Thinking about Tesla (TSLA)? Here’s your trade. (December 06, 2017)
TSLA
I want to do a quick video on Tesla ( NASDAQ: TSLA ), here is why: I have mentioned this before, this stock has looked, and still does really, looks very toppy. Certainly, you don’t want to bet against Tesla ( NASDAQ: TSLA ). But also, this is not a top yet; all this is is a sideways consolidation. You could look at this and say, “Okay well, that is a double top; it looks like a double top to me.” I will tell you it was a double top when the stock is down at 250.00 or 200.00. But right now, with it at 300.00, nothing is to say that this stock can’t do a triple top; come up here again and then fall back down.
In fact, as I understand it a Morgan Stanley analyst has actually made a prediction that basically (I can’t make this up) Tesla ( NASDAQ: TSLA ) will probably go up to 400.00 again on retail buying on enthusiasm over the rocket ship and this and that and the other thing. And then when reality sets in next year and they are unable to get financing and this and that and the other thing, then the stock will be down at 200.00.
Again, that is not my analysis; that is a Morgan Stanley guy who said that last week. I thought it was interesting because what he was really doing is predicting what retail behavior is going to be like. And frankly, it is probably not a bad bet. I made a Twitter post the other day kind of ridiculing some CNBC guy that was talking about what a great deal it would be for SpaceX to combine with Tesla ( NASDAQ: TSLA ); just more welfare from the taxpayers on that. When I mentioned that was BS I got a lot of private messages that weren’t particularly nice; so this is loved.
This brings us to this trade. It is okay, I have got a bull put spread on this, I think it is going higher. Support is at $300.00. You can buy this stock now. You could see the demand for this stock right at $300.00. It is big all the way for the last month and a half or so. So you are buying this stock at 313.00. You are setting a stop at about 298.00, 297.00, something like that. You are probably going to get at least a test of the 50-day moving average. But the way Tesla ( NASDAQ: TSLA ) trades, if this thing starts to squirt out to the upside, which it does look like it is going to do, you could get 30 points out of this thing. This could easily rise back up there.
So what I am suggesting is, if you are looking to trade Tesla ( NASDAQ: TSLA ) don’t short it. Look to trade it to the upside with a snug stop, right here, that gives you like a 5 percent stop on this trade. Not a bad deal at all. And then watch the stock rally up here on retail buying. Got to get into Tesla ( NASDAQ: TSLA ), right? After all, Elon Musk is shooting his car up Mars and that has got to be worth at least $20.00 on the stock price.
Free Chart