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  • Writer's pictureT. Livingston

Tesla Setting Up Well

Automaker Tesla is setting up quite well for a sustained move higher on its' weekly chart. After monster gains in 2020 (see prior trades here and here), Tesla has been basing over the past few months. This can be considered normal action considering Tesla's substantial move over the past year. I really like the way it has been consolidating on low volume over the past seven weeks, indicating a lack of distribution.

This morning, Tesla gapped up on news it is set to join the S&P 500. I never like to buy a huge gap up like this, as rallies often fade as the day goes on. I took a position in Tesla around 3pm today as it moved closer towards its' 50-day moving average. If TSLA can take out some more overhead resistance and overall conditions are favorable, I may add to my position.

It is somewhat concerning to me that today's close was lower than the open. However, with a stop loss in place, I believe the risk to reward makes this an appropriate play. If Tesla falls towards its 200-day moving average, I'll take a small loss. If it begins a strong multi-month uptrend, I'll profit handsomely. That's really all we can do as traders. We'll never be able to predict the future, but we will always be able to look for situations where there are opportunities to make multiples of what we risk.

Full Disclosure: Tesla is a stock I currently own.

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this post constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this blog or the associated Twitter and Instagram feeds. The stock or stocks presented are not to be considered a recommendation to buy any stock or stocks. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.


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