Tesla roars back to life with foot on the floor

Dear Trading Diary: Another very decent week with my Tesla position zooming up by one third in just a week from $185 to $245. And my long currency positions continue base-building with higher prices looming. And my PM positions continue trading very favourably. But NatGas has failed to follow through on previous gains and I am pleased to have been stopped out for a loss before major damage could have been inflicted.

Now. the old order is now history – let the new ‘old’ order begin! Only the new ‘old’ order promises to be much like the old order but on steroids. Unless the leopard has miraculously changed his spots, I see the new Labour government doing what it always has done – tax and spend on white elephants. And that coming on top of a rabid tax-and-spend Tory administration. The mind boggles as to the gilt market implications when sanity returns.

And of course, more taxpayer money will be funnelled (aka wasted) into unworkable Net Zero projects such as carbon capture and ‘green’ hydrogen and ‘eco-fuels’. I see that over in the US, a huge and very controversial 2,500 mile pipeline project taking CO2 from the West to an abandoned mine in the East for storage is attracting headlines – and major farmer objections over whose land the pipeline will go.

With the likely push to go even ‘greener’, the new government will run headlong into reality. Here is the breakdown of global energy sources for 2023

Fossil fuels account for 82% (up from 81% a year earlier). Hmm. And coal shows no signs of slowing down as the cheapest energy source. So Starmer, how do you plan to reverse that global trend here working in the puny UK economy with your failing ‘energy transition’ directives? This promises to get even more interesting.

Yes, CO2 emissions are falling in the US, EU and UK (reducing industry) but ballooning in India and China (increasing industry) with global concentrations still rising above 400 ppm. And that increase is greening the planet even more. Is that a bad thing?

I have long maintained that the blinkered push to Net Zero will likely crash Western economies (unless Trump wins in November who will likely push back against Biden’s eco policies, if he can overcome their blob, that is).

Against this background, EV sales continue to disappoint (except Tesla’s!) but I see massive taxpayer subsidies coming down the pike in a desperate bid to re-kindle sales. And that will boost the national debt to even higher stratospheric levels. Eventually, something will break – quite possibly in the second half of the year. Will this likely national debt hike be the straw that breaks the camel’s back? That would be most poetic.

My Tesla campaign update: As I first surmised, a massive hedge fund short squeeze was in progress last week to electrify (pun!) the shares – totally against consensus. Sentiment had been on the floor with slowing sales in China and elsewhere and total global EV sales figures weaker. As I mentioned last week, Tesla is not only a car company – it has a major Energy Division that shows signs of perhaps overtaking the car sector’s profits one day.

To recap – this was the chart I posted to my Pro Shares members on 29 June

With that chart I quickly sized up a likely rally phase if it could break the smaller trendline. This is that chart updated

With that pinpoint timing of my entry, the sharpness of the surge is a tell-tale sign of the short squeeze with the stops that were set just above the two trendlines being set off like a Chinese cracker.

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OK, now what? A very good question! And that brings me to a crucial point – -one that many investors/traders get wrong – how to handle a profitable position to obtain optimum results on your exit. I have often said that it is easier to take a new position than it is to manage it. Strangely, trade management gets little attention but it is of critical importance to performance.

That is why I take as much care in my trade management than I do in nailing excellent high prob/low risk setups, such as the above. My Pro Shares, VIP Traders Club and Phoenix members can attest to that.

Of course, your own trade management depends first on what time frame you are working in. At the short end (day traders), you would take the profit quickly and run. But that would be missing out on the likely added gains and probably lead you to a state of frustration and disgust that would set you up for some bad emotional trades. I do not advise that approach.

At the other end of the time scale, as a ‘proper’ investor who does not believe in employing stop losses, you would just sit on your position and do nothing and perhaps take a look weekly or monthly as you have fully committed to your view. But that runs the very considerable risk of the position reversing and trading well under your entry after posting some strong gains. That too would lead to a state of frustration, disgust and even extreme annoyance that would set you up for some bad emotional trades. I do not advise that approach either.

The approach I approve of is my own Swing Trading system where I am looking for trades that typically will last for weeks and sometimes months and basically go in one clear direction. I always use stop losses which I move towards the current market in a trailing stop manner. And I am constantly vigilant looking in on the market at least once a day. This approach I believe is the optimum for wealth building for most individual retail traders.

In that way, I have accumulated an over 250% profit in my Phoenix Trading Club since March 2023 on my initial stake.

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It is aimed at busy traders where I trade only a small handful of active markets – and is very affordable! I consider it a very high prob/low risk investment.

Update on my Gold campaign: For weeks now I have been working the wave 3 of 3 up theme to guide my trading. Recall, this is the most explosive wave on the books. But although advances are usually sharp, setbacks can be fairly deep but brief. The ATH was attained at $2,450 on 20 May and the seven-week correction took it to a low (so far) at the $2,285 level – a drop of only $165 (7%). That is a small pull-back and commensurate with my wave 3 of 3 theme.

I had taken profits in May just after the ATH on my trailing stops and my task then was to judge the extent of the likely correction. And on 27 June I spotted my opportunity to get back on the long side at low risk. I had my textbook three down a-b-c on a good mom div and Bingo! I entered long again on that signal.

And on Friday, the NFP (non farms) jobs data were posted, the market dipped at first and then caught a huge bid and closed at new recovery highs at $2,390. Which is typical wave 3 of 3 action. I am looking at Gold making new ATHs soon.

As for Silver, it mirrors the moves in Gold (see below).

Update on my Nasdaq campaign: Last week I highlighted the Nasdaq had made a high on the Summer Solstice and believed that that high was likely The Top. Not so and I have abandoned that idea. But nothing was lost as I had no position. And with last week’s US jobs data, Big Tech caught another huge bid (continuing the ‘bad news is good’ theme) and closed the week at a new ATH.

But with the Nasdaq index containing all of the Big Tech shares – and the Russell 2000 containing few of them, the gap is widening. In fact, the US market is split into a narrowing band of Big Tech (reaching for the AI moon) and the others (going nowhere). It is really two markets in one.

On the basis of the ‘if you can’t fight them, then join them’ theory, I decided to join them and take a long position with fingers crossed. I do not normally chase a strong market but I believe this one was justified since new ATHs rarely last and new ATHs usually follow after a dip – until the real one appears, of course!

With my waves 5 of 5 of 5 appearing fully developed and the strong mom div, odds strongly favour a major reversal up ahead. I will not likely be staying too long in my new long trade.

Update on my Alphabet campaign: While casting much doubt on the manic AI shoot for the moon, I have been riding that trend much longer than I have for others and have held a long position in Alphabet since March at the wave 4 low at $135 just prior to the fastest acceleration ever.

Now trading at $190 (a gain of $55 or 40%), it appears to be completing its own wave 5 of 5 of 5. When it does, it will cap an historic bull market and kick off the next bear, as it will the Nasdaq.

But with prospects of interest rate cuts this year growing, we should see further gains short term especially in Big Tech.

Update on my Fresnillo campaign: This FTSE 100 silver miner is well off the radar of most investors – but not mine. It gathers few headlines but it may later. In March I saw this share could be a massive sleeper that would wake up as and when Silver prices moved higher as I had forecast. I hold this share in my Pro Shares service.

It recently made a decades-long low at 4.40 which is where I started to get interested. I then (and now) had a bullish view on Silver and I reckoned the shares should move more or less up in synch.

This is the daily chart and shows the sharp rebound off the ATL set in late March. I was then able to draw a speculative trendline separating support and resistance and when the market pushed up above it, I was then looking for a pullback and a possible kiss and then a strong bounce back up. And that is exactly what I am getting.

I can now label my waves where we are entering a third wave up section that should be long and strong. I remain long and plan to buy more on dips.

My bottom line: Contrarily. I have been thinking the unthinkable where prospective rate cuts will keep US stocks elevated for longer than I thought. With the AI mania leading and showing few signs of flagging, the Q4 earnings reports in October will be of utmost significance. So can shares remain elevated until then? If so, then my Tesla and Alphabet shares could move even higher. But with all shorts banished and everyone on one side of the boat, I remain nervously on alert for a small wave that could capsize it at any time.