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03/28/2024
Thomas Thornton

Elon and Me

On Thursday after the markets had closed for a three day weekend, Tesla announced a huge recall of 123k cars.  The next day Tesla announced the driver in last week's fatal crash in California had it's Autopilot enabled. Elon Musk had the audacity to tweet out "everything is better with fire" within an hour of the details of the fatal crash.  Then, yesterday for April Fool's he tweeted out a series of tweets joking about Tesla going bankrupt, and a picture of him with his eyes closed holding up a sign saying Tesla Bankrupt.  I responded back to him saying "Remember when Steve Jobs fought like mad to save Apple?  He didn't resort to this stupidity."  To my surprise, Elon tweeted back to me a You Tube of Billy Idol "Dancing with myself".  Seriously.  He has time to tweet back to me?!  I actually admired him early on yet a year ago, I started to examine Tesla and what I found was one of the best short ideas I've ever seen.

What I discovered after his tweet (my tweet got over 500k impressions) is that his followers remain 100% committed and that they have no clue what a dumpster fire Tesla's fundamentals (and technicals) have become. The sentiment remains way too bullish and a rude awakening is ahead.  I also found a lot of them are into crypto and blockchain.  Many want to go to Mars.  A few hate hedge funds.   The laughed at me and a few were rather nasty.  I reminded them I was short with a basis of $351 so if it gets back there to tell me I was wrong.  One thing, I would not short TSLA today.  It's now a popular short and squeezes are likely on whatever the next tweet Elon puts out.   

As far as with the markets, I remain cautious since the down move has occurred in the 3rd wave of 5.  There have been quite a lot of individual downside DeMark exhaustion signals and many price flips up on Thursday.  Last week I took profits on my index ETF puts and will hold the rest of the shorts for now.  I hope everyone was able to check out the Hedge Fund Telemetry DeMark Primer I emailed on Thursday.  It's the basics and should help you follow along better.

Notable:
US Markets - Sentiment remains low and indexes are at risk of breaking support - a dangerous combination
Tesla Focus
Asian Markets - Still nothing to do from these levels
A few commodities I'm watching
Bonds
DeMark Screens - A total of 94 price flips up out of the SPX 1500 index last Thursday.  That's a lot of reversals.  These are when a stock trades higher than 4 previous closes.  If this pattern can hold then there is some potential for long ideas.

US Markets


SPX bullish sentiment is at 23% up a little from the previous day of 16%.  It can and likely will stay down at these low levels for a while.  These are also where risk can be higher and just because sentiment is low doesn't mean risk is low too.  I've seen some rather sharp moves when markets were very oversold and sentiment depressed.  
Here's a link to the Hedge Fund Telemetry market sentiment page with 40 charts of sentiment including equities, bonds, commodities, and commodities updated each day.   

 


SPY did have a downside exhaustion 13 and a Setup 9 however there is risk of a new downside red Countdown starting up if we see a few down days.  This did not make a closing low below February's low thus the Wave 3 has not been locked in.

 


Nasdaq bullish sentiment is at 19%.  Same story as SPX sentiment

 


QQQ has support at 155.76.  This could get ugly very fast.  


One of the biggest risks to the market in April is earnings expectations being too high.  Retailers who reported in March across the board missed elevated estimates and were hit hard on the misses.  

 


FANG + continues lower and has support at 2300.  

 
Tesla


Tesla has had a free pass with the markets over the years with unrealistic production targets and tweets from Elon that never seem to come close.  This is the Model 3 tracker.  Numbers should be out today or Wednesday.  I didn't get a confirmation on this.  

 


Tesla daily in the past 6 months has been a mess with support at 300 finally broken.  My last add was the recent green Setup 9 on the upside in February.  My basis is $351 and I'll use $310 as a stop.  This now has a downside red Countdown on day 4 of 13 and it's achieved and surpassed the wave 5 downside price objective.  

 


The weekly had an upside red Countdown last Summer and it's made a series of lower highs.  The downside Wave 3 weekly price objective has also been achieved.  A lot of people didn't believe those price objectives would be hit.  

 


This was Elon's famous tweet a year ago.  Anytime a CEO spends an ounce of time focused on short sellers, it's usually a sign that they actually have the right idea.  


This was my tweet back to him last night.  If you don't follow me I'm at @TommyThornton  
I'm all for good April Fool's jokes but come on.  There is a time for fun and a time to get serious.
For the record, I think Billy Idol was a total poseur then and even more today.  

 
Asian Markets


FXI Hong Kong China ETF watch the support level at 45.69

 


Nikkei Index bounced in the last week in a decent fashion closing at the highs each day but last night it closed on the low.  I'm not that constructive here on the long or short side right now.  

 
 
A few commodities I'm watching


Cocoa bullish sentiment is at 82% and remains in extreme zone.

 


Cocoa Futures has seen a cluster of upside exhaustion signals and is on day 11 of 13 with the latest

 


Uranium has backed all the way down from the spike late in the year when capacity was taken down by some of the big players.  If looking for a long, enter here with a stop a few % below.  Going to be tough to turn this so size this very small

 


Coffee bullish sentiment is at 15% and remains depressed.  As I say often, sentiment can and will stay low for a period of time.  


Coffee Futures on a daily chart has seen several downside exhaustion signals that have not been able to work to turn around the down trend.  I do expect a move up since speculators are very short coffee.   As of now I'm not ready to buy yet but will monitor for everyone

 


Sugar bullish sentiment is at 12% and very depressed too.  


Sugar Futures also has a very pronounced downtrend and despite some downside exhaustion signals there hasn't been enough evidence to buy.  

 
Bonds


Bond bullish sentiment is at 53% and a new high for this cycle

 


10 Year Yields have done very little and there is a downside Wave 3 target at 2.7199 that nearly has been achieved.  I've felt a bounce in bonds has started.  

 
DEMARK SCREENS - Daily, Weekly, Monthly Upside/Downside Exhaustion Signals

Daily/Weekly DeMark upside/downside exhaustion signals (Sequential) Weekly updated on Monday's.  Price flips occur when a stock closes higher/lower than four previous closes.    

S&P 1500 Universe: 

DAILY UPSIDE 13:   BGFV, CATO, RLI
DAILY DOWNSIDE 13:  AKS, ALB, CCL, FF, HOLX, IPI, JAKK, MSCO, MUSA, OII, OXY, SPN, TOL

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   ABM, AEIS, AET, AIG, AKS, ALK, AMG, ARW, ATI, BGG, BIIB, BMS, BOH, BPFH, CASY, CAT, CBT, CCL, CLH, COF, CRS, CVBF, DIS, DISCA, DRI, EFII, ENDP, ESE, EXLS, FBHS, FCX, FHN, FIX, FMC, FTI, FWRD, GEF, GEO, GIS, GLW, GM, HIG, HOLX, ICE, JAKK, JCI, KALU, KBR, KMI, LKQ, LL, LXU, LYB, MAS, MCK, MDRX, MEI, MHK, MHO, MLHR, MNK, NBTB, NFX, ODP, OKE, OLN, PBCT, PH, PNK, PRU, PX, R, ROK, RPM, SHW, SNA, SNPS, SSP, STL, SWK, SWM, SYMC, THO, TPX, TRMB, UNM, UNT, USB, VMI, WAGE, WHR, WU, ZEUS

Updated: 4/2/18
WEEKLY UPSIDE 13:   MPC, AVD, ECL, FAF, PGR
WEEKLY DOWNSIDE 13:   IVAC, MCY, NE, NWL

Updated: 4/2/18
MONTHLY UPSIDE 13:      I'll have the monthly tomorrow.  
MONTHLY DOWNSIDE 13:     

Euro Stoxx 600 Universe:

DAILY UPSIDE 13:   AM FP, DWNI GR
DAILY DOWNSIDE 13: ICOV GR, AZM IM, BNR GR, MT NA, OPAP GA, SW FP

DAILY UPSIDE WITH PRICE FLIP REVERSAL DOWN:    NONE
DAILY DOWNSIDE WITH PRICE FLIP REVERSAL UP:   AF FP, BOSS GR, BVI FP, CAPC LN, DBK GR, DPW GR, FRE GR, IMI LN, MT NA, PAH3 GR, SIE GR, SMIN LN, TKA GR

Updated: 4/2/18
WEEKLY UPSIDE 13:   AM FP, DWNI GR
WEEKLY DOWNSIDE 13:   HEN3 GR, QQ/ LN, WHA NA

Updated: 4/2/18
MONTHLY UPSIDE 13:     ASSAB SS, BEZ LN
MONTHLY DOWNSIDE 13:  CPI LN



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