Elon Musk Does It Again
Elon Musk has been successful in all the projects that he has tried going back to the start of a company that became PayPal just after the turn of the century. His project X Space venture has been successful in allowing private industry to become involved with government to have new ventures in space. Mr. Musk claims that he wants to colonize Mars and that he wants to be buried there.
But for all of his accomplishments in business and science he can’t seem to control his “twitter finger”. He has constantly overstated the condition of his biggest business venture, Tesla Motor Company, and it has gotten him into hot water with the SEC more than once. In 2018 he had to sign a cease and desist order with the SEC over a tweet that claimed that he had more than $70 billion dollars of financing in place with private Saudi investors. In fact, he had none of the money in place.
That tweet caused Tesla stock to skyrocket more than 20% over the next few days before the tweet could be retracted and a “new” version of the financing was revealed. I could not believe that the SEC did not charge Musk with a felony. Not only did he enrich himself and the insiders who benefited off the message, he crushed his opponents that were short the stock and took a billion dollar loss on the deal. Finally, Mr. Musk received a slap on the hand and a $20 million dollar fine that amounted to less than 1% of his net worth.
The SEC cut a deal with Mr. Musk in which they said that he would cease and desist from anymore tweets that over stated the value of his car company. Last week he had his fingers busy again and overstated deliveries buy more than 20%. He backed off of that when he said that was for the current period and that they would be on schedule for an “annualized basis”
On Thursday a federal judge ordered that Mr. Musk and the SEC to work out a settlement to comments he makes on the company where he is no longer the CEO. His legal team assured the judge that a settlement would be worked out that would satisfy the SEC’s desire to have Mr. Musk not be so vocal about where Tesla is headed. We shall see!
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph which will cover the trading subject.
Question: Someone told me I can write vertical credit spreads to hedge my portfolio. Is that right?
Answer: As the option markets have evolved over the past twenty-five years, the use of weekly options has gained acceptance. This allows many investors the chance to use weekly vertical credit spreads in combination with longer based serial puts to create a synthetic short position in the market that has very little or no time decay. This wasn’t possible even five years ago, but it is now a strategy that has gained support and allows the average investor to compete with the big guys when managing their portfolios.
The Wise Guy Report: The View From The Floor
Each week I talk about what I think the Wise Guys (floor traders) are up to with the Big Three commodity contracts: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). I also track the Market Edge (www.marketedge.com) ‘Market Posture’ which has a twenty-six year record of forecasting the intermediate-term direction of the stock market as measure by the DJIA with around 70% accuracy.
T-Notes
After making a flight to quality high last Friday, the ten-year continued to move higher and when it took out the Friday high it was time to look for another spot to trade. The trade was taken off with a stop of 124.10. Of course, as soon as the top was taken out and we were stopped out of the trade, the price immediately started to retreat to support. We are now long from 123.27 and the market closed slightly off that support level. Now the question is can economics keep the ten-year interest rate to continue fall?
Crude Oil
After taking a breather, crude was off to the races again last week as it made new highs closing on the high tick of the week at $63.33. The Naysayers that felt that there would be weak demand on a slow down in the world’s economies are not doing well on this trade. The market is trending but as the price becomes steeper you have to be alert of a potential blow off top. However, since there is no overhead resistance in sight we will continue to ride this trend.
Gold
Traded in a narrow range all week. It did not take out last weeks high or the sell off low from last Thursday. The market seems to be looking for a direction as it has now been trading in a large congestion range for the last five weeks. It must be looking for some fundamental news that will give it a direction. Until it moves out to the top or takes out support we will continue to trade it from a long position.
The Big Three Commodities Contracts
| Contract | Opinion | Open Date | Open Price | Friday’s Close | Gain/Loss |
| T-Notes | Long | 04/05/19 | 123.27 | 123.60 | $330 |
| Oil | Long | 03/09/19 | $55.05 | $63.33 | $8280 |
| Gold | Long | 02/27/19 | $1,317.00 | $1,295.90 | ($2111) |
Market Posture: Based on the status of the Market Edge market timing models, the ‘Market Posture’, which has been Bullish since the week ending 1/04/2019 (DJIA – 23433.16), is Neutral as of the week ending 3/22/2019 (DJIA – 25502.32).
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Mr. Seifert