News and analysis

That's funny, but Elon Musk's shamanic spells worked perfectly. He only had to arrive at his brainchild firm's quarterly conference call to casually mention that Tesla's vehicle growth is on the way to reach fantastic 20% to 30% (!) next year, due to lower cost vehicles, widespread advent of full-self driving autonomy and supposed 2 million Cybercabs a year "eventually". Without demanding any proof, the crowd of investors immediately came out of its post-Robotaxi-event stupor to feverishly picked up Tesla at whatever price the stock was available. Shares of the hyping EV-maker have fully plugged the bearish price gap, which suddenly appeared on the night of October 10-11. Tesla rallied nearly 22% in a one day to rebound from a $213.65 dip this Wednesday to fresh peaks above $260 per share. Thus, my entire predicted range for the rest of the year was travelled in less than 12 hours.

By the way, dreaming of a 20% to 30% pace of growth in Elon's rosy forecast is a very nice thing, but Q3 deliveries increased only 6% YoY to follow two straight quarters of YoY declines. The market was even so brave to ignore mixed Q3 earnings, when the best adjusted profit for the last five quarters ($0.72 vs consensus of $0.60) were nominally offset by lower-than-estimated revenue of $25.18 against $25.40 in average analyst projections.

Okay, so what happens next? First of all, the crowd's attitude to Tesla is a bright example that sometimes there is a fine line between love and hate, and vice versa. As for me, the EV-maker's "We, robot" presentation was amazing two weeks ago, and only the Wall Street's pool of experts spoiled the party, unreasonably claiming that visual effects with a fleet of human-like dancing robots, as well as Robotaxis and a 20-seater Robovan newly created by Tesla were probably lacking financial details. In my opinion, the stock was clearly overweight at any price below $220. However, it was also overbought near $270 in mid-summer. And now this love-hate balance shifts again towards such a trembling stage of love and loyalty.

The previous way of thinking was based on gulping down too many negative articles, even though 99 percent of a biasing tone behind these articles was politics. But the crowd blindly believed this rubbish. Now the same people think they suddenly become smart to see the whole truth as if they actually took the red pill according to Elon Musk's advising tweet a few days ago that is related not only to the red colour of Republicans instead of the blue colour of Democrats, but repeatedly referenced the first Matrix movie. If Neo takes the blue pill, you know, the story ends, according to Morpheus, and the character continues to live in the simulated reality of the Matrix, just waking up in one's own bed to believe whatever a fake person wants to believe. Whereas the red pill … “You stay in Wonderland,” says Morpheus. “And I show you how deep the rabbit hole goes.” Meanwhile, reality outside the mental Matrix generated by machines can be hard, hard to understand and adopt.

What do I mean by that? I guess the same crowd is not much cleverer than it was before eating the pill. Some could take an ecstasy pill instead of blue or red pills. As a result, they are still in another euphoric version of the Matrix. It is now closer to the positive side of truth, as things are going better for Tesla in true reality. This is partially the reason why the crowd's euphoria is maybe better than its nearly causeless frustration about Tesla was before. This euphoria will not stop immediately to last for some extra time, so that a very strong bullish momentum may prompt the price to touch September 2023 highs around $280 or even its 2023 annual peaks at nearly $300 per share. Additionally, investors would be ready to buy at any local dips between $240 and $250, provided if would-be bulls may be blessed with a temporary retracement.

When the pill's effect lets the shareholders down or back to reality, my conclusion for now is that the crowd may stop somewhere higher than $270, but rather below $300. To justify this moderate point of view, at least for the next three or four months, I could say that investors may want to check the success of a pilot project with driverless ride-hailing service in Texas and California, scheduled by Elon Musk for early 2025. That's number one. Number two: the same pool of analysts may return to negativity after waiting a little, as they would certainly attempt to dissect not only the pace of EV manufacturing, but also marginality of probably discounted sales. This sad quibble with clearly growing Tesla's business worked many times in the past. If so, a new range between $240-250 as a price support and $300 as a strong resistance could be shaped soon.

However, my number three logical point is strongly in favour of resuming the rally in Tesla for higher price goals someday later. This expectation of mine is based on the two performance metrics, which are very important and closely watched by analysts. Gross margins excluding EV credits provided by regulations, now raised to 17.05% from 14.7% in the prior quarter to beat the Street's estimate at 15.1%, being "on a trajectory back into the 20% level in 2H2025," according to Wedbush. Another major metric for me is Tesla's energy generation, accumulation and charging stations business, which reportedly achieved record gross margin of as much as 30.5%. The company said in a statement that "energy storage deployments are expected to more than double year-over-year in 2024", and I sincerely believe in this prospect. For its shareholders, Tesla is not only about EV sales profit, but it is also about money from widening infrastructure for the whole EV segment, which is used even by Tesla rivals' electric cars.

Nem (XEM) has declined by 7.2% to $0.0170 this week, significantly underperforming the broader market as Bitcoin (BTC) drops only 1.3% to $67,840. With no recent fundamental updates to support XEM, investor sentiment remains muted. The token’s last significant development was in June when Binance delisted XEM, causing a substantial 68.0% decline to $0.0111. Since then, XEM has been consolidating in a symmetrical triangle pattern, a classic signal of market indecision.

This pattern suggests equal potential for a breakout in either direction. However, the recent downtrend increases the probability of a breakdown through support, which could lead to a further 41.0% decline toward $0.0100. Conversely, if XEM manages to hold above $0.0200, a bullish scenario could emerge, potentially pushing the token up to the $0.0300 resistance level.

Neo (NEO) has dropped 8.2% to $10.00 this week, underperforming Bitcoin (BTC), which declined by 2.5% to $66,980. Despite this drop, NEO's price has formed an ascending triangle pattern, signaling potential for an upward move that could push prices above $12.50, possibly even as high as $13.40, which marks the middle of the ascending channel.

This ambitious target is supported by the increased security of Neo's sidechain, Neo X, which adds further confidence to the upside scenario. However, for this scenario to materialize, NEO must hold above the $10.00 support level, as breaking below could invalidate the pattern and limit further gains.

The first and largest cryptocurrency had again failed to cross over the major psychological border at $70,000 just a few days ago. We feel it was a good try anyway, and not the last one before the year's end, even though the mid-summer rollback repeated itself. The current week is clearly a time for retracement, with a potential for Bitcoin price to slide somewhere into the area near 65,000 or slightly below. Yet, the fundamentals behind our estimates of future developments whisper that the crowd of crypto traders would barely step into the same river twice, as this is not the same river anymore. Increased market bets that Donald Trump is going to win the 2024 elections mean a high likelihood of another attempt to hit multi-month highs as political factors probably formed the main driver for Bitcoin's ascending from its local dips below 60,000 to nearly 70,000 in October. Public polls show it's rather neck and neck race between Republican and Democratic nominees, but Wall Street got its own beliefs.

The point is that "Harris stocks" generally include renewable energy, electric vehicles, healthcare and defence segments, which are in a low or uncertain mood during the last couple of weeks when the S&P 500 and especially the Dow Jones Industrial Average are growing. A very fresh example of losing ground by Lockheed Martin weapon contractor could be noted. Typically "Trump stocks" like oil and manufacturing enterprises are feeling much better, as well as some of his former personal favourites like Oracle. Our conclusion at the moment is that money reallocation signs in the real world hints at least a 60% chance of Trump's victory, with supposedly a 40% chance for Joe Biden's vice-president Kamala Harris to take his chair in the White House for the next term.

And what does it mean for Bitcoin prospects? The Democratic administration has reputations of crypto haters. A set of high-profile lawsuits from the Department of Justice and the Securities and Exchange Commission has polluted the air for the industry. Harris was trying to distance herself from Biden's heritage when she briefly touched on the subject of improving a regulatory framework for crypto. This also offered support for a potential crypto rally in case of her victory, but she didn't give details of such plans. If markets would agree with polls to change positioning for a tight presidential election, then "with clear policy statements supporting crypto from the Harris campaign, the market seems less worried about downside and finds it attractive to bid here. Bitcoin ETF inflows, crypto equity markets and retail trading sentiment is screaming ‘risk-on’,” Bernstein noted this weekend. But Bitcoin lovers already transformed into Trump supporters as Trump more clearly called many times on a largely pro-crypto stance, even promising to build the future of U.S. governmental reserves on Bitcoins in America. His election campaign even accepts donations in crypto.

Bitcoin becomes a so-called Trump trade. Thus, if he wins, Bitcoin may reach $100,000 in nine to twelve months. Bloomberg wrote on October 22 that Bitcoin options traders eye $80,000 no matter who wins U.S. election, just increasing bets that Bitcoin will reach this record high by the end of November. "The open interest... for the call contracts expiring on Nov. 29" is focused around $80,000 with the second most popular strike price at $70,000, the article said, while the open interest for the calls expiring on Dec. 27 "is clustered around $100,000 and $80,000", while "the most popular strike price of the calls expiring on Nov. 8 is at $75,000". Further rate cuts "are seen contributing to the optimism". In other words, the global depreciation of the buying power of the entire currency basket in relation to the whole variety of goods and services, combined with the need for businesses to bypass restrictions, are favouring Bitcoin's rally. The Greenback strengthened this month on expectations of rather moderate 0.25% rate cut steps at the November and December meetings by U.S. central bankers. This only smoothed the crowd's aspiration to climb higher on Gold and Bitcoin, but did not cancel its desire to own more digital money instead of traditional money.

And if so, we now may sing along with Nobel Laureate Bob Dylan who famously called everybody to admit that "the waters around you have grown" and that "soon we’ll be drenched to the bone", while feeling "better start swimming or you’ll sink like a stone for the times they are changing". It's probably a time to recognize the new realities to avoid just sitting on the sidelines when the crypto movement would start gaining momentum.