Short term traders can look at the correlation of crude oil (in blue, front month crude oil futures, CL1! symbol) and you can come to the conclusion that this rally may be at the higher end of the range. I imagine Goldman Sachs might want to get back on the bearish train about Crude Oil going down to 30/barrel as one possibility for a decline. There is gap up from earlier this week that the market could retest.
Do you exit here and re-enter on a pullback or just raise your stop? These are the questions that traders and investors must be making at this time because I am both and that is what I am thinking. I think selling call options makes sense too as implied volatility is high ahead of earnings in early May and the news on April 30th about battery systems which could cause some volatility and cause a pullback to the 207-206 "key hidden level" where earnings were reported on Feb 11 this year (see green line).
Either way, whether you sell out now, sell calls, raise your stop or look to buy more on dips to 207-206, it's good to assess the environment for how a stock is acting relative to other markets and in this case, relative to crude oil.
Thinking out loud ---
Tim
2:31PM EST, Friday, April 24, 2015 218.61 last TSLA
Comments
timwest
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Projection is pretty close, only the drop back to the "ideal entry" level never happened. The upside magnitude and duration has been ok.
G_Man
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after seeing this chart originally and shorting oil, I have tried unsuccessfully to short tesla too :)
perhaps we'll see a correction soon? or do you think the bull market is confirmed and running
timwest
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Ok. I see and I'm sorry. I am a bull on Tesla, but thought about hedging the long in Tesla with a short in crude oil figuring the "Gold-man" would try to break it back down. The new battery story seems to be giving some lift to TSLA with some $800 million in orders taken in the first week or two. I think that is making the shorts take in some stock and the longs to hold off selling and marginal new buyers to bring some fresh money to the table. I think the way to go with TSLA for the next 6 months or more is to sell downside protection by selling puts against cash. I think the upside is limited, but the fear of downside will be overblown for some time. I think that is the safest way to make money. I might consider buying more TSLA and selling calls, which is the same trade as sitting on cash and writing puts (identical risk/reward, depending on the options strike).
Justiceisfalse
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Looks like your key earnings level is on deck today!
A-shot
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Sharp change of plans?
timwest
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Hello @2use, I was "Thinking out loud" - I still hold TSLA but was really wondering when to exit... With so much uncertainty about the upcoming "earnings" release (or loss) and their new home battery business, I couldn't tell if it made sense to just get out. I hadn't done the updated PSR on Tesla, so when I did that work I saw that TSLA was still relatively cheap (relative to its historical trading valuation ranges). I'm happy to ponder out loud and share my thoughts.
A-shot
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I watched the I8 video on how its made as well, and i do suspect that large players may pickup, but currently tesla is the hype among cars. Its a risky investment, but so was Microsoft at some point
Not to get too far off topic, anyone see this video? youtu.be/fxe_b2GRwok I think serious competition is still 5-7 years away. Based on what I saw at the factory tour on Friday, Tesla will be much further ahead by then.
timwest
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Here's a nice review of the Tesla car from a salesman on a test drive, from a California store. youtube.com/watch?v=9S4HqTxOUD0