Broken stock? Maybe. But here’s how you trade Tesla (TSLA) from here. (July 11, 2017)


I want to take a quick look at Tesla ( NASDAQ:TSLA ) here. Here is the deal, the stock is broken, we know this. The recent news was that in Hong Kong, when they took away the subsidy for buying an electric car, the sales on Tesla ( NASDAQ:TSLA ) dropped to zero; literally zero; but the stock is up.

Now, you can look at this as an opportunity to buy Tesla ( NASDAQ:TSLA ), and it absolutely may very well be. You can see how the stock has performed and each big pullback has indeed turned out to be a great time to buy the stock. Here is what I am doing, I am just kind of taking this for a ride, long. I have a bull put spread and I also have some calls on this. I am just looking for the stock to come back to the 50-day moving average. What it does after that, I don’t know. As most people know I am not really enamored with this stock, I am not a ‘Teslonian’. But if I see a chart that works I will go ahead and trade it.

The thing that works here for me is that the stock, I think, has probably another $10.00, maybe a little bit more. But it has another $10.00 to go on the upside before I would look for traders to start taking profits. They would have made over 10 percent, in a very short period of time, on a stock that is definitely under distribution. Institutions are selling. How do we know this? Because if they weren’t it wouldn’t have fallen like this on such massive volume. This isn’t you and me and 19 other guys that are trading stocks that sells this stock.

So look at this only as an oversold bounce. Take it for another 10 points or so. Then after that, if you are inclined to hang on to the stock or some of it, something like that, then absolutely go ahead and do that. There is nothing wrong with that, as long as you are protecting it with a stop. Just be mindful, when the stock breaks below the 50 like this, where it has held before, and on huge volume, that is a big change in the character of the stock, it becomes a different stock. It is not a holding stock for me, it is a trading stock.

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