A $20 move in Tesla (TSLA) today. What’s the key price point? You’ll find out in this video. (April 03, 2017)
TSLA
Lets look at Tesla ( NASDAQ:TSLA ). Monster stock. Today over 7 percent, that was then, this is later than then. This is what the stock looked like, you always have to respect prior resistance. But this is Tesla ( NASDAQ:TSLA ) and it trades a little differently; that is not all together a positive comment that I am making. But with this as resistance here is what you need to do on a stock like Tesla ( NASDAQ:TSLA ): You have got to be watching this for more upside. You don’t look at the valuation. You don’t look at anything else. You don’t look at whether they are going to be putting solar panels on hoodies, any of that stuff.
You have just got to watch this stock, know that it is heavily shorted, almost 40 percent of the float is short. I don’t know why anybody would want to be short this stock. I have been long it, I have been short it. I have made money on longs. I have actually lost money on longs too, and I have definitely lost money on shorting this stock. I only trade this with options and I trade them pretty safe, because I am scared of this stock, but it is fun to trade.
So with that said, when this stock opened up today and traded ABOVE last weeks high you can see what happened. Lets look at the intraday action here. The stock gaps up. Now, 300.00 is definitely resistance for the pure and simple fact that it is 300.00. That is where a 275.00 or $280.00 stock is going to stop, 300.00. So, here is where the stock was trading on Friday, right? It opens up, this is a 15-minute chart, the first 15-minutes of the day, it doesn’t even really come close to filling that gap.
So what you want to be asking yourself is, what is going to happen if this stock starts moving higher again? Remember what the daily chart looks like? My answer was, “This stock is going to really start screaming, because we got a high short interest.” The stock has broken out above what was pretty solid resistance. That kind of potential double top and all the momentum traders are coming in, they are going to be coming in to squeeze the shorts. I love a short squeeze. There is nothing that makes me happier in the market than seeing short sellers lose money. Other than maybe high-frequency traders lose money.
So the stock gaps up. Holds this gap. As soon as it starts to move up, we had a bear call spread on at Option Market Mentor, which seemed like it was pretty safe. As soon as this happened we closed out the short $300.00 call. Left the 310.00 in place. So we cut our losses for what they were. And then watched this stock continue to move through the end of the day, and here is where it is. So we wind up closing that $310.00 call out for more than a double and that actually turned our entire bear call spread trade, which was a loser, we were wrong on the direction, it turned it into a gainer of over 50 percent total.
Anyway, with that said, where are we going with Tesla ( NASDAQ:TSLA ) now? I think there is actually a good chance that the stock could gap up tomorrow, absent some kind of news, if it does that should probably squeeze more shorts and could see the stock continue higher. You look at this trendline that I have drawn right along these prior lows, extend it out, you can see I have already done that. This COULD be the type of pattern you see. I just don’t see this regaining this level here. Right now this prior support line along here, now would be resistance. It would be nice if Tesla ( NASDAQ:TSLA ) trades this high. But I am just saying, here is really your resistance, because this has been busted through. So we look at 300.00 as the first line in the sand. If the stock gap up above 300.00 and doesn’t fall back within the first half an hour or so of trading this stock is going to go higher.
But here is the other part of the trade: Tomorrow morning, if the stock gaps down, and it will gap one way or another because that is just what Tesla ( NASDAQ:TSLA ) does. That is why all these things are pretty lonely. But if it trades DOWN then your BUY is when the stock trades above the days intraday high of 299.00. If it starts down and then starts moving back up I would start taking a little bit of a position even before $300.00. Watch it carefully, but after the move this stock had today if it trades lower you would think that is just going to flush out more sellers that just want to make sure they don’t miss out on their profits.
And so, if the stock then turns higher what that is telling you is, it didn’t flush out all of these sellers. These sellers are not sellers, they are holding the stock. That is going to bring in new buyers and the stock is going to move higher. So make $299.00, make that be a really important level for you. I am going to put this alert on my personal software, ‘Buyers still buying’, I am going to put this in and keep it on. Because again, if this stock trades above 299.00 I am probably going to go long this stock. We closed out today at a nice profit so now we are on the sidelines waiting for about 48 more cents.
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