Morning Market Thoughts
Good morning. The market is set to open just a bit lower this morning. This should be expected, given the dearth of market moving news this morning.Tesla (TSLA) is up about $5 bucks today on news that the National Transportation Safety Board (NTSB) has cleared them of any fault in that fatal crash last year when a driver was killed while allegedly watching a Harry Potter movie as his Tesla Model S was speeding about 9 MPH above the speed limit. The car’s automated system was repeatedly instructing him to put his hands on the wheel, but he declined to do so. Ultimately, the climax of the trip was not when Harry killed Voldemort. No, the climax was when the Tesla plowed into the side of a tractor trailer and killed the movie-watching driver. The trailer sustained a small dent. Truly a tragedy, but I have to think that Darwin was looking down with a slight smirk on his face.
So Tesla is cleared, and the Teslonians are happy. I am short the stock with a very small, “I’m scared to death of this stock but I can’t help it” position. Not sure if I’ll cover it this morning, but I definitely won’t add to it. In fact, I may decide to join the party if it hits a new high…or just withdraw and look for opportunities elsewhere.
Watch the homebuilders today. As you know, they’ve been trading in a flat base for the past 4 months. Lennar (LEN) posted earnings well above estimates. Consequently, the stock is trading up near $55, which was printed last Wednesday during trading. A while ago it hit $55.75 in premarket trading, so traders are pretty bullish on Lennar. I never recommend chasing a stock at the open unless it is popping out of a very tight squeeze. The trading range has indeed been fairly tight, but still, I suggest caution on this. If you’re buying at the open, buy lightly. The market hasn’t really been rewarding gap buyers these days (see AMZN yesterday, and NVDA last week).
As we move into the summer months, try to tighten your focus on fewer stocks. With volume lighter this time of year, the market can be more volatile. And since volatility is starting to be more of a historical concept rather than a current reality, any increase in volatility would be welcome. But if you narrow your focus, you’ll find yourself better able to capitalize on opportunities because you’ll see them sooner. With a tight focus, there is less of a chance that you’ll be muttering “woulda, coulda, shoulda”, and more of a chance of saying, “Should I take profits now, or hold it a bit longer?”
I’ll be teaching a trading session next week on trading the first “hour of power” next week. I hope you can make it.
See you in the forum.
–Dan you in the forum.
–Dan
Market Update