Tesla Defies the Selloff, Short Sellers Smoked

February 2, 2020

Weekly Market Outlook

By Keith Schneider

US equities tanked, and as we highlighted last week the spreading virus was simply the tipping point for an insanely overvalued and overbought market. Three out of four equity benchmarks are down for the year. Apple looks like it ran out of momentum and might have put in an intermediate term top or even more. In fact, most FANG stocks are looking tired and are getting some dental work, which entails filing down some very extended cuspids.

Amid the sea of red on my trading screens on Friday, one holding stood out and that was Tesla. It closed up on the day and up 20% for the week. Short sellers didn’t care about the market meltdown and just wanted out.   It is now over doubled from our entry in early November, removing billions from the pockets of the short sellers. The smartest guys in the room thought Elon was smoking dope (hmmm …maybe we should all have what he had) and his metrics bogus. Fundamentals are interesting, but charts come first, because by the time you get the fundamentals right it’s just too late.


This week’s highlights are:

  • Risk Gauges are still bearish, and all key US Equity benchmarks closed under their 10 DMA’s
  • The Dow and IWM both slipped to warning phases and SPY will with any further weakness
  • US bonds rallied strongly and close to all time low in yields
  • Gold closed at highest levels since early 2013 and looks poised for more
  • Emerging markets completely failed its recent breakout
  • Switzerland continues to outperform all foreign stock markets both on a weekly and 3-month basis
  • All members of the modern family have broken down to warning phases with several already attacking their 200 DMA’s
  • On a short-term basis sentiment is a few days from reaching a bearish extreme
  • Volatility jumped and broke above key Ma’s, bearish for equities

Best Wishes for your trading

Keith Schneider

CEO - Marketgauge.com

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