Tesla (TSLA) broke through support at $300. And it’s now a good time to buy. (March 26, 2018)
TSLA
I want to look at Tesla ( NASDAQ: TSLA ); here’s why: This stock, as zigzaggy as it is, frankly it doesn’t really trade as technically as you might think. What I am talking about is this tendency to test and then BREAK 300.00. I made this mistake in the past, where I started looking at trading this thing really technically, “Oh it broke 300.00, I have got to short the stock. All the thing does is snap up and go against me. That doesn’t work.” Then it comes back and tests 300.00. This time it was a nice rally to the upside. But then this time around it tested 300.00, fell below it and then rallied.
The bottom line is, it is not like this is the type of stock that when it breaks a key level it just keeps going. In fact, it actually just kind of is a little bit of bear trap where it sucks you in on the short side and then spits you out at a lot higher price.
So what are we doing here? Well, I typically don’t trade Tesla ( NASDAQ: TSLA ) but I am trading this one. The reason is; because it has done the same thing that we have seen before. That is, break 300.00, sell-off, suck everybody in the short side and now it is starting to move up to the upside.
What I would suggest doing is, forget about the news, forget about everything else, just focus on the chart. If you focus on the chart you will see you have actually got a pretty low-risk trade here. If you are already in stay in; just keep a stop, you could keep it now, today’s intraday low was 291.00. So if you are in right now you can keep a stop less than 5 percent. Just keep a stop a little bit below 291.00; you can even make it at 289.00. I wouldn’t be in it that long but at least that would help you define your risk. So you are buying this stock and give it more room to the downside.
In my mind, a safer and more certain trade would be to wait for the stock to move up to above $308.00; 307.59 was the top here. So you wait for the stock to hit that alert, 307.60; that is when you buy the stock. This is for a nice trade. If you have got enough shares maybe you will be able to buy one of those new Teslas ( NASDAQ: TSLA ) that probably aren’t going to be delivered for quite a while.
In any event, you can make money on this stock to the long-side. Even though it broke support it actually came back and CONFIRMED that 300.00 is indeed support. So you are taking this stock after a pretty steep pullback to the upside and I think you are going to make some pretty nice money there.
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