% market decline-debacle from Feb-Mar. Nonetheless, the core TSLA postion taken anytime between December 9th on forward has excelled, whether it be by shares or Jan 2021 calls; (2) Exits are all over the place, from trailing stops to riding calls out to expiration. We leave exits to individual traders, but do keep track of two exit strategies in our trading tables; a 50% trailing stop, and holding to expiration. If holding multiple contracts a strong case can be made for holding half with a 50% trailing stop and half with no stop at all.
