This is a DAILY chart of Tesla. In this time of market turmoil, please be very careful...
Would you own TSLA stock? I too would love to drive a Tesla. Given the opportunity, I would go out and drive one tomorrow. But would I buy the stock tomorrow? You might be surprised at the answer.
Some things to ponder without answering the question at hand -
**On the negative side : Today's price action fell below the longest uptrend line on this chart. So that trend line will have to be adjusted down to the bottom of today's candle. But let's leave it alone for the purposes of this idea. This breach of the downtrend line could signal lower prices.
**On the negative side again : TSLA is now below all the moving averages. Yes, even the 200 day (Not on this chart).
**On the positive side (really - a positive side??) : TSLA closed back above the longest uptrend line on this chart. If it manages to stay above this uptrend line we may see higher prices.
**On the positive side again : TSLA did not fall below the horizontal support of $193 ish. Now I will be the first to say that $180 is possible on another spike down. But on a day like today (8/24/15), holding the $193 ish level is a little ray of sunshine.
**One comment that is neither positive or negative : The way I see it, TSLA's closing price for today is between an uptrend and a downtrend line. If it stays there for a while, we could see prices up to $250 to $255 or prices down to $215 to $211 in the very near future. Admittedly those are extremes. I am not saying one or the other will happen. I am saying they could happen though.
Let's try to pretend the last few days never happened. Let's pretend you had no opinion about the company. We are simply going to consider risk versus reward. In this line of thinking, with TSLA closing at about $219, we could say $219 is $8 off the $211 low of range and $36 off the $255 high of range. So the potential risk is $8 while the potential reward is $36. I actually like this risk reward scenario.
For every 10 shares of TSLA you buy here you have the risk of losing $80 plus commissions. Why would you lose? Because I expect you are going to sell and try again later if the price gets below $211. If an $80 loss per $2,190 invested is a number you can handle then this might be a good scenario for you. It would amount to a loss of about 3.7%. Remember, this is a very risky trade just due to the erratic market conditions at the moment.
Long Term Investors - If you are a long term investor in TSLA what should you do now?? I can' t tell you what you should do. It's your money. You always get to decide it's fate. But I can tell you that I would do everything I could to buy some around that $195 level. If it goes below the $195 level, I would anticipate a drop towards the $180 level. If it get's there, I would try to buy more. Now this is kind of playing with fire but you have to realize this truth. The overall market is not dropping because of TSLA. TSLA is dropping because of the overall market. TSLA is the same company today it was in July when it touched $280.
A Generic Lesson - The last paragraph can be applied to long term investors in many companies. Obviously the technical analysis doesn't hold true for other charts but you may find similar lines that appear to be horizontal support and similar uptrend and downtrend lines. The nice thing is these lines give high probability entry points with high potential reward and low percentage loss exit prices if you choose to exit a trade. Some of the best profits are made immediately after a widespread drop in the market.
Good luck to you in this erratic market. I hope these thoughts help you think your way to some profits. I went long TSLA today (8/24) for a trade. Let's see how it turns out.
Would you own TSLA stock? I too would love to drive a Tesla. Given the opportunity, I would go out and drive one tomorrow. But would I buy the stock tomorrow? You might be surprised at the answer.
Some things to ponder without answering the question at hand -
**On the negative side : Today's price action fell below the longest uptrend line on this chart. So that trend line will have to be adjusted down to the bottom of today's candle. But let's leave it alone for the purposes of this idea. This breach of the downtrend line could signal lower prices.
**On the negative side again : TSLA is now below all the moving averages. Yes, even the 200 day (Not on this chart).
**On the positive side (really - a positive side??) : TSLA closed back above the longest uptrend line on this chart. If it manages to stay above this uptrend line we may see higher prices.
**On the positive side again : TSLA did not fall below the horizontal support of $193 ish. Now I will be the first to say that $180 is possible on another spike down. But on a day like today (8/24/15), holding the $193 ish level is a little ray of sunshine.
**One comment that is neither positive or negative : The way I see it, TSLA's closing price for today is between an uptrend and a downtrend line. If it stays there for a while, we could see prices up to $250 to $255 or prices down to $215 to $211 in the very near future. Admittedly those are extremes. I am not saying one or the other will happen. I am saying they could happen though.
Let's try to pretend the last few days never happened. Let's pretend you had no opinion about the company. We are simply going to consider risk versus reward. In this line of thinking, with TSLA closing at about $219, we could say $219 is $8 off the $211 low of range and $36 off the $255 high of range. So the potential risk is $8 while the potential reward is $36. I actually like this risk reward scenario.
For every 10 shares of TSLA you buy here you have the risk of losing $80 plus commissions. Why would you lose? Because I expect you are going to sell and try again later if the price gets below $211. If an $80 loss per $2,190 invested is a number you can handle then this might be a good scenario for you. It would amount to a loss of about 3.7%. Remember, this is a very risky trade just due to the erratic market conditions at the moment.
Long Term Investors - If you are a long term investor in TSLA what should you do now?? I can' t tell you what you should do. It's your money. You always get to decide it's fate. But I can tell you that I would do everything I could to buy some around that $195 level. If it goes below the $195 level, I would anticipate a drop towards the $180 level. If it get's there, I would try to buy more. Now this is kind of playing with fire but you have to realize this truth. The overall market is not dropping because of TSLA. TSLA is dropping because of the overall market. TSLA is the same company today it was in July when it touched $280.
A Generic Lesson - The last paragraph can be applied to long term investors in many companies. Obviously the technical analysis doesn't hold true for other charts but you may find similar lines that appear to be horizontal support and similar uptrend and downtrend lines. The nice thing is these lines give high probability entry points with high potential reward and low percentage loss exit prices if you choose to exit a trade. Some of the best profits are made immediately after a widespread drop in the market.
Good luck to you in this erratic market. I hope these thoughts help you think your way to some profits. I went long TSLA today (8/24) for a trade. Let's see how it turns out.
