Happy Thursday! Hope everyone is having a great week. Thank you all for your feedback on my recent posts. It is truly appreciated and quite humbling.
I wanted to write a quick post on sentiment in the markets. Things feel downright FROTHY sentiment-wise. The bullish can be visualized by the chart of small trader call option purchases highlighted by the great @sentimentrader:
You can see his full post here.
In my opinion, the market zeitgeist across periods of time shifts continuously. In the mid-19th century it was the “Nifty-Fifty.” In the 2010’s it was the “FANG” stocks — Facebook, Amazon, Netflix and Google (Alpabet).
So what assets epitomize the sentiment of today? In my opinion, it’s Tesla ($TSLA) and Bitcoin ($BTCUSD). Both had extraordinary runs in 2020 that have continued into the new year. Tesla ran over 1,100% from it’s March 2020 low to it’s recent high. Bitcoin returned just under 1,000%.
Tesla ($TSLA): Here’s the $TSLA weekly chart. Just incredible… Note the developing RSI momentum divergence in the upper panel. The key downside level is $789. The upside level is a mind-blowing $1,250 per share.
Bitcoin ($BTCUSD): Here’s the daily chart with the same annotations from my first post. So far my $30.25K downside level has held for a ~$8K rally, although it’s probing there again today.
Both assets have treated investors extremely well over the last 12 months with astonishing parabolic advances. It will be important to monitor these two assets over the next few months to see if they can continue to rally and support investor sentiment. Maybe I’m exaggerating their effect on sentiment… What do you think?
Watch $789 on $TSLA (earnings report coming soon) and $30.25K on Bitcoin.
Cheers!