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Tesla closes above $200, stock volatility dips: Trading takeaways

As the S&P 500 and Nasdaq closed at record highs in Tuesday's session, Jared Blikre breaks down his biggest takeaways from the trading day.

Shares of Tesla (TSLA) closed above $200 as the company's earnings are on deck. Market concentration has topped the 1929 peak. This concentration is especially unique as large caps dominate the current market. Finally, stock volatility has dipped while bond stress has jumped. However, stock volatility has not fully recovered from its pre-pandemic levels.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video transcript

The S and P 500 NASDAQ closing at fresh record highs.

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Investors digesting fresh inflation Commentary from Fed Chair Uh, Powell here with more on the trading day takeaways.

Yahoo Finance's Jared Blicker Jared, Josh, we gotta talk about Tesla today.

Huge breakout above the psychological level of $200 and I'm gonna outline the technicals here.

Uh, it's a number of milestones and breakthroughs, depending on how you look at it.

This is not what I'm looking for.

We're going to go to our mega caps, and here we have Tesla closing in at $737 billion.

So still not in the trillion dollar club.

But here we have today's price action.

Let me show you a one year with some candlesticks and this is going to help outline the pattern.

I'm noting here, so this would be an inverse head and shoulders here, and you can see we've clearly broken out to the upside.

You can also draw a trend line all the way down here.

And guess what?

We also broke above that trend line.

So no matter how you slice it in these two different ways, probably gonna get some momentum to the resistance.

Support?

What am I looking at?

Yeah, to the upside.

We really don't have much, uh, resistance until about 2.

65.

So let me, um, put a two year chart, see if I can find 265.

It's gonna be about somewhere in here.

To the downside, 140 is a big level, but I think 150 would probably stop it.

That was kind of the, uh, the neck, uh, the lower neck line of the head and shoulders.

So, uh, all in all, I think we got some space to move to the upside.

We got some space to move to.

The downside if it's a false breakout, but probably not gonna stay right there.

We got earnings coming up.

We got the big robo taxi day in in August.

Jared lot for Tesla investors.

Yeah, a lot for And consumer discretionary.

Let's not forget that Amazon and Tesla are actually in consumer discretionary.

So point number two market concentration there were seasonal.

0, 1929.

You know, that was the peak of the stock market back in the day.

And I got two different, uh, time series.

Two different lines.

One of them goes all the way back to the 19 twenties.

That's a purple, and one of them is blue.

Um, this has to do with market concentration Really difficult to do these calculations.

Especially with these old, uh, series.

But back in 1921 guess what the biggest stock in the universe was.

Give it to me.

AT&T Ma bell.

So Ma Bell was such a big part of the market that it was all the way out here.

And so this purple line is tracking the largest one stock relative to the 75th percentile, Uh, three quarters of the way down.

And then we also have this different measure that starts about, what, 1960 something 1970 weight of the top top 10 stock.

And you can see we are currently at about 33%.

That is the highest level in this series.

But for all the talk of concentration, is it different this time?

Well, by both of these metrics, yes.

This is the greatest concentration we've ever seen.

Let me ask you, we we talk about concentration a lot on the SPX.

Beyond the broad gauge.

Any other signs of concentration.

You know, I think it spills over into everything else.

Because when you have just a few stocks, like the mega caps that have been working so well, uh, you tend to forget about the other ones and you forget about the Russell 2000.

What I think is interesting about this chart.

This all goes back to the beginning of the Russell of in 1979 measures small caps.

So you take the Russell 2000 and divide it by the S and P 500.

You can get the relative out performance or underperformance.

So here in the 19 seventies, early eighties, we are seeing out performance of small caps.

Here we are seeing the opposite.

This is the out performance of those mega caps, the underperformance of small caps.

So this just tells me again, we've never quite seen anything like this.

Concentration in the market so deserves to be handled a little bit delicately here.

I will say this.

I don't think it's an absolute disaster.

We're seeing market rotation right now.

Uh, we saw three P three court, three months of out performance by the big guy.

So I think we're starting to see some backing and filling here.

Third, Jared Biffy point.

Here we go.

Stock volatility.

Yeah, So I'm gonna dial up.

Guess what?

The vics which closed right around 10 or 12.

Excuse me?

It dipped down pretty low today, and I'll put a three month chart with some candlesticks so we can see.

And here we are.

This is hard to see all the way down here, but this is not quite as low as some of the, uh, levels we were getting a month ago.

But if I put a tenure chart on, you can see this is really in the lower part of the range, Especially when you consider where we are coming from in the pandemic.

But we are not quite back down to those levels.

I wanna contrast this with what's happening in the ice.

B of a move index.

Now, this is bond market volatility.

So where the VIX was all the way down here?

Well, guess what.

This is trending up a little bit a lot of times what we've seen over the last few years, bond market volatility spikes first, and then you get it leaking into equities market volatility.

So all the V is low now.

Maybe this is a leading indication.

My my question.

What's the What would you expect to happen next?

What's the read through for investors?

You know, I You know what?

I think it gets back to timing.

We didn't do any seasonality.

Let's do some seasonality here.

We're looking at the vic.

Let me show you some vic seasonality because what we can expect now is here's the vics map.

This purple line goes all it is basically the average of what's happened since 1990 through 2023.

The blue line is what's happened so far this year, and we're right during this period.

This period right here is supposed to be pretty quiet.

Guess what?

July is supposed to be a bullish month, especially those 1st 10 days.

I think we get those, but then we start seeing some hiccups here when the vic spikes up.

That's when we start seeing stocks roll over.

And then by the time we get to September October, that's gonna be those critical two months before the election.

Guess what?

That's when the vic starts spiking.

Historically.

See, no reason why it couldn't happen.

But we'll have to see if it does.

Jared.

All the trade and takeaways.

Thank you, my friend.

Perfect.