Here’s the long and the short on Tesla ($TSLA) – December 12, 2022
TSLA
I want to talk about Tesla ( NASDAQ: TSLA ) today. And the reason is, this is something that for a while now my suggestion to our members is that I think the price is ultimately going to hit $100.00. I am not rooting against it, frankly, I think what Elon is doing, as far as owning Tesla ( NASDAQ: TSLA ) is probably the biggest troll I’ve ever seen, a multi, multi, multi-million dollar troll.
With that said, the reason that I think Tesla ( NASDAQ: TSLA ) is going lower is, (1) it’s got a lot more competition. (2) There’s a real stigma, I think, associated with EVs and Elon Musk because he has upset a lot of people. That means that there are some people that used to buy Teslas because of Elon Musk. Now, there are a lot of people that are not buying Teslas because of Elon Musk.
One thing I know about this business, it is basically a subscription business. Stock Market Mentor is a subscription business at its core; so is a vehicle. When you buy a car you buy a subscription for a vehicle, you trade it in every 2, 3, 4, 5 years, whatever it is. But, ultimately, you are subscribing to, whatever the manufacturer is who you buy your car from.
And so, I think there are a lot of people who are going to look at Musk and say, Do you know what? I don’t want to subscribe to that. And at the same time there are investors, large institutions, that are looking at this saying, Well, wait a minute, this guy is totally taking his eye off the ball. I don’t care about politics, I just care about money. And the fact that he is doing everything that he is doing on Twitter is not really helping me with my investment in this EV company.
There are a lot of things that are going against Tesla ( NASDAQ: TSLA ). And, frankly, I can’t think of one thing that I would say, Oh well, this is in Tesla’s ( NASDAQ: TSLA ) favor. I am not saying it is a disaster, not at all. I am just saying if you are an investor, if you are a trader, you do understand that your advantage comes, not from seeing things now, but from looking into the future and seeing things, 5 6 7 months from now. Because that is where you are going to make your money, between now and then.
The market anticipates future events. And if there are not going to be any good positive future events, the stock is going to do what it is doing now, which is tail off and roll over, and that is really what we see here. And my measurement of $100.00 isn’t magic it’s just $100.00. It could be 150.00, but I think $100.00 feels a little bit more like the deal.
And so, how are we going to capitalize on that? We’ll go back to the daily chart, you can see that it is the inverse of looking to buy a stock. When you see an uptrending stock you want to draw a trendline and buy at the lows, sell at the highs. Well, when you have a down-trending stock it is kind of the same. You want to sell at the highs and then cover at the lows.
And so, with this simple construct, and it actually is pretty simple but people tend to over-emphasize momentum, they think it is just going to continue and continue. What you wind up doing is, wanting to short a stock when it breaks a key support level. And that generally doesn’t work out really well because you have already given away a lot of the potential gain from this short sell. In other words, you are literally selling at the floor in anticipation that the stock is going to fall through the floor, and yes, it ultimately will.
But for example, let’s say you decided you are going to short the stock here. It did fall, it fell here, you are going to short the stock and then, ultimately, you are making good money. The problem is, the stock ran up. The same thing here, you short the stock; the problem is, the stock runs up. Why is it doing that? It’s pretty simple, stocks zig-zag, that’s what they do.
And so you don’t want to be looking at where this is now and anticipating that this is just going to continue. You need to be looking at it saying, Well, this is what we see and if we are just literately looking at the resistance we are looking at the support. We just need to wait, we need to wait for this thing to come back before we short this stock.
I shorted it up here and sadly I covered. I made some good money on it but not great money. It was because I was playing these zig-zags and just didn’t really have the patience to ride through this stuff for various reasons. I’m just passing that on to you because maybe my loss is your lesson.
You want to wait for the stock to come back a bit. Once it comes back to test the 20-day moving average, we’ll call it maybe 15 points from where it is now, which shouldn’t take too long, it’s down 11 right now. Once this comes back here, that’s when you short the stock.
I would be patient with this. I certainly wouldn’t be buying this stock. It is trending down, why do you want to be buying what institutions are clearly selling? And this isn’t a panic sell, it’s not like you are buying a big massive puke and dump. It is just the stock is drifting lower.
So I want you to stick with this stock right now as something to watch but don’t be shorting it yet, do not be buying this stock. The only trade here, in my view, the way I see it, is down. So entry is everything, wait for yours.
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