Here’s my take on Tesla ($TSLA) and SailPoint Technologies ($SAIL) (October 02, 2020)
TE SAIL GSX SAIL
I want to cover a couple of stocks, Tesla ( NASDAQ: TSLA ) and SailPoint ( NYSE: SAIL ), because I have covered them recently in this Chart of the Day series.
First of all, Tesla ( NASDAQ: TSLA ). Patterns reign supreme, particularly on a stock like Tesla ( NASDAQ: TSLA ), that really trades on dynamics other than fundamentals, it just does. I know you “Teslonians” think this is going to take over the world and we are all going to Mars on rocket ships that we’ve made from all the money that we’ve made on this stock.
And by the way, some of can definitely do that; because this stock has been a rocket ship. I am not saying that the move is over but I am also not going to say that the move is going to continue. I am going to look at the chart to tell me that. All I am telling you is, that we have a situation where, shall we say, the rubber is going to hit the road at some point and I don’t think it’s here.
We want to see, on these symmetrical triangles like this, we actually like to see 3 points; 3 points or tags along this trendline really make a valid trendline. Less than that, the line is just the shortest distance between 2 points. But especially a stock as volatile as Tesla ( NASDAQ: TSLA ). Charts don’t lend themselves to perfect data points and this is one of those cases; because you could run it here and extend it down and say this was a breakout. And that’s fine, but if you look at it, it’s not that compelling.
We just kind of generally run this line about here and then on the bottom we really just only have 2 points, here and here. You could if you want to, say I am going to use that as my 3rd point. Fine, whatever, it really doesn’t matter. A lot of people think because its called technical analysis, that everything has to absolutely precise. I am telling you, that is not the case. Stocks don’t trade that neatly, you have to just kind of look at the overall buying and selling pressure.
The way I read this chart, I am seeing the buying pressure at the 50-day moving average, not really above that. When it’s above that it is only because the stock bounced and then got some momentum. It bounced, got some momentum, that type of thing. So now that this is coming down, this is what I am waiting for. I don’t know whether it is going to happen or not, I just want to see how this stock trades when it comes down to this level, we’ll call it below 400.00, 390.00, 395.00, I just want to see how this stock trades.
And if it does start to rally, boom, that’s when you buy the stock and you have your stop just a little bit below this. The difficult thing about trading Tesla ( NASDAQ: TSLA ) is because it’s so volatile you can’t really trade it big without taking a lot of risk; because the stock could reverse and do all kinds of crazy things. But if you are able to get a really good entry off a reversal, like the first day, you can kind of build your position as the stock moves up.
That’s the way I am looking at Tesla ( NASDAQ: TSLA ) now. If it pulls back maybe you take a small position because as stocks get more towards the apex of the triangle (most people don’t talk about this), as stocks get more towards the apex of the triangle they have a greater tendency to fizzle out. And so we want to only get a small position if the stock is back here. And then if the stock breaks out, that’s when we would look to add to it.
Now, SailPoint ( NYSE: SAIL ) just real quick. We got out of this trade yesterday. This gives credence to the idea that you definitely need to take your money and run. The stock is up higher today at one point, but it closed very close to the low of the day.
So all I will say here is the easy money that was made, I covered this a couple of days ago, I think the last 2 days actually, to get you in and out of this trade, so now it’s just a hard trade. If you still own it put your stop at 44.10 or something like that, then you are only risking $1.00, about 2.5 percent or something, from where it is now. But I would definitely just want to get out of this.
If you look at what happened with GSX ( NYSE: GSX ), we kind of caught this here. But on the day that it reversed, that was the time to sell the stock. This is more obvious, but SailPoint ( NYSE: SAIL ), I would say the same thing. We could see more of a pullback here, so I would take the money and run; do the Steve Miller trade.
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