Thinking of trading Tesla (TSLA)? Here’s your plan! (February 27, 2018)


Tesla ( NASDAQ: TSLA ), why am I talking about this? Am I saying, “Well, it is up at the top of the channel here so you want to sell Tesla ( NASDAQ: TSLA ); you want to short Tesla ( NASDAQ: TSLA ) and then buy it back here at $310.00 or $300.00.” No, that is not where I am going with Tesla ( NASDAQ: TSLA ). I can’t trade this stock; at least to the short side. Virtually every time I have tried to short it, it just hasn’t worked. That is just trading.

What I am looking at is this: We are back up here to a level that before Tesla ( NASDAQ: TSLA ) failed. It couldn’t get back up here once. Couldn’t get back up here twice. Could not get back up here the third time. I am talking about today; the intraday high was 359.99, in other words, 360.00. That is where the sellers live. What I am suggesting is that you do this: Put a buy stop on the stock actually. If the stock hits $360.50 execute a buy order. Buy some of that stock; immediately though, put a stop below 350.00. Keep a reasonable stop on it.

If this is your risk right here what is your reward? This is totally irrational, it has always been trading on the ‘huxter carnival barker’ dynamic but you can’t discount that. This is a stock that just wants to go higher and I think a lot of it too is frankly, Jim Chanos is short and everybody knows it, on the big money side, so there is always an underlying bid to Tesla ( NASDAQ: TSLA ). Respect that. Don’t try to go against it. I think the stock should be lower; I don’t know what it is worth but I don’t think it is worth 350.00. But guess what? Nobody cares; you shouldn’t care. You don’t care what I think about this stock. What you care about is what the stock is doing.

By the way, the stock doesn’t care what you think either. The stock is going to do what the stock is going to do. So you make your risk assessment according to what the stock is doing. Let’s say you are buying it at 361.75, you can put your stop below today’s intraday low and you have got a 3 percent stop on this position. But you could say, “Well, then why don’t I just buy it now? Then I will keep a stop down here so then I am only risking a quarter of a percent?” I’ll tell you why. Because you don’t know that the stock is going higher. You would just be buying the stock on a pullback expecting it to bounce. This thing could fall back down to 300.00 it has been here before.

So wait for the stock to tell you that it is moving higher and you be the first one to be in the door. You be the first one in the door, you grab this thing a little bit above 360.00. And hey, before you know it is 390.00 or so. It is not a big percentage gain but guess what? If you are buying calls on it, like maybe the April 360.00s, you are going to be making plenty of money there.

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