Bearish on Tesla ($TSLA)? That’s been an attractive bet for quite a while. It’s also been a losing bet! Don’t go there now…and here’s why. (February 12, 2021)
TSLA
I want to talk about Tesla ( NASDAQ: TSLA ); this is the top, this is it, it is time to short Tesla ( NASDAQ: TSLA ), definitely this is the time, I’m just kidding.
One of our members in the forum today mentioned that an investor, I don’t want to say his name, apparently he is short Tesla ( NASDAQ: TSLA ) and he is getting shorter. I know Michael Burry is also short Tesla ( NASDAQ: TSLA ) and getting shorter. One of those two guys I really respect and the other one, I’ve never seen a winning trade; it’s the one with the glass eye that I respect. The other guy, I feel like this is not really the time you want to be shorting the stock and this is why: because I said just the other day to our members, I said you have got to watch 800.00 because this thing could be tested. And if it falls below 800.00, that’s not a good thing.
However, what has happened in the last, almost a year, every time the stock has tested the 50-day moving average? Here it did, bounced, here it did, bounced, oh, here is the short, this is the top, this is the top; well, not so much. Instead, it traded around here for a few days. It got added to the S&P 500 ( INDEXSP: .INX ) and boom, there you go.
And so what I am saying is, right now, as I look at this stock, the problem with shorting it here is that the 50-day moving average is just like less than 8 percent below where it is here. And if you think for a minute that Tesla ( NASDAQ: TSLA ) is going to fall to the 50-day moving average and not rebound, I don’t know whether it would continue moving higher, but if you think it’s going to fall to the 50 and not rebound at least a little bit, you’re nuts, you’re nuts.
The time to short Tesla ( NASDAQ: TSLA ) would be if the stock falls like this, then rallies back up here, maybe to the 50 at 750.00 or so, or maybe up here to 800.00 and then starts falling off, what you want to do is, you want to short a broken stock that tries to recover and doesn’t. You don’t want to short a stock that you think is about to break down.
You don’t get a vote, you don’t get to vote when the stock is overpriced. If I got to vote when Tesla ( NASDAQ: TSLA ) was overpriced it probably would have been back here or maybe even further. I don’t know, frankly, I would have probably said it was overpriced at $5.00. When you really get right down to it the fundamentals are not great but the chart is awesome. I don’t make money on fundamentals, frankly, I tend to lose money whenever I watch fundamentals too closely.
So the bottom line here with Tesla ( NASDAQ: TSLA ) is, do not short the stock. If you are long the stock, I’m not; but I actually did make decent money on Tesla ( NASDAQ: TSLA ) last year just on a couple of good option trades, nothing like John Carter did. But anyway, if you are long Tesla ( NASDAQ: TSLA ) then ask yourself, are you willing to give it 9 percent, 10 percent where it would have to fall below the 50-day moving average? If you are willing to do that then just hang onto the stock, you’re good. If you are not willing to do that then you have got to keep a tight stop, give it 4 or 5 percent and that’s it.
For me, I would hang onto it. Depending on what happens Tuesday, I may buy it. But I would not be shorting this stock until and unless it gives you this kind of move, a breakdown, a further move below the 50 and then, oh, now it is recovering, it’s time to buy, time to buy. And then it doesn’t keep going, boom, that’s when you are shorting it.
And what you are doing is, you are shorting the stock there and then you are putting a buy stop right up here. This is a low-risk short right here if you are doing it this way. This is a low-risk short. This is a low intelligence short. Be long intelligence, not short intelligence. Shorting this here, I will just say it, that’s a really stupid idea.
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