SolarCity (SCTY) is at a key inflection point where you can buy the stock with a defined risk that is acceptable. I explain in this video. (April 15, 2014)
Discussed in this article: SolarCity Corporation ( $SCTY )
I want to look at Solar City ( NASDAQ:SCTY ); the company announces earnings on May 7th, that’s a few weeks away so I think maybe there’s a trade here, we’ll have to see what the solar sector itself does. You can see here, TAN ( NYSEARCA:TAN ) here, this is down at a key buy point; above the 200-day moving average, volume heavier than it has been in several days, and a really long tail; it’s kind of a hammer, not quite.
Here, the stock traded in a wider intraday range than it has in quite a while, but it traded down, in fact let’s just go and look at the 5-minute chart; you can see the stock traded down until 1 p.m. when essentially the entire market turned around and then started to get a lift here. So this was all the big selling, look to volume, high volume spikes, here, fairly low volume, somebody probably bought some stock there, had an order to fill, and then the stock just continued to trend higher but the bars were not that high; a couple of them, but it didn’t really matter because the ETF just continued to move, so we see this as an intraday reversal, a tradable low.
Then we get back to Solar City ( NASDAQ:SCTY ), after a big decline here, I mean from top to bottom it was a 42 percent decline, that’s kind of a big hair cut and so this could be a really good buying opportunity. I don’t know what the stocks going to do in response earnings, but that’s several weeks away, which means that by definition, I really don’t care. What I’m looking at here is a low of 50.50, so you can buy the stock right here; let’s pick a stop, $49.73, if the stock falls down below $49.73 you’re out.
Why have I chosen 49.73? Well the 49.00 wasn’t random, I just didn’t want it to be 50.00 because a lot of time stocks come down to the even figure and then they’ll bounce, because that’s where the real buy orders are; 73.00, that was arbitrary, it’s just because I don’t want to make it $49.95 either; so it’s 49.73, you keep your stop at that level, and if you get stopped out, too bad so sad, that’s why they call it trading not winning. If the stock just continues to move higher, it looks like it will go that way for the next day or two anyway, you’re going to have a nice trade on your hands and then you just see where it’s going to take you.