The usual “then & now” charts, then being Febr. 26 2014 and now, you guessed it, today. The beauty of EW is that when you get it wrong, you usually are very wrong but at the opposite end, when it works you can hit the nail precisely on the head. After a few tries this is exactly what we have here.

All high-beta stocks – those that have a wider amplitude when they swing – have been hurt badly in the past month. The Russell 2000, the Nasdaq, things like NFLX, VRX, and also Tesla Motors. It dropped about $80 or close to 30%. Many of these stocks have absolutely nothing more than momentum going for them which is probably why they go well beyond what might be considered “logical”, as if there is such a thing in the stock market. My guess is that this is the end of the ride for many of these stocks. The damage is just to great to allow them to rise again. It should not take to long for the losses to spread to the “blue chips” such as IBM.

Clearly we got this one wrong. The wedge did not stop and just continued in a rather explosive way. Maybe we are in a 3d wave of sorts and still have a way to go. In the mean time there is an analyst who just doubled his target price to, I believe, $340. The fundamental thinking goes like this. This company makes cars, that industry is X billion worldwide so if they can command a certain miniscule fraction they will do very well. It is also, by way of the batteries – once enough of these cars have been built their batteries would hold a charge equal to the entire consumption of Mexico – a utility. That industry is a 10X billion industry and if the company can command just a small fraction, it will do very, very, well. Then they will also be in the forefront of electrical generation, by way of solar etc, which is a big and growing industry. If they can capture just a small fraction the company will do exceptionally well. You get the picture.

For the moment we still do not know who and how many are willing to fork over close to $100,000 for a car, even if it was recently nominated “best of breed”.

Wrong so far, but this may just be a “throw-over”. Give it a little more time, this may have been an acute short squeeze .

So we were right to assume this stock would crash. However we were wrong in assuming the party was over. We got another 5th wave up worth about $90 in three months. This is a very nice wedge shaped structure. We recommend selling yesterday.

By the way, these electric cars cost about $71,000 a piece, but you are guaranteed a resale value , quote – Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing. -  unquote. The company is apparently reporting tonight.