Euphoria squared

Lower parallel to median line in one day

It is my fault really. I did not pay attention to market structure closely enough and did not act quickly enough (or have stops in place). I simply did not expect after a negative week with the pre-market firmly down that issues would move from the lower parallel to the median line in one trading session. I also did not expect to see issues move 8% on fluff news (although there have been so many fluff news moves since the recent bottom that subsequently reverse in a day or two (BYND I am looking at you). Still, this disappointment and sting is a lesson to get back to trading correctly and ignore noise and everything else. I closed out many probes and otherwise cut back in response.

In the morning, price was negative for most issues. FANG stocks were negative but then FANG hopefuls started to move up first. Then the Fed announced they would be buying corporate bonds and equities went positive generally. Many of the FANG hopefuls were up 8% without difficulty. Companies with real businesses were less fortunate as many stayed down (such as GM, COST, V, MRK, COP, GE and VALE to name a few). 

If the FANG hopefuls ever actually made money or articulated a real business would their valuations collapse in line with real businesses? Perhaps it is out of necessity that they engage in vision and hand waving instead. Hope and misunderstanding are priceless. SHOP’s 8% move up today on an agreement with WMT that adds nothing is a classic.

NKLA, which had been sleeping for three trading sessions suddenly woke up at the end of the day and is up 7%. 

It is surreal to see SHOP up $62 and TSLA up $58 in a day. In a more conventional universe one might argue that TSLA as a whole is worth about $58 (once they are steadily making profits and assuming we are not in the middle of the biggest GDP collapse in recent memory). So if the value of the entire company can represent a daily move, why not have TSLA move up $500? Why not $5,000? It is difficult to articulate precisely what is keeping TSLA subdued in this Fed market given that it, and many other names, detached from fundamentals, such as actual market growth, a long time ago. Why is TSLA up only 124% YTD? What is stopping it from hitting 1,000%? TSLA with a p/s of only 6.93 is far behind ZM with a p/s of (looking it up as it changes so much) 75. What is stopping the euphoria from pushing TSLA to a p/s of 69? Ignore GM’s p/s of 0.3. Focus on China or tunnels or taxis.