Bullish Engulfing Pattern on Tesla (TSLA) — here’s the trade. (April 05, 2016)
TSLA
I want to look at Tesla ( NASDAQ:TSLA ) here. If you remember last night I was looking at this stock, it had gone up a couple days in a row, big count, big expectations for the Model 3. Elon Musk and the Tesla ( NASDAQ:TSLA ) team (as opposed to the Teflon team), beat those numbers and so the stock has been going up. But it was closing (I mentioned this last night), it was closing lower than the open. It’s nice to see these uptrends here, and you’ve got to be bullish on this. But it did indicate some selling into strength and that’s always something that you’ve got to keep in mind. But then after hours I think the stock was down about 240.00, something like that, when I recorded this video last night. I noted, you’re kind of looking for the end of this trend to come. The numbers are good, it’s all good in the hood, but the stock is trading lower like this, then it trades lower after hours. I think the reason was that their first quarter sales, they reported them, and they were less than anticipated, so the stock traded down. So you look at this and say, “You know, maybe it’s time to take profits.” Okay, that was the analysis, that’s the lesson of yesterday.
Now lets look at today, because this is IMPORTANT for chart reading, it’s REALLY important. This was a BIG day today. The stock gapped down right about where it was in after hours, right? So it gaps down, and then lets look at intraday action, lets go to a 5-minute chart. It traded up all day long so it hit the low during the first 5 minutes of trading. Probably if I zoom in to a 1-minute chart, which guess what, I’m going to do. Yes, it would be like during the first minute of trading. So this was a big dump, huge dump, and then the stock reverses. This indicates that basically the end is not at hand, seriously. Because when you see this kind of bullish engulfing pattern, within an uptrend, on a high profile stock that has RELEASED numbers, some of them astoundingly good, but then one of them not so good and that caused the sell-off. When you see that stock reverse and continue higher, this is a stock that has buyers, aggressive buyers. And yes I get this, declining volume, which is another kind of yellow flag, so to speak, not a red flag, yellow means wait, but you don’t want to be too late. So here the stock is moving higher. I think it’s a stock that you can buy right now. I think you can buy this stock and probably make about another $15.00 or $20.00 in the next few weeks. At least that’s the way I see it. As always, keep your stops in place. Here, your stop would be about a 7 percent stop, just below 240.00.
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