Tuesday, January 31, 2023

Week In Review : Tesla, Inflation And Bitcoin Taking Center Stage


Market commentary from David Jones, Chief Market Strategist at investment trading platform, Capital.com

29 Oct 2021: Stocks were in focus over the past week with both the and the biting fresh all-time highs. Equities have staged an impressive comeback since the end of September – last month saw one of the largest pullbacks for stocks this year as investor concerns about inflation continued to ramp up. Central banks are sticking to the message that this is likely to be just temporary but it feels as if markets don’t quite believe this narrative yet. Either way, October has seen these nerves shrugged off – or at least parked to the side for now – and it’s been a great moment for stock indices with some feeling that this latest strength might point to an even stronger finish for 2021.

Tesla (NASDAQ:) has been one of the week’s talking points as it too moved to fresh all-time highs – smashing through the $1,000 per share barrier. One of the catalysts this week was the news from rental giant Hertz that it plans on buying 100,000 Tesla Model 3s for its fleet. You could take this as a clearer sign of ongoing wider acceptance of electric cars and the market reaction was very positive. The more skeptical out there would perhaps raise an eyebrow that an order of $4bn or so added $100bn to the valuation of Tesla – but when did markets have to make any sense? Tesla shareholders will be celebrating after a great month – the stock is up by around 38% in October alone and still might appear to have some momentum behind it. What could be more interesting is when we get a sell-off, where do the buyers come back in again. It has been an explosive move through the $1,000 mark for the stock and many may think they have missed out. If the stock turns back down, some investors may well be watching $1,000 as the line in the stand to enter the market. Of course, there is always the possibility that the stock doesn’t pull back in the short term and continues up. For now at least it has held above $1,000 for the past four days, leaving some to wonder if this is a new plateau for Tesla.

Other markets were a little subdued compared to the stock markets exuberance. continued to ease back from its fresh all-time high set just shy of $67,000 earlier this month. What’s interesting here is the lack of follow through momentum on that break through the old highs. Is there a feeling that $60k+ is high enough for Bitcoin for now? The news about the ProShares Bitcoin Strategy ETF (NYSE:) was one of the catalysts driving it higher in early October and perhaps there could be an element of just trading water around $60,000 until the next major news story breaks. Trading momentum feels a bit different than it did in the first half of 2021 – perhaps the memory of the 50% slide from those $60k highs in April has made some cautious of loading up too much at these elevated levels.

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