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Tuesday, March 26, 2019
Shorting HLF (Herbalife)
Over the past decade Herbalife has been a contentious stock for reasons we encourage readers to research if interested.
Basically it's a multi-level-marketing company selling herbal supplements.
Sticking to charts, as we normally do, we see compelling reasons to be short.
On a long-term view we see price peaks have been along a line of resistance stretching back a remarkable 14 years:
On closer view, we see a 15-month up trend recently broken:
Not shown on these charts is that HLF has fallen below its 200-day moving average and is at a nearly 4-month low despite equities overall having enjoyed one of history's greatest 3-month rallies to start this year.
We're already short Herbalife at an average of $57 and are encouraged in our position today that makrets have bounced big, yet as of this writing HLF is down 2% on the day.
It should perform even worse once the next bear market leg in global stocks soon resumes.
It's trading at $53.90 and we suggest covering should it cross above $60.00
Tesla keeps tumbling down the chute, to our great amusement and enrichment.
It
"should" continue to do so, and in the longer term we are completely
confident that it will, however this Tuesday the federal judge's
decision on Elon Musk's flagrant contempt looms - see recent news items posted here
- and if the powers that be once again go shamefully easy on this CEO
then the stock could rocket higher in the very short term.
If so, we will add to our existing short positions.
The fundamental reasons for being short Tesla are nearly endless. Simply, it is as compelling a fundamental short as we've seen since late 1999.
As
we've stated emphatically many times in this blog in recent months, we
see Tesla as a generational shorting opportunity above or near $300.
Three months ago, on December 17, we posted this graphic with the caption "A typical Tesla owner (car or stock):"
That
was just two days after what we now know was a major high, and since
then, despite major stock indexes enjoying one of biggest multi-month
melt-ups in history, Tesla has collapsed 25% while the
prices of their new & used cars along with overall demand for the brand have
also cratered.
"Only" customer dissatisfaction & complaints, service
waits, and costs have gone up - way up - along with layoffs, executive
defections, and store closures while there's increasing and far superior
competition in the electric vehicle space at much better pricing from
automotive brands known for quality products and service.
Ultimately
we always defer to sentiment and technicals.
There's no question that
public and media sentiment has staged a palpable turn downward in recent months.
Even some of the most gullible and shameless touts among the flock of Tesla True Believers have begun to openly question the
ridiculous and highly ambitious bull narrative along with the constant "misstatements", reversals and bizarre
antics of lemming-master Mr. Musk.
Here's the chart (click to view a larger version):
1. Long-term up trend likely soon to be broken and never regained.
2. Parallel line coincidentally marking long-term tops.
3. Major and enduring upside resistance.
The orange ovals indicate multiple touch points of the respective lines.
Note considerable historic support in the $250 range per the tops in 2014, 2015 and 2016, and the big bounces in 2018.
The
rest is self-evident and, we firmly believe only a matter of time.
Probably not a long time, nor a good time for those who stubbornly and
imprudently refuse to see the facts or those who have been making insanely
bullish price proclamations.
The inset pic at bottom of the
chart is not a fabrication, it is in fact CEO Musk's idea of an April
Fools' joke almost exactly a year ago. With that in mind, its worth
reconsidering this post from 4 months ago.
"As soon as a CEO says 'I'm not sure if we'll survive', you're dead."
-Elon Musk speaking of Solyndra, the taxpayer-funded fraud that previously occupied Tesla's Fremont factory.
Given the massive taxpayer subsidies Tesla was built and has thrived upon, that may prove to be a quote of exceptionally fine irony in the fullness of time.
No
one can say there weren't very obvious, strident warnings and massive
flapping red flags however losers will only blame the bears and
short-sellers, as losers always do blame others for their own mistakes.
Perhaps worse they will fail to learn from their mistakes, as losers
always do.
It is a service to society to sell wilfully
ignorant sheep shares they eagerly demand in hyper-overvalued crap companies at high prices then, perhaps,
eventually offer the arguably totally undeserved mercy of buying
back said shares at far, far lower prices when they are clamoring for cash to satisfy margin calls.
Indeed, Musk himself may soon be in that very margin call situation.
This victim suffers the common issue of water leaking into the Tesla trunk, having had it "repaired" twice already. It still leaks:
Such stories are legion, as we've documented many times before. When owning a Tesla often starts off like the following account, what else could you reasonably expect?
In a typically awkward and very late-starting hype event last night, Tesla CEO Elon Musk unveiled the "new" Model Y. New is in quotes because it's essentially a taller Model 3 and there's credible doubt it's merely an old design that's been sitting awhile.
There's no firm production date, though they're hoping for one or two years from now, and of course Tesla is notorious for missing such estaimtes by a wide margin, if it is ever built at all.
In typically desperate fashion, they're already taking deposits of course from unquestioning cultists who don't even know the specs yet much less if the company will still be around to deliver given its myriad issues.
Essentially they're giving a cash-strapped company run by an erratic CEO with zero automotive manufacturing experience an interest-free loan. Such behavior is hallmark of a top in more than just Tesla.
Strangely, the company brags that this promised vehicle will share 75% of its parts and design with the Model 3 which is arguably the worst built and most problem-prone car in modern automotive history if not in all of automotive history.
"Tesla is going to face significantly increased EV competition starting
with the 2021 model year vehicle, which will be available starting in
the spring of 2020," Musk said.
Yet another big lie. It's already facing massive, superior and far more attractive competition at a better price point from far more reliable and solvent manufacturers.
Here's one from Kia, a company once known as a rubbish offshore brand that is now making better cars than an American "luxury" brand.
We reiterate our long-standing prediction that Tesla will end up known as one of modern history's great corporate collapses,
with feature films and documentaries in its wake; a hallmark of the top
of an epic bull market not just in stocks but in too-easy credit and
cult-like gullibility in all aspects of society.
We remain double-short Tesla, believing it to be a generational shorting opportunity above or near $300.
Should Tesla rally materially at some point, we will wish to add a third short position.
