3 STOCKS I SAW ON TV (September 12, 2016)- TSLA, SCTY, NTES
Every night we watch the same shows, Fast Money and Mad Money, and we want to USE those ideas the grow OUR money. Well good trading takes more than just pushing the buy button, in the morning, to buy the stocks you saw on TV last night. I’m here to help you make money on THESE 3 stocks I saw on TV. And frankly, to help you make sure you don’t LOSE money on 3 stocks too.
First of all lets look at Tesla ( NASDAQ:TSLA ) and SolarCity ( NASDAQ:SCTY ), two of the big stocks in the Musk empire. They were talking about these two stocks on Fast Money. Essentially the RISK attendant to the deal if SolarCity ( NASDAQ:SCTY ) is not purchased by Tesla ( NASDAQ:TSLA ). There is some kind of spread between the two and the risks and this and that and the other thing. I look at that as about as useful as turning to the Goldman Sachs idiot who is trying to handicap what the chances are that the Feds are going to raise rates in September. I think he had it pegged at 55 percent, but it might be a little bit lower or it might be a little bit higher. And I’m sure he has got it extended out to various decimal points just to make himself feel smarter. Anyway, with respect to this, we will just look real quick at these two charts, okay? You see what they are looking like? I’ll get back to that in a second. Here’s my question: You have a finite amount of money. You have a finite amount of trading capital. Is SolarCity ( NASDAQ:SCTY ) and Tesla ( NASDAQ:TSLA ) the best trade that you can think of? And maybe it is, and that’s fine, we’ll talk about this thing technically in a second. But is it really the best trade that you can think of? Because I’ve got about 19 better ones.
But here’s the deal: You don’t have to play this game. SolarCity ( NASDAQ:SCTY ) has been in a secular downtrend for about as long as the sun has been shining here. Lower highs; the lows are now right around $16.00 or so. So this is well off the level that it was at when Elon Musk decided to basically square away his cousins who were managing SolarCity ( NASDAQ:SCTY ), but I’m sure none of that came into it. So similarly with Tesla ( NASDAQ:TSLA ), this is also down at support here, different price but you get it, it is kind of the same pattern. So I’m just looking at these two stocks, frankly, and I wouldn’t touch these stocks. Yes you could get an oversold bounce, here’s why I wouldn’t touch the stocks though: There are plenty of other stocks in the Nasdaq Composite that are better trades. There are almost a 100 of them in the Nasdaq-100 that are better trades. Tesla ( NASDAQ:TSLA ) and SolarCity ( NASDAQ:SCTY ), simply put, just don’t work for me.
Now one that DOES is the third stock here, NetEase ( NASDAQ:NTES ). If you look at the weekly chart this thing has been in an uptrend forever, longer than SolarCity ( NASDAQ:SCTY ) has been in a downtrend. This is a pretty steep uptrend. What I like about this is that this is a bullish engulfing pattern. A gap down below the prior days intraday low and a close above yesterday’s intraday high. So you can see this has basically engulfed the trading range where today. It has engulfed the prior day’s, meaning Friday, intraday low. That is pretty significant, particularly when you consider how tough the market was on Friday. But we can extend this back, this puppy engulfs A LOT of price action. I didn’t catch this but I’m not THAT specific.
The 50-day moving average is support for this stock. The stock gapped down, didn’t quite get to there but I look at this as a successful test of the 50-day moving average and has now closed up at an all-time high. This is super, super bullish. Now, it’s a little bit of a tough trade to buy a stock that is up 8 percent in a day. I’m not going to coach you on your entry right now. I will just say this: I think this stock ultimately moves higher. You have just got to respect the trends, and the trend right now is, this is support, this is resistance, and that’s that. Again, tough to buy a stock when it’s blowing out the top, because what you are essentially doing is you are saying, “At no point in the future will NetEase ( NASDAQ:NTES ) ever fall into this box.” I don’t think that is true. I think you want to get long this stock, you just wait for a little bit better entry.