Still the Same

by JDH on May 19, 2018

I will keep this short, because it’s a long weekend here in Ontario, and we all have better things to do than worry about the markets.

Tesla continues it’s implosion.  I sold all of my puts, at a nice profit, so I currently have no position.  Tesla appears to have a base of support around the $275 level, so I will watch, and if Elon Musk tweets something about wanting to crush the shorts and the stock pops up $20, I’ll buy more puts.  It’s a simple play: buy puts on the way up, and sell on the way down.  I see no hope for Tesla not going bankrupt, so we sit and wait.

As for gold, it was not a pretty week, and gold is now trading close to its low for the year (although still higher than where it was a year ago).  The US dollar has been strong, so gold has been weak (in US dollars).  No worries, I see this as an accumulation opportunity, but a slow one.  There’s no rush.  Put in your stink bids on the stocks you want.

That’s the update.

Enjoy spring.

See you next week.

Short on Tesla, Long on Gold

by JDH on May 12, 2018

I am short on Tesla.  I am on record as predicting that Tesla will file bankruptcy on or before September 13, 2019, and it would not surprise me if the date is September 13, 2018.  They are bleeding cash like crazy, and more importantly they have no idea how to build cars.  Deliveries are delayed, and cars that are delivered have numerous defects.

Their financial model is also not sustainable.  A friend of mine gets his Tesla next week.  Here in Canada, even after rebates, the Model 3 costs $60,000, and he will have to spend almost $4,000, again after rebates, retrofitting his garage and electrical system to put in the appropriate charging apparatus.  It’s a rich man’s toy, not a mass market vehicle.

The final nail in the coffin for Tesla is that real car companies, like Jaguar and Porsche, are introducing their cars in the next 12 months.  If you drive a Tesla it’s cool, because it’s quiet.  It’s quiet, not because it’s a Tesla, but because it’s electric; there is no combustion engine.  It’s a new experience, so you think “wow, Tesla is great”.  But when you drive an electric Jaguar or Porsche, you will say “wow, this is great, and it’s well built!”

Currently Tesla earns Electric Vehicle credits of around $8,000 for each car they produce.  Each car manufacturer has a limited number of credits, and Tesla’s will run out in the next year.  The new guys, Porsche, Jag, etc., have not used theirs up you, so a year from now the cost of a Tesla will be about $8,000 more, and the new guys will be subsidized for $8,000.  That’s a $16,000 swing in price, and buyers will quickly realize that they can get a better deal on a better car, and that will be the end of Tesla.

I made some money shorting the stock.

I now own the September 21, 2018 $295 puts.  I’ve purchased them over the last week, and my average cost is currently $32.39; they are worth $30.50, so I’m down at the moment, after Elon Musk threatened a short squeeze and drove the price higher, temporarily.

But, when you look at the stock chart, there is a key resistance level at around $309, and even though the stock surged about that level for a few hours this week, it pulled back, and I don’t think there is enough buying appetite to drive it much higher.  I’m staying short, and if the prices ease off I may leg into a butterfly with the options.  We shall see.

More bad news: On Friday it was announced that Doug Field, head of production, was taking a break from the company.  What?  He’s not leaving the company, but wants to spend more time with his family?  At this critical juncture?  Sounds more like the rats jumping off a sinking ship to me.

The point is that, unless Elon Musk can raise a few billion more dollars, this company is dead.  Stay short.

Gold

In better news, gold looks poised for a breakout.

I’m not saying we will see $2,000 an ounce in three weeks, but prices appear to be on the rise.

I’m increasing my holdings of NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, which needs to get over $30 to really start moving, but the signs are looking good.  The U.S. dollar has had a good run, and is due for a pullback, and when that happens it is likely that gold will take over.

I’m long.

I’m also holding my gold stocks.

My final big holding: cash.  Cash is king.  A market correction could happen at any time, so I am close to 40% cash at the moment.  It helps me sleep at night.

That’s the update.  Thanks for reading.  More next week.

 

Canada is Going to Pot

May 5, 2018

I don’t use marijuana.  Never have.  But now that it is very likely that by the summer Canada will become the first G8 country to legalize pot, so whether you smoke it or not, there is an opportunity to play pot for profit. As an aside, I make no moral judgments on pot.  The fact that […]

Read the full article →

Amazon: The Week That Was

April 28, 2018

This week I decided to play AMZN – Amazon.com Inc.  Here’s how it went: On Monday April 23 I bought 100 shares for $1,529, then another 100 for $1,538.75, and then I averaged down and bought a final 100 shares for $1,511.  Average cost $1,526.25. By Tuesday it was down to $1,463.50, so I sold […]

Read the full article →

Moving up the Tesla Bankruptcy Date

April 21, 2018

Last week I predicted that Tesla would file bankruptcy on September 13, 2019.   That prediction is appearing excessively conservative.  It could be September 13, 2018. They are bleeding cash, and have no idea how to build cars, which is not good if you are a car company. I shorted the stock at $303, and it closed […]

Read the full article →

Tesla: What Day Will They File Bankruptcy?

April 14, 2018

September 13, 2019. That’s the day Tesla will file bankruptcy. How do I know? I don’t.  I just made it up.  I picked it because it’s a Friday the 13th, next year, which seems fitting.  The bankruptcy of Tesla could happen sooner.  Or later.  But it is inevitable. Even Elon Musk joked about it on […]

Read the full article →

The Turn in Gold?

April 7, 2018

Could be.  I don’t know, but it could be. NUGT performed well last week, and this week will be a turning point, as either the uptrend or downtrend line will be violated, which should tell us what happens next. We are entering a seasonally good time for gold, so my bet would be on a […]

Read the full article →

Is the Bottom in For Gold?

March 31, 2018

I have no idea.  It all depends on how you want to interpret the chart.  Here’s NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS: As you can see, there are four important bottoms so far this year: February 9 at $21.42 March 1 at $21.25 (which is worrisome, because it is […]

Read the full article →

I Hope You Are Not Following My Advice

March 24, 2018

For the last two weeks I’ve been telling you that QQQ looks good. Oops. A 10% drop in two weeks is probably not the result we were hoping for. Apparently there’s a bunch of stuff happening in the world, and it’s bad, something about Trump, and China, and Omnibus, and other stuff, so the market […]

Read the full article →

Gold not exciting, but QQQ looks good

March 17, 2018

A chart of NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS , a 3 times leveraged ETF of gold shares, is not a particularly encouraging site: It is in an obvious downtrend from 2016 (and before). There appears to be a solid base around $22, if that is any consolation. Perhaps NUGT will […]

Read the full article →