- March came in like a lion, with another choppy week of trading.
- Interest rates continue to march higher, and Jerome Powell and the Fed don’t seem prepared to address it.
- Tesla has enough short-term issues affecting it to put it in a risky spot.
- Until new stock market highs are set, the downtrend may persist for both the market and Tesla.
- Looking for a helping hand in the market? Members of Nail Tech Earnings get exclusive ideas and guidance to navigate any climate. Learn More »
We received a lot of data last week for the markets. That data wasn’t great for traders, and we see risk for markets continuing this week. It starts with the Fed, which spoke and didn’t have a big problem with rates rising. That means rates can continue to jump. With rates moving as fast as they’ve been, algorithmic trading programs that are set to interest rates may run off track. And while the jobs report on Friday was strong, that underlines the key risk, that rates will go up sooner than the Fed is saying. This played out in an interview WSJ’s Nick Timiraos did with Fed Chair Jerome Powell. The end result: The Fed as of now is not going to control the yield curve like bulls are hoping.
As a result, we downgraded our strong buys to buys, meaning our position sizing is smaller. With the historic patterns around rising interest rates and what that means for the market, we want to be cautious until we’re given reason to be more optimistic. For that, we watch what’s happening in the S&P 500 (NYSEARCA:SPY) levels.
Tesla (NASDAQ:TSLA) is one of those buys, and there continue to be tough signs out there. The delivery estimates for this quarter continue to come down, which isn’t great, and the company continues to have trouble with semiconductor and nickel sourcing. I think the company remains cheap on next year’s earnings, but to get there the market has to start to agree with our earnings estimates, and we’re not there yet, so things could be choppy in the meanwhile.
The video discusses all of these points in more detail.
Reviewing the prior week 1:00
The spike in interest rates, the effect on algo
WSJ’s interview by Nick Timiraos with Fed Chair Jerome Powell and when the Fed might raise rates
The market uptrend and whether it’s breaking
Temporary Inflation - do you buy it? 8:00
The Fed’s guidance, but can we trust them?
Risks around the price of oil and Middle East turmoil
Is this a problem for the market effect or for the consumer effect?
Positioning and pulling back on Strong Buys - 15:45
A time for less risk
Hedges via the ETFs
Where does tech sit amidst a market rotation
The risks to top performers in a downtrending market
Importance of developing conviction and what might drive that
Tesla’s past week of struggles - 26:30
Delivery estimates coming down
Semiconductor and nickel supply challenges
Not much of a response from the FSD subscription announcement
Importance of knowing your own time horizon and emotional responses in a position
Preparing for the Q1 report and not just buying because the stock is down
Last comments for the week ahead - Keep it Simple - 40:45
#1 Tech Stock Pick & Trading Service On SA. Trade Like A Pro.
Raising Annual Prices March 15th
Subscribers are saying;
"personal trading account to go up by ~200% since January 2020"
"3 for 3, baby!"
"paid for itself many times over."
This article was written by
Starting out I could make a mean straight black coffee. But ask me to add some sugar or milk though was a problem. So they got fed up and said, just give him some stocks to follow. That was in the 90s tech boom. Yeah. That worked out.
So, now, mid-life crisis I enjoy second guessing the Fed, which is usually a good strategy. They are not traders, they have no risk discipline, they are having way too much fun with this QE-QT thing and because of their powerful position, are usually way too over-confident in their decision making which is a hint to bad decision making.
My customers have seen that I've been net net pretty good at consistently second guessing the Fed.
Our EPS estimates factor into Street numbers.
I've been on CNBC and a few other places.
But mostly I really just enjoy second guessing the Fed and keeping it simple.
Wishing you all continued success.
Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All model portfolio trades are hypothetical to show direction, conviction and timing. Performance excludes all relevant transaction costs. Opinions given are at this moment and can change rapidly after this is published. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.