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 Tesla Crushes The Shorts, While Amazon, Netflix, Apple, and AMD Climb

michael kramer and the clients of mott capital own shares of tsla, nflx, and aapl

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Stocks Continue To Rise

The S&P 500 continues to rise, and today, the index was up by about 80 bps, closing at 2,772, approaching a significant level of resistance at 2,800. I would imagine the sellers will greet the buyers with a considerable amount of selling pressure on the first such attempt to rise above 2,800.  So, we shall be observing 2,800.

I know how much of victory it must feel to the many who managed to hang in there and not bail out amid the volatility, but one must remember the coast is never clear when investing. Until we rise above 2,800, I will not be satisfied. The sellers will try to test the nerve of the buyers, but this market is not fragile in my opinion, and I do not believe the sellers will prevail.

For me, it is of particular importance because not many were calling for a rise to 2,800 on May 1st when we sat at only 2,640.  And I still think we had to 3,000 later this year.

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Tesla

Tesla had a big day today, and I noted in an Investopedia article that short-sellers may find themselves in trouble. But even more interesting was the market’s reaction today, and if you think technicals do not matter, the chart below should make you think again. Look at the volume in the chart explode when the price crossed above a strong resistance level at $309, and then explode again around $320. That were buyers coming, or short covering.

Volume today, was very high, there have only been a few occasions with higher volume in the stock over the past few years, I may be speaking too soon, but I think it may mark a turning point for the stock.

Shareholder Base

Let us remember, nearly 60 percent of the shares held in this stock are controlled by just 7 investors. Elon Musk with 22.5%, T.Rowe with 9.25%, Fidelity at 8.5%, Baillie Gifford 7.5%, Vanguard at 4.2% and Blackrock at 3.6%, and Tencent somewhere just below 5 %. These guys are not in their whipping shares of Tesla around daily.

That leaves about 40 percent of the float trading on any given day and even less than that because we know plenty of other long-term holders, like Ron Baron and such hold shares as well.

So, let’s say on any given day there are 35 percent of the shares are available to trade. How many shares are short? Well, 33 percent of the float! Notice in the chart, that as short positions were increasing the price of the stock was decreasing, that is because the short-sellers were the only ones pushing it down. We already know that 60-65 percent of the holders weren’t selling. Short-sellers borrow shares from the long-term holders, push the shares lower, no problem. But now they want to cover, but from whom will they buy their shares from, good question.

Also notice where the price of the stock was when the short interest started jumping, well most of the shooting took place below the stock’s current price. So, are they losing money? probably!

Where will shares go, I do not know for sure. But I do know that what was resistance at $309, now becomes strong support, and if the shorts are desperate to get out, then the stock is going in one direction. Up!

TSLA data by YCharts

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Amazon

Amazon’s continues to rise, after its break out.

Apple

Apple broke out as well, rising above resistance easily, and now trading at $194.

Netflix

Somebody wanted to get into Netflix badly at the end of the day, enough so that to take the stock up nearly 3 bucks, on good volume no less.

AMD

Can you believe that AMD was $9.6 at the start of April! Holy Sh*t! Not only that but the rise is coming on strong volume.

JP Morgan

JP Morgan filled the gap, tomorrow will be a good test. Do we continue to rise or revert to the downtrend?

That’s it!

-Mike

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-Mike

Photo credit via Flickr

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future. 

#amd #netflix #amazon #tesla #sp500 #apple