Here is how I’m trading Tesla ($TSLA) – September 11, 2023
This is Dan Fitzpatrick with your Chart of the Day. I want to talk about Tesla ( NASDAQ: TSLA ) today.
This stock has been, like a lot of stocks, it has been kind of languishing below the 50-day moving average, which is generally what you don’t want to see. We have seen it with other stocks, Microsoft ( NASDAQ: MSFT ) is kind of struggling here, but now it is breaking out. Some of the others; Apple ( NASDAQ: AAPL ) is still just sucking the hind tailpipe, getting nothing but gas fumes.
Essentially, this is the way I look at it, nothing good happens below the 50-day moving average. So nothing good was happening here ( NASDAQ: TSLA ), but now we are in a different market. There is about an hour and a half left in the trading day and this stock is already up above the average volume over the last 20 days.
So my bet is, that by the time this thing closes we will have an appreciably higher volume. So this will be a real confirmation day of a breakout, and I am looking at this as a breakaway gap. If you just draw a box around the price range, it is still kind of in the high end of this big box, starting from July down to August. And so you have got to look at the upside as being another 9 “percentish”, that type of thing. Though, in this market, 9 percent is pretty good.
Morgan Stanley upgraded Tesla ( NASDAQ: TSLA ) to overweight. I suspect we will be seeing others, gradually; every EV manufacturer on the planet is starting to adopt Tesla’s ( NASDAQ: TSLA ) format, their protocols, whatever you want to call it, their system of charging stations, which some people think, that is sure benevolent of Elon Musk, they are going to get paid for it. This is a real boon for Tesla ( NASDAQ: TSLA ) stockholders.
But here is what I really like about this and true disclosure, I am long this. I bought some calls, long-dated calls, and then sold some far-out-of-the money short-dated calls. Just because, candidly, I got a little bit of a late start on this, and so I am financing it by supposedly limiting my upside. But I sell calls of such an expiration and strike price combination, where the odds of me getting called out of those are very, very low. So I am effectively financing my long trade and dropping the cost basis there, down to a more reasonable one.
This is what I like about this. Look at the weekly chart, if we go out like this, you can see, this is like the “slope of dope” here. Or if you are a disciplined trader it would be known as the “slope of nope”. But as we look at the stock now, this is what I’ve got my eye on. I’ve got my eye on this 300.00 level. Right now the box is here, but can you imagine how this is going to work if the stock breaks above this level?
I think it can pretty easily go, I’ll say it, I think it could pretty easily go to 400.00. I am not saying it is going to from here. But I will go out on a little bit of a limb, and it is a thick limb, if the stock breaks through 300.00 it’s going to run to 400.00. This is still, after all this time, it is still kind of a religious stock among some people, and I think that this will really work. That’s my bet.
My plan is, that once this runs above this 300.00 level, that is when I will really be increasing my position, kind of pressing my bets. But that is only because the stock will be telling me that I am correct. If the stock is telling me that I am correct, then I will say, Well thank you very much, I’ll buy more, I’ll take a longer position.
But if the stock is telling me, Well, you may or may not be correct. Then I need to kind of pull my horns a little bit and focus more on the risk of loss, rather than the risk of missing out on a big gain. Make sense? I hope so.