Good Thursday Morning
The Bear Growls
News & Sector Flow: TSLA in Focus ……. China Relations Sour
TSLA (TSLA) bull market institutional favorite beat on earnings and revenue and the stock traded up 5% last night in the aftermarket on Gigafactory guidance. Pundits are talking up that the company's shares will soon be added to the S&P 500 (SPY). Given the market capitalization of TSLA, it would command a heavy weight which would force index funds to buy the shares in advance of the addition into the index. In that regard, what many traders have noticed over time is that when a company is added to a premier index such as the S&P 500 that it will in the least put a top in the stock for a period of time. Conversely, when a company is deleted from such an index, selling pressure climaxes and shares tend to lift after the deletion when the pressure abates. What is of interest technically for the shares of Tesla (TSLA) is that short interest stood at about 6.5 days average volume in August of 2019 while as of June 2020 the last reading it stood at 1.65 average daily volume. So, much of the short traders' desire to buy back has been diminished markedly.
US/China relations continue to sour, as the US has forced the closure of China's consulate in Houston over industrial spying. This is a very strong move. Keep an eye on these developments as they may at some point affect markets.
The Euro (XEU) hit a 2 year high against the U.S. Dollar. Keep an eye on those sectors that would be positively affected by a weak dollar, Gold (GLD), Silver (SLV), emerging markets(EEM).
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