Weekly Market Update

[Jeffreauxdawg]

Not going to post all of the sectors like last week. It's all pretty much in the same boat. Big tech is still leading the charge and is getting extended to say the least. Banks report earnings tomorrow and who knows how the market will react.

For now, the long running uptrend is still duct taped together, but the trading range most of you suggested a couple of weeks ago, looks a lot cleaner.

Big number on the board is 3233 in the S&P 500. It's the early June high and will provide strong resistance. If we go down from there the likely target is 3000 again. (If that happens, my next post will be about a double top/double bottom.) If we break through, and 3233 holds as support upon a retest. Look out all time highs. Here's the chart.

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I also wanted to point out Tesla. This is what you call going parabolic. It usually doesn't end well.

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Anyone thinking about buying Tesla right now, should read up on Isaac Newton and the South Seas Company. It did not end well for Isaac.

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[jethreauxdawg]

Shouldn’t banks have had a good quarter? I’m assuming they all made out like bandits on the PPP transactions. What’s their forecast?
ETA: hopefully Tesla doesn’t screw this up. I don’t care about the stock, but I like what they are doing in the car market and hope they are around for a while.

 

[rynodawg]

Tesla up another $100 today pre-market. Bought shares back in at $1040, and am adjusting my limit sell order again today. It is already pricing in a 2nd quarter profit and S&P inclusion,, but that really shouldn’t be worth a 60% gain in a week. Share price is way ahead of itself.

 

[57stratdawg]

I’m sure Tesla is overvalued, but no one really knows how to value them. They’re rolling out products that could fundamentally change how humans live. Ford and GM aren’t doing that. I think there was a lot of skepticism around Musk’s plans, but now that we’re in 2020, those goals look a hell of a lot more obtainable than in 2010.

Are we going to see a Tesla automated long haul rig and Tesla unmanned Model S driving up and down the streets in the next few years? It doesn’t seem like science fiction at all anymore. That’s what is driving their current valuation.

 

[TheStateUofMS]

AMZN is parabolic too. I'm being tempted to start trimming. It's pulled forward so much demand from businesses that will go under (more of the small variety) and I bet advertising dollars may flow from the FB boycott to AMZN or even if not, AMZN probably best place to advertise right now.

ETA: 3,233 is the number to watch. Within ear shot right now.

 

[TheStateUofMS]

PPP are loans. Banks just the mechanism to get the funds out. I don't think they'll be making money on the PPP.

Regional Banks exposed to small business loans are the ones to watch. I think there's going to be some real trouble there.

 

[Jeffreauxdawg]

Shouldn’t banks have had a good quarter? I’m assuming they all made out like bandits on the PPP transactions. What’s their forecast?
ETA: hopefully Tesla doesn’t screw this up. I don’t care about the stock, but I like what they are doing in the car market and hope they are around for a while.

Banks are in a weird spot because they are having to build reserves for insolvency issues to come. I think a lot of them are going to donate the PPP profits to small businesses, which is cool.

The biggest question is are we about to hit a "sell the news" period. For the market as a whole, every best case scenario is priced in already. The market is "forward looking" so last quarter should not matter right?

Honestly, who knows at this point. It's a freaking crapshoot. Reason and accountability are still in lockdown.

 

[Jeffreauxdawg]

AMZN is parabolic too. I'm being tempted to start trimming. It's pulled forward so much demand from businesses that will go under (more of the small variety) and I bet advertising dollars may flow from the FB boycott to AMZN or even if not, AMZN probably best place to advertise right now.

ETA: 3,233 is the number to watch. Within ear shot right now.

FB made a new high today as well.... It's silly season. They don't have any headwinds.*

I love Amazon, but they are in severe political risk. Both candidates have painted a target on them. Trust busting risk is on the table.

Everything needs to take a break.... I'm looking hard at VIX.

 

[rynodawg]

I’m a TSLA fan, and think that all new vehicles will be EV within next 10-20 years. Stock is already priced though as if Tesla will dominate a decade from now, and that remains to be seen.

I think automated interstate driving and long haul trucking is obtainable, but skeptical cars can be fully automated on local streets anytime soon. Too many scenarios that need human decisions,, construction detours with flag men, two way streets with vehicles parked on side (leaving only one lane of space), passing stopped delivery trucks, unmarked roads. An automated vehicle trying to drive a straight line through Jackson potholes wouldn’t mechanically last a week. Just skeptical that Tesla can replace Uber with robot cars anytime soon, regardless of what Elon says about how close they are.

 

[Crazy Cotton]

Nonpolitical political thread: Not taking sides here, just thinking about probabilities. Biden, currently is favored to win the election (Biden +87.2), senate has also recently shaded in to Democratic control (Republicans -110). Biden announced he wants 500 million solar panels installed. If he has congress, he would have the juice to get something along those lines done. And let us assume that they will want US manufacturing to the greatest extent possible.

Tesla bought Solar City and the Giga plant in New York (Musk has a habit of cleaning up on bargins like this, reminds me of another guy...). So they can make the panels, and as importantly, they have the battery wall technology and manufacturing capacity to do commercial level storage as well. This is tech that is already in the field, and is just getting better, they are ahead of everybody else, and if something better comes out, well they'll just buy it and fold it in. Those Giga plants are pretty impressive.

I've always thought Tesla would morph from auto manufacturer to "new" energy infrastructure manufacturer, and Musk has shown he can move from vision to reality pretty quickly - Tesla now has 2,000 supercharger stations up and running for example. If there's political will to seriously move in the direction Biden has indicated, and I think there will be (infrastructure projects bring jobs, aging grid that needs massive overhaul for efficiency and security, younger people are making buying decisions based on how green a company is, etc), then Tesla is set up to own this space.

To me this company is just getting started; I see them kind of like where Amazon was when they were the biggest bookseller on the block - it turned out their model was good for selling all kinds of stuff. I've been buying them for the last 5 years, every time there's a dip I pick up a few shares. I got if for 518 in late March and thought I'd paid a little too much.

 

[jethreauxdawg]

PPP are loans. Banks just the mechanism to get the funds out. I don't think they'll be making money on the PPP.

They were compensated for being that mechanism. I thought they basically received a 3% processing fee, plus they are supposed to get something on the back end. Banks didn’t do it for free.

 

[Jeffreauxdawg]

Nonpolitical political thread: Not taking sides here, just thinking about probabilities. Biden, currently is favored to win the election (Biden +87.2), senate has also recently shaded in to Democratic control (Republicans -110). Biden announced he wants 500 million solar panels installed. If he has congress, he would have the juice to get something along those lines done. And let us assume that they will want US manufacturing to the greatest extent possible.

Tesla bought Solar City and the Giga plant in New York (Musk has a habit of cleaning up on bargins like this, reminds me of another guy...). So they can make the panels, and as importantly, they have the battery wall technology and manufacturing capacity to do commercial level storage as well. This is tech that is already in the field, and is just getting better, they are ahead of everybody else, and if something better comes out, well they'll just buy it and fold it in. Those Giga plants are pretty impressive.

I've always thought Tesla would morph from auto manufacturer to "new" energy infrastructure manufacturer, and Musk has shown he can move from vision to reality pretty quickly - Tesla now has 2,000 supercharger stations up and running for example. If there's political will to seriously move in the direction Biden has indicated, and I think there will be (infrastructure projects bring jobs, aging grid that needs massive overhaul for efficiency and security, younger people are making buying decisions based on how green a company is, etc), then Tesla is set up to own this space.

To me this company is just getting started; I see them kind of like where Amazon was when they were the biggest bookseller on the block - it turned out their model was good for selling all kinds of stuff. I've been buying them for the last 5 years, every time there's a dip I pick up a few shares. I got if for 518 in late March and thought I'd paid a little too much.

Amazon is a great example. Let me show you a few charts of Amazon from the time period you were talking about...

$7.50-$106.00 in 18 months. 14x return.
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If you bought at $106 it took you 9+ years to break even...
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The moral is yes, we can see the future of TSLA. But they are a long way away and may never get there. For now 90% of their revenue comes from being an auto manufacturer. Toyota is the king of the hill in that world and generated $30 trillion in revenue and $2+ trillion in profits last year. Tesla will have to increase revenue 50% for 18 years to be as big as Toyota is today... Tough ask. Yet we currently have TSLA valued double if what Toyota is.. It's crazy speculation.

Those are not idiots running the other auto manufacturers. 1 or 2 will make a big push in to e soon. They will flood the market with electric vehicles. Ford has been getting hammered for years, but they went the other way and invested in infrastructure first.

https://media.ford.com/content/fordmedia/fna/us/en/news/2019/10/17/ford-introduces-north-americas-largest-electric-vehicle-charting-network.html

TSLA at $500, okay. $800 to rich for my blood. $1700... Watch out below.. Now it may hit $2000 or more... But gravity always wins. Ask Newton.

 

[houstonutsack]

Banks can't recognize all of that income at once. The loans are for 10 years so that 3% has to be recognized over 10 years. Each year they will recognize 1/10 of 3% so it isn't much of a windfall of income to the banks.

 

[jethreauxdawg]

Is that agood or bad number for a bank?

Banks can't recognize all of that income at once. The loans are for 10 years so that 3% has to be recognized over 10 years. Each year they will recognize 1/10 of 3% so it isn't much of a windfall of income to the banks.

Not arguing, just asking. Weren’t they basically allowed to loan out all of their reserves at a rate higher than prime and the loan is fully guaranteed by the federal govt? It’s not a lot, but it’s basically free money in that they weren’t previously planning on any return on that reserve money at that time. And loaning all that reserve money out changes a liability into an asset on their books, right?

 

[rynodawg]

Tesla has large lead at moment in battery range, and supercharger network. From that article Ford doesn’t look to be investing much $$$, just entering into usage agreement with a couple very sparse networks. Agree though that other auto companies won’t just give up and go bankrupt. A few will successfully make the shift, and the supercharger networks will naturally follow. When EV sales start increasing to 10% of sales, then 20%, then 30%,,, independent gas station/ convenience store owners along highways will quickly add fast chargers themselves to meet demand.

 

[Jeffreauxdawg]

I like TSLA long term. But they are getting valued like a software company. Every aspect of their business is manufacturing based. That means they have to build big expensive factories, buy lots of materials, and pay lots of employees.

Also, they built that factory in China. Any proprietary tech is no longer proprietary.

 

[LTblows]

Keep it rolling. AWS is what drives the profit.

 

[fishwater99]

I’m sure Tesla is overvalued, but no one really knows how to value them. They’re rolling out products that could fundamentally change how humans live. Ford and GM aren’t doing that. I think there was a lot of skepticism around Musk’s plans, but now that we’re in 2020, those goals look a hell of a lot more obtainable than in 2010.

Are we going to see a Tesla automated long haul rig and Tesla unmanned Model S driving up and down the streets in the next few years? It doesn’t seem like science fiction at all anymore. That’s what is driving their current valuation.

Do we know how long the batteries will last on these cars? How long will the cars last, what is their reliability?

 

[rynodawg]

Good call if you went in on VIX. Half of my TSLA hit its limit and sold off today during that Tech dip.

 

[Grove Sh*tter]

It may have taken 9 years to break even, but for long term holding, you'd have been up 2800% if you held another 11 years

 

[Quincy A. Wagstaff]

If you're pricing your portfolio in USD, just remember that USD is going to zero.
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[Jeffreauxdawg]

If you're pricing your portfolio in USD, just remember that USD is going to zero.
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But by the time it does bitcoin will have bounced between zero and 250 million a few thousand times.

ETA I do understand why you say that... There are consequences to printing the 10 or so Trillion dollars we have printed in the last decade. In that light, it will eventually fail at some point in the distant future if money printing continues to accelerate.

But it's not something to worry to much about, long before that scenario the dollar will regain it's reserve currency status... Backed by nuclear weapons instead of gold.

 

[Quincy A. Wagstaff]

Wow. You're more bullish than me. Next stop $250 million!*

*-not investment advice

 

[Jeffreauxdawg]

Wow. You're more bullish than me. Next stop $250 million!*

*-not investment advice

You have any suggestions on how to trade Bitcoin with a brokerage account? I have not checked in lately and I let this potential breakout get away from me. Any suggestions on a wallet. I don't know squat about btc, but I can tell you where it's heading real soon.

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ETA... That is the most perfect example of a Head and Shoulders pattern I have ever seen with the blue neckline.

 

[TheStateUofMS]

I trimmed CMG and AMZN on 7/13 near the market's close. They are core long positions, but I had huge gains. Have to trim sometimes.

 

[TheStateUofMS]

I use coinbase, but it's really just for holding. You'd have to buy a ton of BTC at once to "trade" it because the settlement times are like a week my last check.

I'm long some BTC in case it skyrockets. My break even is around $8k. Just holding.

 

[Jeffreauxdawg]

Freudian slip. Buy, not trade. I looked at GBTC, but 2% fees.. Yikes.

Coinbase is the only one I really know about. Seems like the 800lb Gorilla for a reason.

 

[Quincy A. Wagstaff]

As far as inside a brokerage account, I'm only aware of GBTC. I know people who own it. But you're right: fees. What you get in exchange for that is convenience: You're not actually buying and holding bitcoin. You're buying shares in a trust that owns bitcoin. It's good for people who just want exposure to price movement but don't want to learn how to buy and store the bitcoin themselves.

For those who want to learn how to actually buy and hold bitcoin themselves, there are numerous exchanges, all with pros and cons. Once you buy on an exchange, the next step is learning how to store the bitcoin yourself with a wallet. Another good way to acquire bitcoin is by accepting it as a form of payment. This is a good option if you own a business or do freelance work.

 

[TheStateUofMS]

Doesn't coin base take care of the buying and the wallet? I used Binance to try and trade crypto pairs a couple years back and I was using my digital wallet to do that.

For now I'm just holding my coinbase BTC and I hardly ever look at it. Am I storing it and holding it right?