In a recent video update, popular finance guru Kevin Paffrath, also known as the host of the YouTube channel Meet Kevin, discusses Cathie Wood’s decision to sell a substantial amount of Tesla stock (NASDAQ: TSLA).
Kevin questions why Cathie Wood, the Founder and CEO of ARK Invest, is selling Tesla stock, especially during a time when the stock has been seeing significant gains. ARK Invest recently sold 56,000 shares of Tesla to invest in other stocks, including Archer Aviation.
According to a report by MarketWatch, Wood’s flagship Ark Innovation ETF (ARKK) sold 56,425 Tesla shares on Tuesday, valued at $13.05 million. This sale does not indicate a change in strategy, as Tesla remains the ETF’s largest holding with a 14.6% weighting. However, it was the ETF’s first sale of Tesla shares since October 18, 2023.
Kevin speculates that the sale may be due to Tesla hitting a critical resistance point that historically leads to pullbacks. He explains that Tesla’s volatility was low when the stock was around $170 to $180, suggesting potential for significant gains. Even a novice technician would recognize that Tesla is at a major resistance point, which could result in a temporary pullback. Kevin stresses that while Tesla may experience short-term volatility, its long-term potential remains strong.
Kevin also highlights economic indicators that Wood may be considering, such as slowing personal consumption, rising jobless claims, and increasing treasury yields. He points out the potential impact of these factors on Tesla’s performance and suggests a cautious outlook.
Regarding Bitcoin, Kevin notes a bearish double top pattern and discusses the impact of ETF flows on its price movements. While Bitcoin’s price movements are concerning, the broader market shows mixed signals with extreme greed in market momentum.
Kevin discusses the possibility of a short-term pullback in Tesla stock due to its high relative strength index (RSI) and the potential “buy the rumor, sell the news” event surrounding the robo-taxi announcement. He advises caution, mentioning that high interest rates and a potential pullback could affect Tesla’s performance in Q3.
Despite short-term concerns, Kevin remains long-term bullish on Tesla. He believes that once Tesla breaks through the current resistance level and navigates through Q3, the stock could reach new highs. Kevin stresses the importance of being prepared for potential market volatility and maintaining a long-term perspective.