Imminent bearish MACD cross amidst bad news on vehicle quality

22 de jun. de 2020

I am not going to actually trade this one, because Tesla is a monster and you don't short monsters no matter how good the reasons are. But I want this idea here for posterity so that I can kick myself later when it turns out to be right. Tesla is sitting right underneath an extremely psychologically significant resistance level at $1000 per share. It's one of those nice round numbers that the market reacts to, like Bitcoin 10,000 or Nasdaq 10,000. Forward P/E of 250 is fairly psychologically significant, as well. Meanwhile, Tesla has been reducing the price on some of its older models, which doesn't bode well for demand. And bad reviews are starting to roll in for the Model Y, with buyers complaining of manufacturing quality issues including:

• peeling paint
  
• inconsistent paint jobs
  
• indentations in the seats
  
• broken seatbelts
  
• scratched paint and trim
  
• backseats not attached to base
  
• loud road noise
  
• water getting into the vehicle
  
• and more; try #TeslaQualityIssues on Twitter
  

Simply put, Tesla seems to have rushed this car to market, and it's likely to cost them a fortune in repairs and warranty work. Tesla had similar problems with the rollout of the Model 3, and it took them a year to fix the issues there.

Because Tesla is such an over-hyped stock and has such strong upward momentum, it's taking a while for the stock to respond to all the bad news, which has been circulating now for several days. But we do appear to be halted here, and the daily MACD is close to making a bearish cross. I expect a correction to volume support in the low $800 range.

P.S. twitter.com/FSD_in_6m/status/1274749731139354627

23 de jun. de 2020

Nota

Tesla's getting a rally today with the broader market, perhaps bolstered by the news that the company is moving its valuable server data to China to focus on China's high-demand market. The bearish thesis holds as long as the stock doesn't make a higher high than the June 10 top at $1027.50.

24 de jun. de 2020

Nota

This trade's going well today as Tesla pulls back along with the broader market. Also announced this morning was that US vehicle regulators are launching an investigation of the Model S due to touchscreen failures.

24 de jun. de 2020

Nota

Just 1 day in, and already kicking myself for not actually making the trade. :D

24 de jun. de 2020

Nota

It's a bad news bonanza today. Business Insider just reported that Tesla knew of a battery leak on the Model S that could set the car on fire, and it sold the car anyway. businessinsider.com/tesla-faulty-battery-cooling-systems-design-model-s-2012-2019-6

24 de jun. de 2020

Nota

Also rated worst vehicle quality by J. D. Power today. Rarely have I seen so much really bad news in one day.

25 de jun. de 2020

Nota

Tesla rallied solidly today on leaked numbers that imply record vehicle deliveries this quarter. Twitter Tesla bears claim the leaked numbers are literally impossible, for whatever that's worth. Interesting that the biggest institutional Tesla bull, Ark Investing, sold over 5,000 Tesla shares today.

30 de jun. de 2020

Nota

Strong rally continued today, making me very glad I didn't actually enter this trade. The rally is driven by continued optimism around Tesla's delivery numbers, with some analysts calling for 90,000-100,000 deliveries.

In other news, Tesla today paid Elon Musk about a million dollars for 90 days worth of D&O insurance, to cover any liability that the company's directors may incur for (non-criminal) wrongdoing committed on behalf of the company. Which, suffice to say, is odd.

1 de jul. de 2020

Nota

Feds have initiated an investigation of Tesla battery safety issues.

latimes.com/business/story/2020-07-01/federal-safety-officials-probe-tesla-battery-cooling-system