3 Stocks I Saw on TV: TSLA, VRX, X (March 02, 2016)
TSLA VRX X
Look, every day we watch the same shows on CNBC, Opening Bell, The Squawk, Power Lunch, Mad Money, Fast Money, you name it, a bunch of stocks there. I want to take 3 stocks that I saw on TV and lets see if we can make some money together.
First we’re going to go with Tesla ( NASDAQ:TSLA ). I mentioned this recently, I think it was even yesterday, because Andrew Left of Citron Research basically published a hit piece. I don’t mean that in a bad way, but that’s kind of what it was, talking about Tesla ( NASDAQ:TSLA ) having supply/demand issues. Also there’s some news flow issues that this guy takes issue with. And basically he was just saying, “You know what? This stock is going lower. There’s not enough catalyst to push it higher.” He’s looking at a big decline. He did revel, today on CNBC, that he’s got a short position at about the 185.00, 190.00 level is where he initiated it. So basically I’m showing this stock again because you can “trade along with Andy” if you want. He seemed to do okay on Valeant ( NYSE:VRX ), which we’ll get to in just a second.
But the bottom line is this: You’ve got to look at the weekly chart and if you’re shorting this stock right now I would suggest you put a BUY stop just a little bit above $100.00, so you’re risking about $12.00 on a $200.00 stock, which isn’t too bad. Then if the stock continues to go down, in other words, if this turned out to be a lower high, you’re going to make a lot of money. On the other hand, if the stock starts moving higher again, you’re stopped out before this stock gets away from you. Look, Tesla ( NASDAQ:TSLA ) trades really big, it can have some big moves, and if you’re wrong on the direction you can really get clipped, so I want you to keep tight stops on that.
Another one he was talking about was Valeant Pharmaceuticals ( NYSE:VRX ). A lot of this is due to a Citron Research report. It’s also one of the reasons why Bill Ackman’s firm is not really doing too well. So Andy Left says that he’s covered his short, same interview on CNBC, he covered his short position on Valeant ( NYSE:VRX ). In his view, and this guy doesn’t sound like a technical trader to me, though he did have some technical terms in there, he said he wouldn’t be long or short Valeant ( NYSE:VRX ) right now. He said there’s a lot of black box surrounding that. Now, what I’m ASSUMING he means is that there are just kind of algorithms trading price levels here. I think that’s what it means, I don’t know. But they got a subpoena from the SEC on Monday, that doesn’t work too well for a company. But the fact that the stock did re-bound, lets just kind of look at it, a big nasty breakdown here, below this last low, and then this was turn around day, we’ll call it turn around Tuesday. Then today we got just a little move to the upside. Not exactly a real three candle reversal, just a little kind of bump to the upside, but I’ve got to go with this guy on that, in that you don’t want to be long or short.
I had actually considered selling some puts, selling some $60.00 puts, 55.00s or even $50.00 puts. The implied volatility on these is really, really high so it made it kind of a juicy trade. At the end of the day thought, I just decided it’s just too much risk with this. I think it could be a great trade; and here’s how this would be a good trade: if there’s no headlines on this stock for a week or two. If there’s no headlines, everybody just forgets about it, you’ll make money because the stock will just kind of drift up. But that’s the issue. All these folks who are buying, and yesterday there were how many million, 41 million shares. That means there were 41 million shares bought. They were also sold but somebody bought them. So there’s a whole lot of buying going on here and they’ll probably make some money as long as the stock just drifts higher. But on any kind of a negative headline you’re going to see a lot of guys going for the door, and I just decided, “You know what? I don’t want to mess around with that.”
Steel stocks, I wanted to show you US Steel ( NYSE:X ) because this is a good one. They’ve been kind of inching up for a while and I’ve been covering these steel stocks, in particular US Steel ( NYSE:X ), for the last few weeks. This reversal here, it’s kind of a base, and it just started to look really good as this was punching up above the 50-day moving average. Well, it turns out today we hear from the Department of Commerce that they’re establishing a tariff on some of these Chinese, Japanese, Brazilian, I think even Putin’s got involved there, from dumping their steel sheets in the US. We are the dumping ground for a lot of stuff and the reason we’re getting so much blow-back on a lot of different levels from foreign countries is, they kind of like it, they kind of like things the way they are. They kind of like having the upper hand on us.
So when they’re squawking about maybe changing things around, like a tariff on the these foreign steel companies, you’re not going to hear too much acquiescence, just a whole bunch of complaining going on, frankly. But the bulls on the steel stocks are here. I don’t think there’s a real high interest, a high short interest on these. So I just think these stocks are moving just on pure momentum. Likely, this will continue moving for a bit. The thing went up almost 25 percent today, so to say you’re early is, lets just say, that’s wrong. But, after the kind of haircut these have taken, I WOULD NOT be shorting into this. I would either stand aside or buy some stock and set a trailing stop on it. Because the 200-day moving average would truly be an obvious place. It would be an obvious place for traders to take profits. Now the good news is, that’s another 20 percent above where it is now.
3 Stocks I Saw on TV Free Chart