Wondering what’s next for Tesla ($TSLA)? I’ve got your answer. (July 10, 2020)
TSLA
Tesla ( NASDAQ: TSLA ); this thing has just been a monster stock. You know this, I’m sure the reason you clicked on this video was, hey Tesla ( NASDAQ: TSLA ), I want to know what’s going on.
The real move started here at 1000.00; the stock had been trading sideways for quite a while. It finally broke out, started here and then on this day, that’s when the volume kicked in and you are going, all right, I think we have lift off away from $1000.00. Where are we going to go?
What I will tend to do is just a measured move here. It’s really, really complicated but brace yourself, take notes because this is really super complicated. I go from the high down to the low of a big move and I see 594 points, it’s over in the box on the left; we’ll call it 600 points down, that’s 62, 63 percent. This thing had a 63 percent retracement. That’s gut-wrenching and all but the “Teslonians”, the folks who at look at Tesla ( NASDAQ: TSLA ) as a religion and they see Elon Musk as the high priest of Tesla ( NASDAQ: TSLA ) holding through a 62 percent retracement.
I know, you’ve done it, good for you. I would have said; Why don’t you sell it until it hits a stop and then wait and then buy it at what is really an obvious entry point right here if you are such a big Tesla ( NASDAQ: TSLA ) fan? Of course, you didn’t do that, you held through. Other people, I would not be one of them, I just kind of missed this trade, would have bought here and now at $1000.00, you know, they are up 136 percent.
So back to the measured move; I am looking at this, it is down $600.00; the way I would measure this move is to say, okay $1000.00 is the starting point. And so if the down move here is going to be repeated to the upside, then I am going to add 600 points to $1000.00 and that will give me $1600.00 as a price target. That’s how I get the price target for this. If you didn’t figure it out by now I was joking when I said it was really complicated. It’s not, it’s super simple; there is nothing scientific about it.
Now here we are, a couple of weeks later we are up knocking at the door of 1600.00. So just like that, this move, that took about 6 weeks to get, about a month and a half to fall; once we get a breakout here it’s taken 11 days, 8 bars, 8 trading days to get up to almost 1600.00. So in my view, a $1600.00 price target is kind of in the bag. I would look more at 2000.00; I’m serious, and I am not a Tesla ( NASDAQ: TSLA ) bull, I am just a chart guy and I like the way this chart is trading. This thing has just taken off like a rocket ship.
Don’t short the stock; don’t be selling calls unless it’s a covered call. Don’t be buying puts; you can trade the stock more confidently because the implied volatility is so high. If you can afford to buy 100 shares of stock you could go ahead and sell a call against it and you knock your cost basis in the stock down by quite a bit. Sadly, 100 shares of stock will cost you over 150 thousand bucks.
Another way you can do that would be like a bull call spread or something like that. I am just talking about buying the stock, whatever you have, hanging on to it as it continues to move up. I would look at the 8-day moving average as your reference, that’s the green line here, for where support is. And you will notice this thing hasn’t even tested the 8-day moving average, you can probably get it down to 5, 6; 6-days really is where this stock hit today.
You can literally use these tight short-term moving averages like this as a reference for the trend. The shorter the term or the period of the moving average is that’s relevant, I’m stating the obvious here, then the steeper the stock is running, which is the most dangerous. The tighter the moving average that defines support the more risky the trade is. So 50-day is fine; 20-day is better, 10-day is even better. When you get to 8-days or so the trend is really, really accelerating. You have to understand that.
When you see a stock a stock trending along the 8-day or even the 5-day exponential moving average, that’s not the time to be getting excited unless you already own the stock, it’s the time to really, really be tracking it. You want to get as much as you can out of your position but you don’t want to overstay your welcome either. I don’t think you are quite overstaying your welcome with Tesla ( NASDAQ: TSLA ) but just know that this car company is now worth more than all of the other auto companies put together on the planet so the valuation is really rebellious but this trend isn’t.
You can’t argue with valuation, there is no possible way to value Tesla ( NASDAQ: TSLA ) in any that gives you some credibility and authority. If you want to come up with valuation and say, well this is why Tesla ( NASDAQ: TSLA ) is valued in this way, I will just go ahead and say it, either you are an idiot or you expect us to be idiots for believing you. There is just no logical valuation for this. Embrace the horror and just trade the chart; you will make a lot of money.
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