Wed Nov 18 2020
Tesla has been admitted to the S & P 500. One article makes a parallel with the elder Kennedy getting a stock tip from a a shoe shine boy
At that point Kennedy realized the stock buying frenzy had peaked, ti was time to exit. Let's look at TSLA.
This is classic textbook behavior. TSLA appears to have completed five waves up. Wave 2 was strong to the downside. That usually indicates wave four is a sideways affair, which is exactly what happened. As the proxy stock for the last ten thousand DJIA points, TSLA finished its fifth wave in classic parabolic fashion. Its fifth is a straight up advance of 225 points in one month.
A parabola is a formation wrought by a geometric formula. It is a number raise to a power as in x squared. Only a geometric formula could result in a vertical rise. An arithmetic formula would be 2x, a much more modest rise even with a higher slope, in this case 2.
TSLA market cap is 431 billion.
GM - 62 B
F - 35 B
FCAU - 30 B
The big Three total $127 B which means TSLA alone is valued at 3.4 x the total market cap of all three. The three of course sell millions of vehicles world wide. Tesla sells about 100,000 ion one year, and that is just recently, previous volume was much lower.
This parallels the run up in the dot.com valuations as well as stock market peaks in the past. There is no assurance of when of course those who bought last year and have a 5x gain, will decide to exit. But when that occurs, the first out the door gets his 5x gain, then it dawns on others but whoops there is no one left to buy at such high prices. And so the parabola collapses.
A tenet of socionomics is that social mood is unremembered, here is a classic example of just that. No one buying TSLA seems to remember the dot.coms or other stock market peaks.
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