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September 20, 2020

Markets Make Lower Lows, Tesla Battery Day, What to Expect

Frank Cabibi

Last week was rough for the market as the S&P and Nasdaq draw lower lows on the daily chart. The Dow Jones Industrial was the only index to look in the best shape as tech continues to fall under pressure.

NAS100 on the daily

The main drivers for the market, which have been carrying pairs like GBPUSD and EURUSD, are tech stocks. In order to see a rebound in US indices and those major pairs would be for FAANG to have a good week, which might be the case. One factor to consider for Monday morning is the sentiment around Battery Day.

Tesla's Battery Day

This Tuesday will provide further insight on the development and advancements Tesla has made for their battery. The company is hyping up the news around the event as the EV maker will announce their new "million mile battery". This would be a huge breakthrough for Tesla and its stock, but will it be enough to push the markets and major USD pair up?

What to consider

A Barron's article analysts sounds uncertain for Tesla's rebound. He holds a price target of $272 a share which is nearly half of what the stock is worth now. However, quoted from the article, the author states that, "Anything below $100 per kilowatt hour, along with a credible plan to get there, should be a win for Tesla shareholders." Other analysts mentioned in the article provide a more generous PT in the $300s.

On top of this, COVID cases are rising back again as worldwide and US cases reach new heights. Profit-taking is another factor after the bull rally. The upside of investing now is very minimal considering the unlikeliness of reach all time highs again. As investors take their money off the table, the bigger question remains where those profits go back in to. Interest may move from heavy tech investments to dividend stocks. Portfolios may lessen the stake in the market overall. Next week will definitely be interesting for the market.

Conclusion

From a macro perspective, I'm looking at what could happen over time. I am also writing at the time of the futures market opening. Futures are dropping early on, and already down 14 points for the SPX500, but a lot can change over night and throughout the week. Tesla's rebound from lows shows investors are excited about the battery day report, but overall demand for stocks seems to be getting weaker. With analysts expecting tech to correct further, this week may be volatile.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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