Is The S&P Throwing Stones At Tesla?

I came across an interesting article about S&P’s mysteriously timed rating of Tesla recently.  The author questions S&P’s credibility given its inability to accurately forecast the mortgage crisis and its admission that “it didn’t know what it was doing.”

Tesla’s bonds (the debt that the S&P is so concerned about) aren’t due to start being paid until 2018 and they are positioning themselves to be in a fantastic position with the new Gigafactory that will be the largest producer of lithium ion batteries.  This will make the company way more valuable than it is today.  Consider the rise in brand appreciation and a larger market share with their sedan models, Tesla should have no problem paying back their debt and then some.

Here’s a link to the article:

Forbes Article by Mark Rogowsky

The Market is Still Rallying

The market is going bananas over the past few sessions.  Cramer had some good insight on why the market rebounded so sharply after the down sessions last week.  The bears were placing a lot of puts and shorting the market and when the market showed a little strength they tried to buy back all their shorts.  This is what happened in Trading Places with Eddie Murphy and Dan Akroyd.  The market kept going up as people tried to recover their shorts.

Now in terms of the one stock I’m really watching there is a strong contingent of bulls behind TSLA and whenever the market tries to short TSLA there is a huge rally when the selling pressure goes down.  In light of that there is a new development with the S&P listing Tesla’s debt as junk based off their cash flow as well as their recent and planned purchases. Even in light of this news the stock is still stable on after-hours trading.  It will be interesting to see what happens tomorrow.  

Tesla: Where To Go From Here

Here is some commentary on TSLA from CNBC:

CNBC Commentary on TSLA

The analysts say that TSLA is overpriced or at the level where it will now be consolidating and moving sideways.  They believe that there is no more equity left at least for the time being.  I am contemplating whether to sell at these levels and put my money into my dividend stocks or just hold and wait to see where it goes from here.  If TSLA paid a dividend I’d be more than happy to stick around, it’s just that I don’t want to tie my money up when I could be making money instead of letting it sit on a stock going sideways.

I’ll see what happens this week and then make my decision by the end of the week.

Climate Change and Stocks

Because of the weather this year many retailers like Walmart (WMT) who’s price got hammered today have missed their earnings estimates and have caused the market to be extremely volatile.  If there’s one reason to pay attention to climate change it’s because of the effects on the market.  With heavier storms called for in the future there will be fewer opportunities for consumers to make it out to brick and mortar stores especially during the holidays.  One way to play this market situation is to invest in online retailers and delivery services.  Amazon is of course the largest online retailer but there are other companies like Ebay (EBAY).  Some of the delivery services to pay attention to are of course Fed Ex (FDX) and UPS.

The key is to look for bargains.  Look at companies who have an active and extensive online offering.  This is a good indication that they are making money from their online store.  You of course have to do due diligence and see what the PEG and EPS ratios are and pay attention to the trend and the price overtime.  I would also look at the management and maybe even Google some of the management team to see how they have fared over the years.  If a company is well managed, has a strong PEG ratio, and an active online presence then consider it a bargain.

You can also do the contrarian play and short big box retail stores like Walmart (WMT) and Target (TGT) but be careful.  If the companies you are looking at are making the necessary changes to increase their online sales and using alternative delivery services, then it’s not a good bet to go against them.  

My TSLA Saga

So needless to say I (and probably a whole lot of other investors) had a rough day with Tesla.  The stock got beat up after hours and when the markets opened it tried to make a comeback but the Bears were too strong.  I'm down about 25 points from my entry yesterday.  My intention is to hold the stock for the long term but I wanted to see if I could time my entrances and exits off of technical analysis, so much for my timing.  I may wait and see how the stock performs over the next week and possibly build a position if it recovers.

TSLA Is Getting Hammered Today

The Bears are hammering TSLA today.  I sold my position for a loss because I knew it was going lower.  I’m going to try and scale back in when and if it hits $190.  There was a negative feeling about the missed earnings and with BMW releasing news about its new EV car to compete with TSLA.

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I got back in today at $202  because it found support off a resistance level.  Now the market has reversed possibly off of Janet Yellen's comments. This is a perfect representation of the chaos of the market. You never know what will happen.  TSLA had an earnings announcement that wasn't favorable and with possible competition the stock tanked today.  That coincided with the Fed Chair Yellen speaking today to conspire to make it a very schizophrenic day.

Profit Taking On A Stock You Still Want

When taking profits it is important to consider if you still want to hold the stock because of its overall growth potential or if you want to collect a dividend.  If this is the case then to not miss out on any potential surges after you have taken profits be sure to scale back in by buying small amounts even at the higher price.  Also if the ex-dividend date is approaching and you want to catch the dividend you will want to scale back in as well.  Use a dollar cost averaging strategy to get back in so you don’t miss any potential big upswings.

Note: I took another position into TSLA as it climbed back up today.  It may pull back after earnings this week but I want to be in a position to ride it higher if it doesn't.

Take Profits When You Can

So just took my profits on Tesla today because of several reasons:

• The 20 period moving average crossed the 50 period moving average
• It’s the beginning of May and people usually “sell in May and go away”
• The stock is starting to get overbought on the slow stochastics

I’m going to wait for the pullback and get back in because I know this stock is going to go higher.  As I said before when you invest in Tesla you are investing in more than just a company you are investing in Elon Musk’s vision.  He is a tenacious owner and he has a way of surviving situations that is commendable.  As they say the best indicator of future behavior is past behavior and his ability to build his businesses and grow them amidst a chorus of naysayers bodes well for the future of Tesla.