Tesla (TSLA) — buy or sell? It depends….
Discussed in this article: Tesla Motors Inc. ( $TSLA )
I want to look at Tesla ( $TSLA Tesla Motors Inc ). This stock is actually setting up to look like it might be a decent trading buy. The reason I want to cover it is this; the company is really making inroads in the electric car industry. Who knows, maybe we’ll all be driving Teslas ( $TSLA Tesla Motors Inc ) one day.
This stock has absolutely crushed the bears, and so I’m showing this for a couple reasons. First of all let me get right to the point. On the weekly chart, would you really be buying this stock right now? I wouldn’t; not to say that it’s not going higher from here, but what I’m saying is, as an investor I wouldn’t be buying this stock; it’s too extended and it looks to me like the chances of it falling, say to $80.00, are probably a little bit greater than it coming up to new highs here at basically $115.00. It looks to me like there’s more downside risk than upside.
With that said, this is now a momentum stock. This is or at least has been in the hands of the momentum traders, the ones that buy high and sell higher, and then they buy it even higher and sell even higher. So this is what you want to do on Tesla ( $TSLA Tesla Motors Inc ). If this is a stock that intrigues you, even at this point, I would say you’ve got to be really careful. I see this is one big reversion to the mean, and I’m not saying that the stocks going to fall all the way to the 50-day moving average, I think it would be like felony stupid for anybody to say it’s going to fall to the 200-day moving average because then what you’re really doing is accusing the company of cooking the books; maybe that’s what they’re doing but kind of doesn’t seem like it to me since the cars got amazing reviews from I think it’s Consumer Digest or whatever the car review thing is, they loved it.
The bottom line is, this is a stock that ultimately is going higher. You just have to ask are you going to buy right now? I would say the only way that I would buy this stock right now is if I’m a trader. If I’m a short term trader and I’m thinking this was the top, big enthusiasm, short squeeze, short cover, oh my gosh kind of top, and now it’s pulled back and this today, 88.25, is the low. If the stock falls below 88.25 then I don’t want to be involved in this stock, I’m out of here. If that’s your trade then you go ahead and buy this stock with a stop just around $88.00 or something like that. What you’re risking is about five percent, $4.59, something like that. I don’t want to be that specific.
The bottom line is that would be the only way that I would want to buy this stock, if I’m looking at this type of stop, on a short-term trade. My sense is, you probably see a little bit of a bounce tomorrow, but there’s so much selling pressure on this stock I think it’s a short term trade, but ultimately comes back down and gives us a better buy point sometime over in this area.