53 weeks ago, in “To Hedge Or Not To Hedge? ‘When?’ Is The Question”, I introduced the idea of the Japanese Nikkei as harbinger, and wrote:
A new all-time high in the Dow, unconfirmed by other indexes, to mark the top of this phase shouldn’t surprise at all. It’d make for fine irony if one of history’s greatest false-breakout bull traps caps one of history’s greatest manias.
If only famed Dow Theorist Richard Russell were still alive to see it!
If it happens.
It seems to be happening. Small-caps and Dow Transports remain nowhere near new highs, and so too crypto.
As it stands today, the Nikkei is up against an upper trend line from which it has turned sharply lower many times - and every time - over the past 15 years, and the situation with interest rate inversions - most recently discussed 3 months ago - is still moving closer toward the key “0” line.
In the chart below I’ve noted the 100% hit rate with subsequent percentage decline in the Dow. Other, more speculative, indexes fared far worse, while many individual stocks never recovered.
When the inevitable decline does occur, the most over-believed stocks suffer most.
Tesla is one of the most popular and over-believed stocks ever, by far the worst performer among the big tech cohort in recent months, and one of the few “meme stocks” left standing.
Factoring the dividend of $3.723 paid in late December, my Tesla short - via TSLQ - is slightly profitable.
I’ll double that position in TSLQ at tomorrow’s open.
It closed the week at $32.74
I’ll stop out of only this 2nd TSLQ position if it trades below $26.25
That’s about 20% risk, vs greater reward.
Headlines:
Ford Loses $36,000 on Each EV, Cuts Production of Electric Trucks
Average Price of Used Tesla Declines 18 Straight Months
Hertz Will Shrink Electric Fleet After Being Burned by Tesla’s Price Cuts
The rental car company blamed the sharp drop in the value of electric vehicles and higher repair costs for its decision to sell 20,000 cars.
Business Insider: Europe’s Nuclear Power Renaissance
Several European powers are rapidly progressing plans to expand their nuclear energy sectors, despite a lack of support from major EU powers, such as Germany.
The U.K. recently announced plans for its biggest nuclear expansion in 70 years, as well as plans to extend the life of several existing facilities.
France continues to back its longstanding approach to nuclear power, with plans to build several new reactors in the coming years.
Sweden recently voted in favour of the expansion of its nuclear power sector, and Hungary is moving forward with the construction of a massive nuclear plant.