• Is TSLA 2021 the 'Dot.com' of 2000

    Despite inflationary pressure especially on commodity/energy, the Fed postponed rates tightening to Mid of 2022. The direct consequence was a continuation of the chase after already overbought equities.











    The small caps broke out on strong buying as an epic short squeeze took place yesterday.





    The heavily shorted small biotech sectors also attracted strong shorts covering.



    As can be seen below, the combined eight mammoth stocks gained much in the past two weeks.



    However, the total gain came out of TSLA investors as we can see in the Table below: during the past 15 days, TSLA gained the strongest Money Flow (numbers are in ,000) while the share price gained 33%. You will note that the weakest stock "V" has a money Flow outflow that was about 40 times smaller than the TSLA money inflow. NQ8 stocks are shown in Yellow.



    This in the context of a somewhat weaker Reverse Repo. I still think that the Fed could easily increase its RR program to $2T by the end of 2021 in order to press interest rates down. Hence, equities still have room to run until end of 2021.



    At this point, the markets are however overextended. We can see below that the Average TEV on 1000 stocks displays a straight up line, but it is extended above its average Pink line.



    Conclusions:

    What can go wrong here?

    Funds are chasing assets prices up. However, the most important aspect of the uptrend is that all the ETFs that own the TSLA stock have to keep a purchasing balance of other stocks and hence have to buy also other stocks even if they do not deserve it.

    If TSLA fails, then it could be the start of a general drop. Since we are in the middle of a supply chain interruption, TSLA could fall short in terms of semiconductors or batteries. Fortunately, they do not build many cars, but any sign of a production slow down will be met by instant selling because the stock is priced for future total market leadership of the EV sector.



    Let's get TSLA $2000 first! This is only a 50% gain from here!
    But at the end of 2021, TSLA experienced a similar parabolic move, although on a much weaker Money Flow. That move reverted back down in February. The S&P500 did not notice this move because TSLA was not as important as it is now.

    I believe that TSLA could take the whole market down.
    Consider this: by itself TSLA of 2021 could be the 'dot.com' of 2000.