Tesla (TSLA) is moving higher on increasing volume. Here’s your trade…with an important trendline. (December 27, 2016)
TSLA
I want to look at Tesla ( NASDAQ:TSLA ) today. It is the first time it has been above the 200-day moving average in a while; it closed above that on volume today. The news is that they are building solar cells and modules in New York with Panasonic, and they have other deals going on with this company, that is really the news here. So what is happening with this stock? I don’t really trade Tesla ( NASDAQ:TSLA ). I have made good money on it, I have also lost good money, because it is all good money, you either win it or you lose it. The fundamentals scare me and Elon Musk kind of scares me too; because in my view he has a little bit of a Ponzi scheme going with government subsidies. You take away the government subsidies and probably the only place that guy is safe is on Mars.
But with that said, the stock is a stock and a trade is a trade, and as I look at this it is actually a trade that might work for you. Forty percent of the float is short. That is a nasty short interest and I would not want to be short this stock. If you look at the way this is trading you can draw (I can do it here just for myself) a trendline that really defines where support is. I will go ahead and extend it here to the right, lets go ahead and make this red. So as long as this stock remains above this trendline (you can kind of clean it up exactly if you want, it is not that important), as long as the stock remains above the trendline I think it is fine. What I see technically is this though, I see this kind of resistance here from this squeeze.
So I think the way you trade this is, look at this, it is quite a ways back, but technically you want to look at something, this is not coming close to hitting all-time highs so you have to look at something to get price targets. So I would look at this and see, okay, the stock is just starting to creep through the bottom of this range. Lets use 235.00, maybe 240.00, but more like 235.00 as a reference for where a good time to be tightening stops would be, or even taking some profits on this. You can trade the options on this stock, they are actually fairly actively traded. But the one thing you want to keep in mind is this: this is where the stock has been trading. You always look back and see, as we get into the last few days of the year, where did the stock start? Because you can look at a stock like Nvidia ( NASDAQ:NVDA ), my gosh there is so much potential profit-taking in that stock it is scary. It does continue to move up every day and that is kind of nice to hold some.
With Tesla ( NASDAQ:TSLA ) though, this is where it was trading at the beginning of the year. Here is where it is now. So if anything this has been under selling pressure just like folks taking their losses. So I think this trade works for now. Tomorrow, the next day, certainly next week, if the market starts rolling over that is another thing, that is a totally different trade, but for now, this is working. It has been closing near the upper part of the trading range almost every day. So as long as it is doing that, volume is increasing, frankly, I think Tesla ( NASDAQ:TSLA ) works for you.
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