Hope you and yours are well. My typical every-other- Thursday note is early because this is a big earnings week impacting my holdings. I am going to make some forward-looking statements. Buying stock before earnings is risky business. Read the below opinion recognizing that everything mentioned is a holding and many I’ve owned for a time. Don’t want you to dive headlong into some new position when negative earnings surprises may await! If you must- only put 30-50% in pre- earnings.
- TSLA. Decided to sell 50% this coming week. Will put the proceeds into AAPL, GM and NVDA. First, I am slimming down because I am up well over 100% since buying it and secondly, the wheels are coming off the party bus. Last week’s earnings were a disaster. TSLA stock is priced for perfection. I suspect that if it wasn’t in the S&P 500 it might have cratered. Bad earnings coincided in time with massive inflows into S&P 500 stocks (the bi-monthly millions of 401k and TSP money). S&P funds must buy IAW the % of the “weight” of an issuance and TSLA weighting in the index is significant (1.69% / #6 in size). Only reason, aside from blind optimism I can think of to explain why it didn’t hit our sell stop.
The blue line is the TSLA elevator trend line that shows the doubling of TSLA’s price in 2 months. You can see that trend line has now been violated. Generally parabolic runs end in parabolic price drops. Maybe not this time. It may resume or (better) just base along where it is for now. That’s why I will keep half w/ a $769 Stop Loss. While I generally characterize attempts to regain above an elevator trendline the “Napoleon crawl” (wishful Bullish thinking before a Waterloo) for the Rob Gronkowski Party Bus of stocks… let’s call this a walk of shame. TSLA’s story is not over- but ST it faces serious headwinds & rapidly growing competition from GM, F, the Europeans, the Asians and apparently… Apple?!
- DKNG: ($63.87) Decided to forgo Canopy Growth that I mentioned a few weeks ago I was planning to acquire. CG is a good stock but I bought Draft Kings (DKNG) instead. Figured if I was going to place a bet on bad life choices, gambling on gamblers made more sense in a perverse kinda way.
- AAPL: ($136) Excellent rising trend chart. Buy if it hits $130. Earnings up 21%.
- AMZN: ($3352) Still range bound BUT may blow past upper range resistance at $3500 if 07 Feb earnings are good. If midnight deliveries of packages in Dec was an indicator- earnings should be outstanding. Bezos moving going from daily operations to a strategic role is a very smart move.
- F (Ford $11.51) crushed earnings last week and is threatening to bust $13. F hasn’t threatened that since 2011 and briefly in 2014. Success of a LT Triple Top breakout would indicate a move towards $20.
- GM ($54.41) Feb 10 earnings. Expecting it to beat with ST upside of $65-70. Cramer is on the GM bandwagon. Love him or not, he moves markets.
- GNRC ($270) Established a new trading range between $240 and $280. GNRC generally sits in a range for 3 months and then rises 10-15% and repeat. Earnings Feb 11. Suspect Cali wildfires last fall will spike sales this year. Millions sat in the dark while PG&E tried to dodge the risk of causing another fire. Anyone with $7000 will be a potential generator customer. In 2019, there were not enough qualified installers out west when the first series of utility inflicted brownouts happened out west. They have them now! If GNRC falls, buy. Its more than just a generator company now.
- INMD ($67.77) In price discovery (PD) up 50% in 2021. The definition of a parabolic move. A good hold, but 10 Feb earnings might deflate this one ST.
- NVDA ($543) Expect 11 Feb earnings to push this over $600. But, when NVDA disappoints, hang on for a -30% drop. I don’t have sell stops on this one, myself. Cost basis is way under $100. Buy on a dip- this is a modern blue chip.
- PLUS ($95) Set an alert- if this breaks $105, get into this one if you are not already.
- RNG( $407) Ring hit my $400 target. Up from $300 in Dec. Earnings 16 Feb. I am a holder, but if you’ve been following this trade since the $250 range, ringing the bell on some before earnings might make sense.
OPTIONS: Opening Long Call in the money positions Monday on GM (40% of $), NVDA (20%) AMZN (20%) and both GNRC & INMD at (10% each). Mentioning since my assessment of stocks with the best potential ST move higher can be implied by the allocations. A Call is a bet that over a short term, the stock price will go up. Buying Calls before earnings isn’t what most investors do because it’s risky. Calls lose value fast price drops.
Of all the stocks hitting earnings, GM chart appears most likely ST profitable followed by NVDA & Amazon as probable winners. Last two are just foolish speculation. No amount of Technical Analysis can justify my decision… and I tried really hard to give myself something or someone to blame. Well, fine! See #3, bad life choices.
- BTC ($38,636) Things are looking up for Bitcoin! Two weeks ago, I was concerned it was headed towards $25,000.
- We remain in a confirmed Crypto uptrend, but BTC really needs to push over its Jan ATH just north of $41000 for this to regain true momentum.
- Keep in mind my bias! I will pull the trigger on crypto fast when I see weakness. Rode too many coins down 90% from last peak. That has burned loss- bias into my decision-making process.
- Must Own Coins: BTC, ETH, ChainLink. Other good ones: AVE, UNI, SNX, GRT, REN, VET (VeChain) and ALGO. Some like AAVE are up 50% in a week. I guess I owe you an analysis on these puppies that might better inform your decision making. Will do that on Thursday.
- Avoid Ripple Labs XRP. USG is pulling them into court. Enough said.
I fight inbox clutter & won’t give it a second thought if this isn’t what you need cluttering yours! Lacking sophistication- unsubscribing is just telling me! Added some folks this week. If you want, I will add more to my list in order to spare you having to forward. Just get their permission first! You can reach me at email@example.com
Till next time, be excellent! Pete