Dow 22,000 NYSE Composite 12,000 Tesla Earnings

Tesla Model 3 passes regulatory hurdle : production to begin

Yesterday the Dow Industrials closed above 22,000 for the first time and market participants gave a collective sigh of relief. As the markets approached these two round numbers, we’ve been taking profits along the way. In addition, we’ve been transitioning into Consumer Staples and Energy names in the trading room. Tesla reported after the close.

NYSE Breadth

NYHL and NYAD are bullish. As long as the upper histogram stays above zero line, we are bullish. The moving average is cycling down, so NYAD in the lower panel could fade a bit. It is for these reasons, along with TICK cumulative that we continue to think rotation is in play.

NYHL NYAD

Rather than repost a bunch of charts, please take a minute to review the charts and comments we posted on Stocktwits last night here.

That said, we were watching earnings of the big cap names as well, with Tesla reporting last night after the close.

Tesla Motors – fundamentals

  • Adjusted loss per share of $1.33 vs. $1.82m, which was narrower than expected, according to a consensus estimate from Thomson Reuters.
  • Revenue: $2.79 billion vs. $2.51 billion expected

More importantly, gross margins were North of 25% and during a rough seasonal period for car manufacturers, Tesla has managed to grow its sales by double digits.

Tesla Technicals

Technically speaking, we still see potential for a head and shoulders pattern to play out, if investors “sell the news”. It is for this reason that we will watch price action for a potential trade.

TSLA-08-02-EPS

Sidenote: We started a position in Apple (AAPL) and First Energy (FE) yesterday. We will add to ConAgra (CAG) when appropriate.

Finally, watch the U.S. Dollar for further weakness. Should this happen, multinational companies and the markets more generally, will have an additional tailwind. For the time being, we are taking the “less is more” approach to the markets.

Happy Thursday,

Vinny

More: Three Steps to Winning Stock Trades



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Vinny Gambini

Trade Fundamentals w/ Technical Analysis - CANSLIM method using high probability setups and Ichimoku Trend Analysis. Architect, Family Man and Father of three.