And you thought Tesla ($TSLA) would run out of gas after the split? Well, Tesla doesn’t run on gas. The stock is electric!!! (August 31, 2020)
TSLA
I was watching Tesla ( NASDAQ: TSLA ) last week, I just couldn’t bring myself to trade it because I was on vacation. Today, however, it was a totally different deal. I was watching this stock this morning; I actually bought a very, very, very small position premarket because the stock was up a bit, not a lot but a little bit.
I bought a very, very small position just to kind of keep tabs on it; you could say it was like a mental health buy. But then as the stock ran up you realize this Tesla ( NASDAQ: TSLA ), it’s a religion, it’s really not a stock. It is literally a religion and that means any price will do. This stock could get to 50 thousand and there are some “Teslonians” who will think that this stock is still cheap, that it is just going to the moon. It may, it may go to Mars, that’s my long-term price target is Mars. Right now it is just trying to escape the earth’s gravitational pull here.
This morning during the day, I think the stock was around 460.00 and I said, “My bet is the stock is going to go to 500.00 today.” Obviously, it surpassed that but if you look at this, this is a real tell for the strength of a stock. You look at a stock like this, where the price is just stupidly high. By the way, I acknowledge that I have triggered some of you, I can live with that and I am sure that ultimately you will be able to live with that too, that I said stupidly high.
So the price runs up here and where does it stop? Where does it hit resistance? It hit resistance a little bit below 500.00. If I recall correctly, I’m not going to go look at it now, I think it was like 498.00 or something like that, and then the stock comes down, but then it holds here. So the stock splits 5 to 1, runs up, knocks against resistance, the ceiling, right here, and then doesn’t really pull back much.
That tells you that, first of all, there are some sellers right at 500.00, kind of where you would expect them to be and then there are buyers. You don’t know that they are going to go up but once this stock starts holding here you say, “All right, with this kind of move, a big move here, and then a pullback and now we’re getting some buyers here. This is the time for me to either buy the stock or add to it,” whatever your situation is, “and keep a pretty tight stop right here.”
So you are able to add to a position even though you think the stock is really risky anything can happen. It isn’t risky for you because you are buying here and your stop is right there. So your risk is literally inside the box. This is the risk that you have, right here. So you are able to buy a strong stock that is just acting ridiculously well and have it be a low-risk buy.
That’s what I did with Tesla ( NASDAQ: TSLA ) today and I am still long the stock even though it’s up so much. I would imagine I will probably be selling some tomorrow just because stocks don’t go up forever. But as long as the stock stays above 500.00 I am going to want to stay long the stock. This is a shorter-term trade that I am talking about but literally, the stock would need to hold above 500.00 and then I am fine. If it trades below there then I will probably want to take more profits. That’s how I am trading Tesla ( NASDAQ: TSLA ); I hope that this works for you.
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