How Long Can Tesla Hold This Market Up? |
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The S&P 500 has been stuck in a relatively tight range for some time now. |
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However, today's action in the S&P 500 futures took it right to the upper edge… |
Will we see some mean-reversion on Friday, or are the bulls back in charge? |
If Nvidia can get back on track - which it seems to be doing today - that's likely. |
However, it's worth noting that the rally remains concentrated in just a few stocks. |
A look at the advance/decline line, which is 263 stocks up and 234 down…it isn't super convincing. |
Regardless, the adage holds true: You never want to short a dull market. |
And that's somewhat to be expected in a short holiday week. |
Obviously Tesla didn't get the memo as its shares continue to blaze higher. |
They're up nearly 25% over the last week. |
Who needs AI when you have robots? |
As for me, I was able to secure a 37% profit in my Tesla Catapult Alerts Portfolio |
Onward and upward |
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As mentioned earlier, the S&P 500 is right at its upper edge… |
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If you're not schooled up on what expected moves are, you can watch this free video. |
It's worth keeping in mind that Microsoft, Apple, Nvidia, and Amazon make about 25% of the S&P 500 in terms of weighting. |
And if Nvidia regains its mojo… well, we might see the S&P 500 breakout of the range it has been in. |
Why do I bring that up? |
To remind you that Tesla from a market cap and weighting perspective isn't big enough to impact the markets to the same extent as say Microsoft, Apple, or Nvidia. |
If you recall, Apple was in the dumps for a large part of the first half of the year, but despite that, Nvidia was able to hold it up. |
Tesla doesn't have that kind of power… |
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Tesla continues to shine… |
The stock was hated during the first half of the year, but the strong delivery numbers earlier this week - along with the hopes of its robotaxi business taking off in the next few years - has traders buzzing. |
One crazy thing I'm seeing is that Tesla options are heavily outpacing Nvidia options. |
Yes, Nvidia is a much larger company in terms of market capitalization. |
But we're actually seeing a greater notional value on the options side from Tesla. |
Yesterday more than 4.2 million contracts were traded. And by 11 AM ET we already had 3 million contracts traded today. |
Besides Tesla and Nvidia, I'm also watching gold. |
If you don't know I have a gold In/Out Spread on which is working out nicely at the moment. |
The reason why I liked gold, and still do, is that its price held up well when the dollar was strong. My thinking was that if the dollar could pull back a little, we could see gold prices taking off. |
And that's what we are seeing play out now. |
Markets are closed tomorrow. |
Have a happy and safe fourth of July! |
I'll be back with you on Friday. |
To your success, |
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Don Kaufman |
P.S. 90% of all trades are placed by algorithms. It's why the average trader gets crushed trying to day trade. But it doesn't have to be that way. You see, the ultimate algo trading insider has discovered an A.I. solution that can help you level the playing field. Click here to learn more. |
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