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TSLA – Tesla Motors (Last:569.43)

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This one’s just for fun and educational purposes: shorting a stock that has wreaked more damage on bears than any squeeze I can recall. Ever. The chart shows a well defined rally target at precisely 510.14, and it is there that we will attempt to intercept the stock, at least on paper. I’ll suggest an rABC set-up with the following coordinates on the 60-minute chart: A=435.31 (12/27 at 10:30 a.m. EST); B= 402.08 (12/31); and C= yet to be determined. C will of course migrate higher and become a moving target as TSLA ascends toward 510.14, but I would suggest pulling the trigger on a relapse to X only after TSLA has traded 508.90 [note: corrected from 497.60] or higher. In this case we’ll assume a second attempt, and even a third, if the position gets stopped out.  On the first try, cover 100% of it at p. But if another opportunity trade materializes (irrespective of whether the first has produced a profit or loss), take half off at p, 25% at p2, and the last 25% at D.  Initial theoretical risk for these trades would be about $3300 on 400 shares. The potential gain on try #1 is $3300; and on try 2, about $6000. If the position is stopped out for a profit on #1 and the second try gets to D, the gain would be around $9300. _______ UPDATE (Jan 12, 10:14 p.m. EST): The rally sputtered out at 498.49, denying us a chance to get short at the promising Hidden Pivot resistance identified above. We’ll back away for now. _______ UPDATE (Jan 13, 15:55 p.m.): TSLA’s pop through so clear a target as 510.14 borders on psychotic. No rABC trade has triggered, but I am no longer recommending the short. Note: When a stock blows past the perfectly good target of a large pattern, I use whatever smaller pattern is available at the rightmost edge of the chart to project a new target. In this case, it’s 532.07, a Hidden Pivot that is short-able, even if the task is becoming somewhat labor-intensive. The stock can also be traded rABC-style with a bullish bias until 532.07 is reached. _______ UPDATE (Jan 14, 7:35 a.m.): The stock has gone as high as 542.75 this morning ahead of the opening, extending one of the most spectacular — and devastating to bears — short squeezes of all time. A point-and-figure guru I know says TSLA could hit $1000. In any event, there’s little point in trying to get short at targeted tops unless you’ve been long the rallies to them. _______ UPDATE (Jan 14, 10:12 p.m.): The 569.59 target shown here looks like it has close to zero chance of not being fulfilled. A pullback on Wednesday to the red line at 521.23 would trip a ‘mechanical’ buy signal there, stop 505.11. _______ UPDATE (Jan 15, 5:31 p.m.): This started with a just-for-fun-trade, but it would appear that I am now knee-deep in it, so we’ll pretend the 521.23 bid was filled.  The stop will remain at 505.11, and I’ll be as interested as you to see whether this ‘mechanical’ trade works. If not, in theory at least, a second buy signal would trigger at 496.77, stop 472.87. _______ PENULTIMATE UPDATE (Jan 16, 8:36 a.m.): The 521.23 buy was stopped out by a hellacious plunge overnight.  It triggered the second mechanical buy noted above — at 496.77, stop 472.87. I am leaving TSLA on the touts list because I want to see the little POS redeem itself, but it will come off when the trade is either stopped out or hits the original ‘D’ target at 569.59. _______ UPDATE (Jan 21, 7:30 p.m.):  Today’s island reversal has further shortened the odds that 569.59 will be reached. I am going for broke (i.e., ‘D or bust) with this trade just to make up for the initial stop-out. Netting out the initial loss on 400 shares of around $9600, an exit this time at D on all 400 shares would produce a gain of about $19,200. Margined at 50%, the trade would have required an account with about $120,000 in it. The trade demonstrates, as I’d hoped it would, that mechanical entries are well suited to trading vehicles that have undergone violent price swings, the more violent the better. Our bid is placed at a level where the lunatics have already been disemboweled. Their pain is literally our gain. _______ UPDATE (Jan 22, 10:00 p.m.): TSLA reached 569.59 enroute to an intraday high at 594.50. This would have allowed traders to exit the position, which was spelled out on January 16 (see above), for a theoretical gain of $28,800. It also activated a new target at 637.50 shown in this chart.  This Hidden Pivot looks likely to be reached because of the way buyers impaled the pattern’s 563.88 midpoint pivot, but also because the pattern itself is well formed. 

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