Here’s how you trade Carvana ($CVNA) (September 13, 2019)


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With Carvana ( NYSE: CVNA ), here’s the deal: Talking about entries, this would not fit my criteria at all for a stock that I would want to buy. I would typically want to get it closer to the 50 or at least give it some more time to kind of settle out here, kind of drift a little bit, maybe drift down, the 50-day moving average is coming up like this. If it could just drift a bit more and then start moving higher then you’re kind of buying it right here and then buy more up here and it’s all good.

The issue that I am bringing up now is there is shot interest., there are over 12-days to cover. That’s a big short interest on this kind of stock and the stock is not going down it’s moving up. And so this is going to make for some nervous shorts and if they are not nervous they should be. I would say, if the stock breaks out above 84.80 or so I think you are going to see a pretty substantial short squeeze and we could see kind of a parabolic move in the stock, similar to what we have seen in the past here and then here, we could see this.

Think about what this is, I will let you figure out the details but I am not going to buy a car in a flippin’ kiosk, where I go in and put some money in and the car comes down. I don’t get the whole thing but that is basically what it is. In other words, in my view as an investor, as a trader, as a market guy, this is one of the dumbest things that I have ever heard. However, does it really matter what I think because look at what the stock is doing?

My point is, I really doubt that I am the only guy out there who thinks that this is a dumb idea and that the company is never going to make any good money and it is ultimately going to be a zero. I don’t know about that but the point is if I was just looking at the business and I was inclined to short stocks, I would short as much of this as I possibly could. But since that is not the way I am I recognize that that is the way people think, a lot of people, which is why we have so much money betting against it.

I will just tell you this, when you have smart money betting against a stock and the stock is making the smart money look dumb, I would want to go on the side of the stock. Because sometimes the smart money, it turns out it’s not really smart. It might even be smart but it’s not profitable. So I would say avoid Carvana ( NYSE: CVNA ) at all costs until it breaks out. If it breaks out above here then I think that is going to be a pretty good buy and a pretty good trade for you.

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