Three Stocks to Watch and Trade: $BYND $TSLA and $AMZN. (June 13, 2019)
I am going to follow this series of videos that I am doing on three stocks, Beyond Meat ( NASDAQ: BYND ), Tesla ( NASDAQ: TSLA ), and Amazon ( NASDAQ: AMZN ) for the next few days. All of these stocks are really good trading vehicles for various reasons right now, which is why I am doing it. Let me just get right into it.
First of all, Beyond Meat ( NASDAQ: BYND ). We all know what this is, vegan, fake meat. So what do we do with this stock? The stock is way overvalued if you are looking at it from a fundamental standpoint. But I am looking at it from a technical standpoint; and one thing I know for sure, as I look at the stock at 141.85, guys, that’s fair market value. That’s what it is, it’s not overvalued, it’s not undervalued; the price is the price. Technically, what we are doing here is, we are managing risk.
You can trade this stock; at STOCKMARKETMENTOR.com, that’s what we do but I also have OPTIONMARKETMENTOR.com. Options, right now, I think are more fruitful in trading this stock because it hasn’t been trading that long. If we look at this on a 15-minute chart it is generally trending sideways. Look at the VWAP here, which I will get back to in just a second, the VWAP is just basically sideways. The stock isn’t really moving that much but that actually sets up a good options trade. Look at 170.00, $170.00; what’s the chance the stock is going to go back there? $110.00 on the downside. What’s the chance the stock is going to go down there? Personally, I think it will probably come down here easier than go back up but you never know.
I am going to set up what’s called an iron condor. Here’s what we are going to do, I am going to sell a 170.00 call and buy a $180.00 call, that’s $10.00. We are going to sell a $110.00 put and buy a $100.00 put. And so we have got a $10.00 difference here and a $10.00 difference here. This is how we can set this trade up; we buy the 180.00 call, we sell the 1 put, we buy the 110.00 put so the stock can go to the moon or it can go down to zero and the most that we would lose would be the $10.00 difference between 110.00 and 100.00 or 170.00 and 180.00. But we are taking in $4 66.of credit so this is money we get to keep. The most we can lose is $10.00 so you take the difference between the two and you have 5.34 of maximum loss, this is basically a 1:1 risk reward. But from a technical standpoint this is really, really a high probability setup. That’s a trade that I sent out to Option Market Mentor members. I will be covering this again over the next few trading days so we will see how that works out.
If we look at Tesla ( NASDAQ: TSLA), this is a little different animal because it’s Tesla ( NASDAQ: TSLA ). It trades all around, it is basically a news flow driven thing. I think it’s institutional selling but retail buying. You guys know the story here, it’s kind of more of a religion. But you have got to get away from that and just trade the ranges. Right now, yesterday was a big sell-off where the stock gapped up after Musk’s shareholder meeting and then traded down. It was basically a bearish engulfing pattern from the prior 2-days of trading.
This is what this means, that day’s range was completely engulfing the prior 2-days range, so this is a reversal pattern. You would expect this stock to go lower here. I do but I am hedging my bets here, here’s why: This little rebound is not surprising at all. This is a bearish wedge, this is what this is all about; higher lows, higher highs but they are kind of coming together. So you expect this to kind of pour out like the end of a garden hose. It is not likely to test this level anytime soon. But definitely the trade here would be to sell call options. You can also short the stock if you can get a borrow.
And then the last one, I am running out of time because I don’t want to keep you too long on this. The last one is Amazon ( NASDAQ: AMZN). Amazon ( NASDAQ: AMZN ) is in a situation where I have drawn some Fibonacci numbers here, zero is this last low, 100 is the high and so you can see this is actually above the 61.8 ratio, this is like the high-end of the Fibonacci ratio; 61.8 is right where the 50-day moving average is.
So here’s the deal on Amazon ( NASDAQ: AMZN ). They report earnings towards the end of next month. As long as the stock stays in this general area or higher I think you can rely on this as support. So you keep a fairly tight stop right there and stay long the stock. I really think that the path of least resistance ultimately will be higher. But FIRST, the stock does need more time to stabilize so it is not really showing me that it is about to make a big move one way or another. It needs to form more of a base and I think that base is along the 50-day moving average. THAT is where you want to be in this stock.