Seeking Alpha

Allan Harris'  Instablog

Allan Harris
Send Message
Developer, Chief Strategist and Head Writer of AllanTrends.com, a trading service based upon a proprietary algorithm that identifies the dominant trend of any stock, index or ETF.
My company:
AllanTrends
My blog:
AllanTrends.com
View Allan Harris' Instablogs on:
  • InVivo Therapeutics (NVIV)

    (click to enlarge)

    Tags: NVIV
    Feb 27 2:37 PM | Link | 1 Comment
  • Apple And Tesla, Sitting In A Tree, K-I-S-S-I-N-G
    Apple and Tesla sitting in a tree, K-I-S-S-I-N-G

    Apple & Tesla

    Apple and Tesla
    sitting in a tree,
    K-I-S-S-I-N-G.
    First comes love,
    then comes marriage,
    then comes baby
    in an electric carriage!

    Last weekend Jason Calacanis, an angel investor out of Northern California, published the article (linked below) making a very persuasive case for Apple to buy Tesla and by so doing, take us all into the new world of electric, self-driving, solar energized consumer transportation, all before the end of this decade:

    Apple will buy Tesla for $75b in 18 months (prediction)

    My take from this article, and from using Apple computers since 1987, and from my own most excellent TSLA test drive last summer (they still haven't found my socks):

    (1) Apple has $140 billion in cash, Tesla's market cap is $25 billion. Paying 3X Tesla's current market cap Apple can buy Tesla for the equivalent of one year's iPhone profits;

    (2) Apple is rumored to want its own electric car. It would need at least seven years to get a car on the road: three or four years to design it, followed by three to five years of building factories capable of any sort of modest capacity. Tesla is ALREADY THERE;

    (3) This is the touchy-feely part, something just feels right about bringing all of the above together: Elon Musk-Steve Jobs-Tim Cook; Climate Change-Solar Energy; Tesla - "Greatest Car Ever Made" (Consumer Reports); Apple - "Greatest Computer-Cell Phone-Tablet Ever Made" (Walt Mossberg - WSJ technology guru).

    Within the next 36 months, both Tesla and General Motors plan to be selling mid-sized $35-$40K electric cars with a 200+ mile range…the so called tipping point of mass consumer acceptance of electric cars. These will probably be soon followed by entries from German, Japanese and Korean manufacturers. By then, Tesla's market cap will likely be too expensive for Apple, or anyone else to touch.

    The idea of an AAPL buyout of TSLA may be way, way too speculative, just as for decades it was too speculative for every great technological advance or innovation or idea in the years before its eventual materialization.

    For the sake of this Weekend Update, for the benefit of all of the members of this service, for the traders and dreamers among us, with our shared aspirations for wealth and good fortune for ourselves and our families, and if this indeed is going to happen, sooner or later, then we must ask:

    What is the trade?

    (1) Buy and hold TSLA shares and wait for a takeover, buyout or merger at about 3X current share price, i.e. a 200% return: $10,000 grows to $30,000;

    Alternatively,

    (2) Buy TSLA call options, as far out in time as possible (Jan 2017), that will leverage the bet for a buyout while at the same time allowing for some profit whether Apple buys Tesla or not. Looking at what is available and calculating various bullish scenarios, this is what I've come up with:

    (a) Buy the TSLA January 2017 $300 calls, now trading at about $20.00 ($2,000). Although this raises the bar for break-even to $320 stock price, the stock price at $340 results in a 100% return, while a $400 stock price creates about a 400% return, while the buyout of $600/share described above would value those $300 calls at $300 each, growing the value of the original $2,000/call to $30,000/call;

    (b) Buy the TSLA January 2017 $200 calls, now trading at about $50.00 ($5,000). A more conservative option strategy, TSLA needs only rise to $250 for break-even and $300 for a 100% gain. The stock at $400 results in a return of about 300% and in the advent of the buyout described above ($600/share) each $5,000 original call becomes worth $40,000.

    I'm not sure how to categorize this trade, it doesn't quite fit into any of our four portfolios, Intermediate, Long Term, Short Term or Biotechnology. However, based on the chart below, we may have a category that would be a prefect fit. TSLA's Long Term Trend Model is on the verge of generating a Wave 5 Buy Signal. If triggered, the chart is targeting $400, minimum, for the length of Wave 5:

    (click to enlarge)

    There are more caveats to this entire scenario than a boy who although born in the mid-west has lived most all of his adult life in the South can shake a stick at. We've talked about the concept of confirmatory analysis before, that where there is a compelling story behind a stock that is also supported by some potent technical analysis, you have a very high probability (albeit not guaranteed) trade. This particular trade can be both extremely profitable as well as a lot of fun to follow insofar as it involves being at the cutting edge of transportation and energy technology and partnering up with the legacy of Steve Jobs and the vision of Elon Musk. Who says we can't have a little fun making money, and feel good about saving the planet to boot? Yea, there's risk, market risk, geopolitical risk, just plain bad luck risk, but weighed against the reward, in my mind there's just no contest. I'm in.

    Two Week Free Trial AllanTrends Standard Trading Service

    Feb 21 11:42 AM | Link | Comment!
  • Silver Buy Signal

    (click to enlarge)Gold and Silver have reversed Long in their respective Intermediate Term Trading Models. The AGQ trade above is one of my favored trades for leverging up on even a small move higher. More charts on this trade in my Public Chart Library.

    Jan 24 5:01 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.