We booked this trade on Tesla ($TSLA) today. Did you? (October 26, 2021)
TSLA
We’ve been rockin’ on Tesla ( NASDAQ: TSLA ) for quite a while in the Premium site, as a member you know this. There have been a few different buy points here but this is the one where I really started tracking it. We have been taking a couple of profits along the way, and today I just suggested to everybody, just go ahead and book the rest of your profits.
What I am not doing is, I am not predicting this kind of move. However, I am telling you that this is certainly a possibility because this was a big old parabolic move. The trick to these is, that they tend to go up farther than you think they will. I have seen a lot of people lose a lot of money shorting rocket ships, just looking at a stock, and this is one of them. Probably the biggest offender or I should say, the biggest bear killer is right here.
People short this stock because it’s going parabolic and they say, you know what? It can’t keep going, I’m going to go ahead and short this stock. This is how I am going to make up a year of crappy trading, and it doesn’t happen because the issue is this when a stock is in such demand, there’s a lot of buyers, there’s a lot of buyers underneath. They keep bidding the stock up and the sellers kind of keep lifting their offers, like oh, I will sell it for 1,000.00.
And then pretty soon it’s like, you know what? Maybe it’s 1,010.00, maybe I won’t sell it, maybe I will just hang onto it. So the buyers keep going, right? But then here’s what happens too, this is a double your fun thing, you’ve got buyers underneath wanting the stock, and then you’ve got short sellers who say, hey, I am going to sell the stock short and then I will buy it back when it falls to a lower price. When they do that, that puts them in the same camp as the buyers who just want to buy the stock.
What happens is, you’ve got short sellers that are ticked off because they did the wrong thing at the wrong time, even though they know they’re right, they are also losing a lot of money. So you have got short sellers competing with natural buyers to buy the stock. The natural buyers are the ones that truly want to own the stock, they are opening a position. The natural sellers are those that literally want to ditch the stock, to buy it back so they can get out of the trade, so the dynamics are completely different.
But what really rules the day on this is just trader psychology. And right now, I think it was either J.P. Morgan or Morgan Stanley, it’s like they are competing now with each other. Somebody raised it to 1,200.00 and another to 1,350.00. I’ll go to the top of the street, I will say 1,500.00 is my price target on this stock. Why is it 1,500.00? I don’t know, it just kind of popped into my head. It’s not a real estimate, but sure, I will be the guy that is at the top of the street.
The issue here is not what some analyst says the price target is, or what the fundamentals of the company justify. It is just crowd psychology. And that gets me back to here, crowd psychology is buy it. Then maybe we will take a little bit of profit here and then buy it all of the way up to today. And then at some point, in the morning here, the stock started rolling over. And that is when, it’s not like, oh I think the stock is going down. That is not like why I said sell it. It is really a point of, I just don’t think the stock is going to continue to go higher, these are two totally different things.
I think the stock is going to go down. That is kind of a prediction, and it’s one where you are going against the grain, you are being a contrarian. And that’s fine if the crowd turns out to be wrong or fickle or they are done, that’s, I think it’s going down. I think the better analysis, certainly on this is, I’m just not sure how much more reward there is in this trade from where it is right now. Maybe I need to book this big profit and pat myself on the back for being right about this. I need to be happy about this trade and then the money that I am making will either go back into Tesla ( NASDAQ: TSLA ) when it’s up again, or maybe it will just go into another stock.
Money is money, it doesn’t matter where you get it, how you make it, what stock you buy, you just want more of it, it’s actually pretty simple. Anyway, we’re done with Tesla ( NASDAQ: TSLA ) for a while, now I will just wait for it to reset.
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