Old Fashioned Capitulation

Noted short-seller Carson Block came out this week with an interesting take on his TSLA bias going forward.

As you know, Tesla has been a hot-button stock/company/CEO for years on end, alternating between bear fantasies of going to the pink sheets versus periods of pure bull ecstasy where the stock functioned like a cute piggy bank dispensing hundreds of thousands of dollars at will. 

Here is some of what Block said, as per a New York Post article, with my emphasis added in bold:

After slamming Elon Musk as a “liar” for years, short-seller Carson Block says he’s come to develop a “newfound understanding” of the Tesla CEO’s “bulls**t.

In a colorful letter obtained by The Post — Block’s first missive to investors since starting Muddy Waters Capital six years ago — the hedge fund manager said he’s done with buying put options betting the electric-car maker’s shares will decline. Those bets went to “Heaven” after “the Fed loosened in response to COVID” last year, he said.

There are a few ways to read into this piece. But my takeaway is that this is old-fashioned capitulation on TSLA (and, perhaps, by inference, many richly-valued growth stocks at-large) by a prominent short-seller who was once rather bold and public in his short declarations. 

Ask yourself: Do you see news articles of this sort at stock market bottoms, in the meat of the trend, or near the top? 

Another point: The TSLA weekly chart, below, looks to be on the cusp of emerging from a multi-quarter consolidation. And bulls naturally became excited this week about it. If the move fails and dips back below $600 in the coming weeks I would be looking at that as confirmation of the Carson Block capitulation marking a meaningful inflection point for TSLA.