TSLA 

I want to look at Tesla ( NASDAQ: TSLA ) today. This is a stock that has been on our Active Trade List for a while. Meaning, we just got in last week on this little pullback here.

What I like to do, by the way, is, I will look at a stock like this, some traders were good to buy the stock last June, still be holding it, and feel like, hey, 263 percent, that’s good for me. And that’s great, but they are also then, willing to sit through a 33 percent drawdown. And then from up here another 36 percent drawdown. They are willing to sit through what is still a basing process for over a year. Where they are now, they could have done even better if they had sold in the first part of this year.

So what’s my point? My point is, there are any number of ways to trade a certain stock and all of them can be very different but all of them can still be very profitable. The difference is in you, it’s in what each trader feels is their best way of trading. And you will kind of gravitate towards it. You are going to find out, even when you adopt a process that works for you, you are still going to find out what kind of a trader you are. If you tend to like to hold things for a longer period of time or whether you are just kind of quick flipping. And the right system is the system that makes you money.

We just took a shorter-term trade here. I can’t ride stuff like this down, I just can’t. I won’t, I’ve never been able to, I never want to be able to. But when I see a stock like this, a strong stock, it’s in demand, it’s Tesla ( NASDAQ: TSLA ). And the stock was right at the 50 and the 200-day moving average. That is a very, very powerful setup here. When you’ve got a stock right in here, that’s a powerful setup. Then you look at the weekly chart and you can see this stock could run really, really nicely, so we are still in it.

My suggestion is, decide how you want to trade it. I don’t think you can buy it here, I certainly wouldn’t. But I wouldn’t sell it here either unless you are an action junkie. If you are a short-term trader then you actually would have wanted to be out sometime earlier today. But I think the best bet, for the short-term guys, is, look at the Volume Weighted Average Price. Typically a stock, towards the end of the day, will drift back to the Volume Weighted Average Price, whether it’s from below upwards or from above downwards, just because the price will ultimately just kind of sink to whatever the average price was for that day, the volume on any given price range. As long as a stock is staying above the VWAP then long is the place to be.

Again, I am talking short-term traders. But if the price starts to fall below the VWAP, then you really want to start looking at that stock and decide whether you want to still be in that stock. By the way, in another big deal, I don’t really mention this too much. I think I just kind of think about it without thinking about it, what’s the direction of the VWAP? What’s the direction of the Volume Weighted Average Price? If we just look at the VWAP, I already have it as thick as I can have it, if we just look at the direction of the VWAP, this is not where you want to be long. This is not where you want to be long. This is not where you want to be long. Here, this is where you want to be long. You see there is a difference, if you just look at the orange line there with nothing else, you could actually position trade this stock.

AMZN 

I want to look at Amazon ( NASDAQ: AMZN ) today. As you probably know, if you trade stocks, Amazon ( NASDAQ: AMZN ) fell pretty decently, 7.5 percent on earnings that the market didn’t like much. It was really, from what I can see, kind of more on guidance. I think it is ultimately a buying opportunity. However, not really as a trade.

That potential trade was, first thing this morning though, on a percentage basis it wasn’t that big of a move. On a point basis, if all you are counting is dollars, from the open the stock moved up $21.00 before it ultimately fell back. From the open it moved down almost $40.00. Breathtaking. But on a percentage basis the thing basically flatlined. It just basically flatlined all day long. So this was a trade that really didn’t turn out to be a good trade.

I want you to look at the way this is on a weekly basis. You can say, oh wow, what a great uptrend. Yes, that’s fine, but look at all of the periods when the stock was in this sideways range here, even here. Here, all of this, and then here. And so the question you have to ask yourself is, is this the kind of stock I want to be trading?

My suggestion would be, no, not really. Look, it costs a bazillion dollars for one thing, $3,300.00 a share. For a lot of people it’s like you are on the iPhone, Robin Hood, Vald the new billionaire account with the confetti every time you buy a teeny tiny fraction of a stock. Hey, I spent $30.00 and I own Amazon ( NASDAQ: AMZN ) now. Fine, you go ahead and trade it. But for the rest of us, this is a stock that you are either going to be holding or you are really not going to be involved in it at all, one of the two. That’s the way I look at it anyway.

Now, there are millions of people that would disagree with me and that is totally fine, you are entitled. I would just say this if we look at the daily chart, the time to really be buying Amazon ( NASDAQ: AMZN ) is twofold, first kind of like right here, sometime in the next few days as it bounces along the 200-day moving average, which it has done for a while before.

So it’s like every time it hits the 50-day moving average it recoils like you just put your hand on a hot stove. No, it farts around there for a while but then ultimately it moves up. The 200-day moving average hasn’t truly been moving lower since I don’t know when. So this is tending to be a good time to be buying the stock.

On a fundamental basis, I won’t go into big detail on it, but just kind of looking at the MarketSmith fundamentals, this is the earnings per share increase versus the same quarter the prior year. This is the revenue versus the same quarter the prior year. And then finally, this is the profit margin. So we want to see all of these going up. Well, they basically are all going up, little fits and starts here and there but they are all kind of going higher.

My point is, as long as you are seeing this type of thing this stock is good to go. It is one to own. I just really wouldn’t be trying to trade it right now. I just think there are easier trades out there, that’s really what I am saying. But if you are an investor, if you have been looking for a time to buy Amazon ( NASDAQ: AMZN ) this could be your start for a starting position. Literally just waiting for the stock to firm up a little bit, you are probably going to be in for the long haul though.