Tesla: Hew High: Funding Secured?

by JDH on December 21, 2019

I must admit, I am stunned by the fact that Tesla is trading at an all time high.

$400 has served as an impenetrable resistance level, as evidenced by this four year chart.  On three previous occasions Tesla couldn’t break through, and finally dropped to the November/December 2016 support level in the late spring of this year.

It looked like the end for Tesla.

While people I know who have older models of their cars love them, the newer versions (the ones built in a tent) have more quality issues, and they appear to catch fire more frequently than other models of cars.  Their financial statements look horrific, and by all conventional definitions the company is insolvent, and yet here we are, at a new high.

Why?

There are two possible explanations.

The first that Tesla is a great company, with a great product, and great management, and my opinion for the last few years is entirely and completely wrong.  The introduction of the new cyber truck has boosted the company’s fortunes, and all is good.

The other explanation is that we are nearing the end of this elaborate ponzi scheme, and the cyber truck reveal (where the window broke when they demonstrated how bulletproof it was) will be remembered as the nadir of this scam.

I favor the latter explanation, but given that I have been completely wrong on this stock, don’t listen to me.

I stopped attempting to short this thing many months ago, so at least my opinions are not costing me anything, so that’s good.

Perhaps the smart people realize that this thing is a dead man walking, and they’ve goosed the stock higher so that they can get out at the top.  If so, bravo to them.

Since it’s making a new high and has no overhead resistance, the obvious play is to buy it.  But the RSI is at 80, which strikes me as somewhat “toppy”, so that seems like a risky play to me.  Perhaps the answer is to wait until the RSI hits 90 and then short, or buy puts, and see what happens.

I will not be attempting it.

I’m out.

Lots of other fish to fry; this isn’t one of them.

Those are my thoughts, have a great Christmas, see you next week.