Unrealistic Investor Enthusiasm in the face of Great Odds?
Is Tesla Undervalued?
Oil bulls have no more gas to push higher.
Hawkish ECB comments move Euro Higher from Multi-year support.
S&P500
S&P500 was up by 1.61% to 4462.21 in yesterday’s session, the rally is the perfect example of the sense of complacency that prevails in the market that has coloured most of the past decade and depicts the irrational enthusiasm in the face of overwhelming odds. Investors continue to overlook the risks the economy and global financial system face. In the past 6 sessions the market has been stuck between the 4380 to 4460 range and after the rally yesterday it seems a break higher is likely ahead.
The major news of the day was Netflix’s disappointing earnings report. Netflix is one of the FAANG members and reported the first subscriber decline in over a decade. Since the news hit the markets, Netflix is down roughly 36% making it the worst-performing stock in S&P500 in 2022 and currently trading at $226 down from its November peak of $700 in Nov 2021.
S&P 500 Index
Is Tesla Undervalued?
As per the latest report on the already quickly growing EV market, the Tesla stock is considerably undervalued even at more than $1000. The International Energy Agency estimates that the Electric Vehicles represent close to 9% of the global car market. It is about triple the EV market share from about two years ago. And the EV car sales have more than doubled to 6.6 million in 2021.
The report further suggests that Tesla is already far ahead of smaller EV makers. And large Automobile makers in terms of technology development for efficiently manufacturing EVs. The company first built and then reinvented tools. Then factories reduce the complexity of making car body parts. This will enable them to produce cars faster and at less cost than any other EV maker. As per the Edison Electric Institute estimates there will be a huge demand for EVs in the future. In addition, U.S. roads will have 22 million EVs on the road by 2030. This itself will accelerate Tesla’s revenue growth and cash flow in the coming years. Tesla has multiple business lines, massive scale, expanding margin profile, technology development, etc. All elements give an impression the EV carmaker is quite undervalued at this stage!
Tesla Stock Chart
Trade Insights – Tesla/ TSLA
Viable Long positions for long-term investments above the Pivot point at $980, first targeting the Key Resistance level at $1150 and then advancing towards the Resistance Zone between $1240 to $1250 and beyond (tradingview).
Alternatively, Short positions below the Pivot Point at $980 if prices drop, targeting the Key Support level at $830. And it heads downwards to test the support zone at $700 to $720 in case of a larger catalyst brings the whole market down altogether.
USO/USD
Technical analysis of the US oil charts shows that after bouncing back up from the key support level at $94.00. The oil struggled to keep up with the rally and found resistance at $109 to drop down below the Pivot on the chart at $104.00. The Triangle formation and its breakout we saw on the charts in the last few reports. It failed to gain momentum and oil has fallen back below its one-month moving average. The volatility remains high, and oil could move in any direction given that Russia’s invasion of Ukraine is ongoing and in its third month. It is imperative for the Oil to move above the Key Resistance level at $113 and consolidate up there to manage and break through the Resistance Zone at $121. However, it seems the Oil bulls have no more gas to push higher.
Trade Insights – USO/USD
Viable Short positions below the Pivot point at $104 Level targeting first the Key Support level at $94, dropping towards the Support zone between $88 to $86 (tradingview).
Alternatively, Long positions above the Pivot Point at $104.00 if prices gain the momentum back and break higher above the pivot. Target the Key Resistance level at $113 and head upwards to test the resistance zone between $120 to $123.
The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Trading in Rockfort Markets derivative products may not be suitable for everyone as derivative products may be considered as high risk. Please ensure that you understand the risks involved. A Product Disclosure Statement can be obtained here and should be considered before trading with us.
Market Insight - Is Tesla Undervalued? TSLA trading insight
Market Insight – April 20th, 2022.
S&P500
S&P500 was up by 1.61% to 4462.21 in yesterday’s session, the rally is the perfect example of the sense of complacency that prevails in the market that has coloured most of the past decade and depicts the irrational enthusiasm in the face of overwhelming odds. Investors continue to overlook the risks the economy and global financial system face. In the past 6 sessions the market has been stuck between the 4380 to 4460 range and after the rally yesterday it seems a break higher is likely ahead.
The major news of the day was Netflix’s disappointing earnings report. Netflix is one of the FAANG members and reported the first subscriber decline in over a decade. Since the news hit the markets, Netflix is down roughly 36% making it the worst-performing stock in S&P500 in 2022 and currently trading at $226 down from its November peak of $700 in Nov 2021.
Is Tesla Undervalued?
As per the latest report on the already quickly growing EV market, the Tesla stock is considerably undervalued even at more than $1000. The International Energy Agency estimates that the Electric Vehicles represent close to 9% of the global car market. It is about triple the EV market share from about two years ago. And the EV car sales have more than doubled to 6.6 million in 2021.
The report further suggests that Tesla is already far ahead of smaller EV makers. And large Automobile makers in terms of technology development for efficiently manufacturing EVs. The company first built and then reinvented tools. Then factories reduce the complexity of making car body parts. This will enable them to produce cars faster and at less cost than any other EV maker. As per the Edison Electric Institute estimates there will be a huge demand for EVs in the future. In addition, U.S. roads will have 22 million EVs on the road by 2030. This itself will accelerate Tesla’s revenue growth and cash flow in the coming years. Tesla has multiple business lines, massive scale, expanding margin profile, technology development, etc. All elements give an impression the EV carmaker is quite undervalued at this stage!
Trade Insights – Tesla/ TSLA
Viable Long positions for long-term investments above the Pivot point at $980, first targeting the Key Resistance level at $1150 and then advancing towards the Resistance Zone between $1240 to $1250 and beyond (tradingview).
Alternatively, Short positions below the Pivot Point at $980 if prices drop, targeting the Key Support level at $830. And it heads downwards to test the support zone at $700 to $720 in case of a larger catalyst brings the whole market down altogether.
USO/USD
Technical analysis of the US oil charts shows that after bouncing back up from the key support level at $94.00. The oil struggled to keep up with the rally and found resistance at $109 to drop down below the Pivot on the chart at $104.00. The Triangle formation and its breakout we saw on the charts in the last few reports. It failed to gain momentum and oil has fallen back below its one-month moving average. The volatility remains high, and oil could move in any direction given that Russia’s invasion of Ukraine is ongoing and in its third month. It is imperative for the Oil to move above the Key Resistance level at $113 and consolidate up there to manage and break through the Resistance Zone at $121. However, it seems the Oil bulls have no more gas to push higher.
Trade Insights – USO/USD
Viable Short positions below the Pivot point at $104 Level targeting first the Key Support level at $94, dropping towards the Support zone between $88 to $86 (tradingview).
Alternatively, Long positions above the Pivot Point at $104.00 if prices gain the momentum back and break higher above the pivot. Target the Key Resistance level at $113 and head upwards to test the resistance zone between $120 to $123.
Click to see Chart of The Week: EUR/USD – Hawkish ECB comments move Euro Higher
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The information provided is of a general nature and is not intended to be personalised financial advice. The information provided is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.
Vishal, R.
April 21, 2022
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