Bad news from Tesla ($TSLA). Time to buy! (October 03, 2017)


Tesla (NASDAQ:TSLA ); I am covering this today because they announced this morning that they were having bottleneck issues with their new Model 3. The stock gapped down a little bit and the typical thing that always happens, happened. And that is, traders came in and said, “What? Tesla is down, I am buying the stock.” And then the stock rallies, basically all day, into the close anyway. It popped out of this squeeze.

The point is that this is a stock that had traded down. Because I think a lot of people don’t really believe Elon Musk and some of the things he says, because it is always revised. Like, “Remember what I said last month about how things are going swimmingly?” Or, “Oh my gosh! This is what we expect. Well, not so much. Just kidding. Hopefully you will forget about that.” Happens all the time. It has been happening as long as I have been following this company. The future does not live up to today’s representations.

So, the point is, this moved today, this little tidbit of information about the Model 3. They still expect gangbuster production later on. It is always going to be good around the next bend, and it very well may be. But for the stock it is probably going to be good now. Because, the stock pulls back, the market is anticipating the bottleneck. Maybe fewer cars produced than was originally represented by Elon. So now that they actually make the representation that the prior representation is no longer the current representation, what happens? Buyers come in and go, “Know what? It isn’t so bad, sure, I am taking the stock.”

Now we have the stock rebounding right off support. I am not going to be drawing all these goofy lines like this. This is just a pure price play off of 340.00, 348.00. The fact that the stock rallied into the close, we will look at the intraday again in a second, gives me the sense that the stock is going to go higher. It can go much higher than it is right now. It has done that before, one day up and then it continues to move higher. We see that a lot.

So, I wouldn’t be selling Tesla (NASDAQ:TSLA ) tomorrow. If you are long this stock don’t be selling into strength. Frankly, if the stock starts trading above the 50-day moving average I would be buying it. Look for a little move, 5, 6, 7, 8 percent. I would look for retest of 390.00 only if the stock starts trading at a new high tomorrow above where it traded today, 348.55, so we will really look for about 350.00.

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