Time to buy Tesla (TSLA)? Here’s my take. (Hint: No). (January 13, 2016)
TEA SP-500 TEA
I want to look at Tesla ( NASDAQ:TSLA ), in large part because I was looking at the other auto manufactures and they’re all stinking up the joint and I thought, “Hey, what’s Tesla looking like?” This is actually stinking up the joint too. Here’s the thing, the company reports earnings next month, almost a month away on February 10th. This stock will not be at 200.39 on February 10th. Now, it might be up at 240.00 on February 11th. Who knows? Or it may be down at 140.00. But here’s the deal, the stock has broken through support here and testing $200.00. But I would be careful about being too bearish on this stock right at this moment in time for the simple fact: that the S&P, the overall market is really, really oversold and we could get a bit of a bounce tomorrow.
But, make no mistake about it, this stock, and I think I might have mentioned this quite a while ago, but perhaps not, this stock has been forming this bearish wedge for a while. Higher highs, higher lows, but the trendlines are converging. So ultimately you would see them just form the back end of a megaphone. So typically what happens here is, the megaphone starts to fall out the wedge and continues to go. My minimum target on this type of a pattern is to at least test the low, the beginning of this megaphone or wedge pattern. So that’s what it’s doing right here, right at $100.00.
Now, as I look at this chart, I’m pretty bearish on Tesla ( NASDAQ:TSLA ). I don’t see anything to be bullish about here. I would have to be some kind of a clueless fundamental analyst to say, “Oh, Tesla is a buy right here because the P/E is this and that and the other thing.” Not my deal. I always see those guys on CNBC talking about a particular stock saying, “Oh, it’s a buy, and this and that.” And “If you’re patient.” And then I’ll look at the stock chart and I’ll think, “If I buy that I going to BE somebody’s patient, like under intensive care, or critical care.” The bottom line is, the charts really are the ones that control whether you make money or lost money; not a P/E or revenues or anything else.
So what I want you to do on Tesla ( NASDAQ:TSLA ), stand back. If the stock starts trading below 200.00, this could easily fall another 5 percent down to 190.00, maybe even lower, IF the stock first breaks 200.00. If it doesn’t, obviously, then that’s not going to happen. But we’re here at support, we’re kind of testing support. If this stock bounces up a bit, lets say over the next day, two, three, four days, the stock starts rallying back up to 210.00, 215.00, something like that, and then starts rolling over, frankly, I think that’s your short entry. So you would be watching the stock for a bounce and then if it fails to move to a new high, and it will, a least prior to earnings, then you can go ahead and short the stock. If the stock falls below 200.00, I think that’s a short as well. It could be a little more problematic simply because this is Tesla ( NASDAQ:TSLA ) and it tends to be really volatile.
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