Tesla (TSLA) gave us a pretty solid daytrade this morning. Here’s how we did it. (April 04, 2019)


Today I want to look at Tesla ( NASDAQ: TSLA ). Yesterday we had a pretty nice trade going on GameStop ( NYSE: GME ) on an oversold bounce. Similarly, Restoration Hardware ( NYSE: RH ); you wait a few days, wait for the stock to settle out. Then once the stock turns eclipsing the prior day’s intraday high, that’s a good time to take the stock too. This wasn’t a big trade but they are all pretty profitable, right? Particularly GameStop ( NYSE: GME ).

So today with Tesla ( NASDAQ: TSLA ) we had a similar opportunity. First of all, this is a cult stock; it’s got a stupid valuation but, I’ll go ahead and say it, the real stupid traders are the ones that are short this stock, I say that tongue and cheek but only to a point, because this is one of those instances where the market can stay irrational longer than you can stay solvent. This has been a heck of a tough short for people; they see the valuation, it is just ridiculous. Ultimately, the stock should be much lower than it is right now. We could have said the same thing; it is basically right where it was over a year ago. Back here a year ago the stock was down in the 260.00s, it fell below 260.00 to 250.00 and that is what established this support level.

Look, as a trader, particularly if I have got my day trader hat on, I don’t really care about this type of stuff. All I care about is this: We’ve got this support line here at 250.00. The stock is in a downtrend; lower highs, lower lows here and then they report that their Q1 deliveries were well below what the expectations were. I am not going to talk about whether expectations were good or bad or this or that it doesn’t matter. All I know is the stock opened, I think it was like 12 percent; it was 12 pre-market, at least 10 percent down on this news. Then there was a court appearance on Musk and his tweets and all that I don’t care about that.

All I know is this, the stock gapped down to support. It is a cult stock, meaning there are always retail buyers. They are waiting to buy any dip, just like there are, typically, a lot of institutions waiting to sell any rip. So you have to look at that dynamic as occurring over a few days, not just one day. What I mean is, the stock goes down, snapback, the stock goes down, snapback. The stock goes down here in one fell swoop, look for a snapback. I don’t know how high it is going to go. I just know today, when we looked at this, the stock gaps down here and immediately moves higher.

I was talking about this in the forum, giving specific levels and things like that. If you are a member definitely check those out if you are looking at day trading first thing in the morning. But even if you are not, definitely check out these types of trades because it will help you understand the dynamics and how stocks work.

The deal here was, you are buying it; once it has been established that the stock is not going to see further selling at the open, that’s when you go long. You can use a time stop, I typically do, I will use the 9:45 time period to make a determination; is the stock above the opening or is it below? If it is below the opening I am not going to be buying the stock; if it is above the opening I am sure not going to be able to short it. I am not going to be shorting it; I am going to be looking to be long. But I am also aware that you get this kind of move and then at some point the stock is going to taper off.

That is exactly what happened with Tesla ( NASDAQ: TSLA ). The easy money was made first thing in the morning. And then ultimately the stock kind of drifted higher but you have got to hold it all day long. I don’t want to do that. On stuff like this, on these big slam plays, you look to get in early and you get out early as well. It is the best 15-minutes of the trading day and all you need to do is get on the right side of a really nasty sell-off and you can make some quick money and then get on with your day. We see these all the time and with earning season coming up I am pretty sure we will see more of them.

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