Here’s your trade on $TSLA and $RACE. Gentlemen, start your engines!! – August 19, 2024
Dan Fitzpatrick at StockMarketMentor.com. I want to look at a couple of cars today, they’re actually both pretty fast.
Tesla ( NASDAQ: TSLA ). I always get a lot of questions about this in my Monday morning training session. First of all, the chart is just an absolute sloppy mess as I look at it here in this timeframe. You can see that it’s all over the place. And then on the daily chart, it’s the same thing, just all over the place.
Now, if you’re a real short-term trader you may be looking at this and saying, Oh that’s BS, it’s fine, and this and that. Well sure, it may very well be for you because if we just really, really zoom in, and maybe even go to an hour-long chart, this is popping out of a volatility squeeze here on the 13th. And then since that time, it’s just been running up nicely.
The point that I’m making is, beauty is in the eye of the person who’s looking at it in the right timeframe. So in this respect, Tesla ( NASDAQ: TSLA ) works this way. But on the daily chart, this thing doesn’t work worth a darn. You just don’t know whether it’s going to move higher or not. I love Elon Musk, I think he is the best so I’m all in his corner. But with that said, I’m sorry man, I can’t put any money there.
On the other hand, Ferrari ( NYSE: RACE ), I love some Ferrari ( NYSE: RACE ), and we’ll start here on the weekly chart. This is a pretty nice volatility squeeze, within an uptrend. A solid uptrend, kind of a ‘cuppy’ base here. Then we get one little pullback/base. A second one here each time we get a breakout to a new high.
And now we’re back here, to say, at third base, and this has gone on for most of the year. And then finally, just last week we got this breakout. So on this timeframe, I look at this stock and I want to buy it right now. Maybe put a stop down here a little bit below $400.00. That’s a little bit loose, say 13.5 percent, that’s pretty loose in my book.
So what I would probably do, again, I’m only looking at weekly, we’ll look at daily in just a second. What I’d probably do instead, if I’m just trading off the weekly chart is, I would say, Okay, where is the middle Bollinger Band? That’s really what I care about. We’ll say it’s around 421.00, we’ll say 422.00.
So if I’m buying it here my approach is, okay, I don’t want it to come more than halfway down into the Bollinger Band complex, which is supposed to capture all of the price action. And so, that now cuts my risk down to about 8.6 percent, which is certainly acceptable. So this is a trade that you could make right here right now with that risk/reward profile.
If we look at it on the daily chart, we’ve got a little bit of a different sense here. First of all, I’d move this around a bit. And then also, this is a little ‘gappy’, we’ve got a gap here, then a definite breakaway gap here. Here is another gap that actually closed up on the day, but down from low.
That could give you a little bit of a pause for concern, so to speak. And then another gap yesterday and then another gap today. So this is a really ‘gappy’ stock but it’s all in the right direction. First of all, I’m not buying the stock right now. The weekly chart looks solid, so yes, I want to buy the stock.
Then I zoom into the daily chart, and this thing has been up outside the upper Bollinger Band for four straight days, which is a definite sign of strength. So yes, I want to buy the stock. But with the volume trending lower, I think the better trade would be to step off of this thing for a bit. It traded clear up here to 466.00.
Let’s look at the intraday chart, it traded clear up here to 466.00 and then just drifted off for the balance of the day. So I feel like this trade, this initial move is kind of over. So if you can see be patient, if the stock can pull down closer, say to 450.00 or so, which isn’t that much of a move, then that’s at a point where you could really consider buying it.
The further down it goes, frankly, the more attractive it is because as I see this weekly chart, I don’t think this is a breakout that’s going to fail. I think this is a breakout that’s going to keep going. The only question is, where are you going to be able to get in here?
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