Welcome to the "Tell" Club, Tesla

While it may be too easy to focus solely on the FANG names for market "tells" this year, Tesla is likely a better gauge for a few specific reasons. 

First and foremost, the momentum darling has essentially gone nowhere for roughly two years now, currently trading at levels it was back in February 2014. It is often said in the market that from periods of price compression often come explosions, as part of the theory of alternation. 

Next, short interest in TSLA rose throughout 2015, indicating that more and more market players were betting against the Elon Musk "super stock." 

Given the elevated stakes, this type of dynamic lends itself to either a monstrous squeeze higher or a sharp wipeout lower, as we noted for Members over the weekend in the full-length video strategy  session. 

While one session does not a year make, bears are clearly off to a great start as far as that large directional move thesis playing out this year. We noted on this website last week that TSLA was having issues holding over its 200-day moving average, but a brief rally may have sucked in a fresh batch of longs as the stock became overbought and found resistance at its 150-day moving average. 

Incidentally, the reason why this is so crucial to the broad market is that in broad market bear trends we see heavy short floats actually get it right, unlike in a bull market (typically) where they are often the sucker at the poker table and get squeezed into oblivion, which is another reason why I focus on lower beta, liquid, mega caps for shorts in bull markets in lieu of the high beta names.

But if that changes this year then so, too, should a short-selling strategy, to become a more aggressive one.