Warrior Trading Blog

TSLA takes $350 | Mike’s Trade Recap

What’s up guys? Well, we’re here on Friday, closing up the week. Unfortunately, we haven’t really seen much of the momentum return this entire week. It’s been really choppy, just a lack of follow through all around, and really tough to get a trade started.

 

We’ve had a lot of the right ideas, been kind of chopped out before the real move actually takes place, and then when that does happen, it doesn’t really get that continuation that we’re ultimately looking for.

It’s again, one of those times where we still just have to remain very patient, trade very conservatively and play a lot of defense until we can get a confirming factor of the momentum. Until that happens, again, we’re going to have to sit very patiently and really wait for those really quality setups.

But right now guys, it’s tough. There’s no denying that. I’m right on the week, and we’ll have to come back strong next week and try to have a really good start to the month. But until then, again just keep grinding along and be cautious and patient.

Let’s talk a little bit about today’s trade, which was Tesla in today’s recap.

All right guys, let’s do a recap here from today’s action. Tesla, obviously the one in play today. I tried to trade it once, and I took a stop on it. I got popped out on a quick uptake here, right around 10:15 AM or so, after we were failing the breakout. You know what? Usually I wouldn’t have this tight of a stop, but on Tesla on a day like this, it was already somewhat of a risky trade, and I just didn’t really want to give it too much room.

Let’s break it down a little bit and tell you what I saw. First off, take a look at the daily chart here, you can see we have a very nice ascending support line. This is what we were really focusing on. Is that, we had some very nice interactions on this ascending support line over the last couple of years here, and we were breaking it, or attempting to break it this morning, and that’s the trade that I was really looking for. Is that, if we could break down below that point, we had a really nice pocket down towards 252, and this afternoon we’re now breaking it, and the selling is now coming in.

But that’s the trade I was looking for this morning, and we had the technical setup to do it, right? We had a catalyst, the FCC hit the company with fraud, it’s a big catalyst. So that aligned with the technicals, really made a great potential opportunity here, and we wanted to watch it very closely.

Again, coming into the open, we had this big gap down yesterday after hours, and we were sitting right on that trend line, and that former gap fill point, is that white dash line. But a lot of support inherent through here. It was a heavy duty zone that was definitely going to put up a fight, but if it got through, it would probably continue, and now it’s doing that, right? It’s continuing to the downside.

Here’s what I did this morning. I wanted to sit tight and see if we could break down through this level before I attempted to take a trade. And the reason I wanted to do that, is just because of the way Tesla trades typically. It likes to … the dip gets bought on this, at least initially, and we saw that happen today, right? It got bought up right out of the open, big spike here, then it got rejected.

I saw this right here, this secondary move sort of rolling over. But due to this big support zone, I didn’t want to short into that right away. I wanted to see if we could actually clear it. So I sat tight on this for quite a while, and actually did become interested until around 10:15 AM, and I’ll show you why.

If we dial into a much faster timeframe chart, it allows us to see the price action, a much more granular level, which definitely gives us more of an insight to the sentiment of the name. If we look at this, and we start to see what was going on here around this 275 and 273 level, I started to get kind of interested in potentially initiating a short-sided trade on it because the breakout wasn’t really happening, all right?

Here’s the big first reversal that we see. We get that hold of the trend line, which is right to the penny there, it bounces back up. Then right in through here, I started to see some action that was interesting, and most of it was within the level two, in a sense that I could see that every time it would try to move to the upside, it would get hit back down, right? The pops were being sold on this several times, so I waited to see how many times it would get sold.

Then once we pulled back off with this move right here, we basically made sort of a double top, if you will, right in through here, and we pulled back and we got back below 273, I said, “All right, I’m going to take a trade on this.” And yes, it is a very risky trade for a couple reasons. Because we’re basically consolidating here after a pull back, and we’re coming off a big support level.

The other reason too, is we are above [inaudible 00:05:17] in the 20. Typically, I won’t take a trade like that, but factoring in the news, the gap down, we hadn’t really pushed higher. We pushed higher here, but we gave it all back. The price action here tells me that the stock is still relatively weak, and if it’s not holding the move back up, it’s likely we’re going to see it move lower.

As we got in through this 10:15 point right here, I took a trade at 273.30. I got short. 273.30 and my stop was initially going to be up here around 275. But as they started to come in, we started to break down a little bit right here, test view app, we were holding, and we just kept holding in through here, and rejecting that 273 level. And I was okay, because I break even the whole time, or better, at 273.30.

Then we got this uptick right here, and I said, “You know what? I don’t like the way this looks because it looks like it’s now trying to resolve off the view app.” A little bit of volume came in here at the bottom, spiking it up. And I pulled my stop down. I said, “All right, I’m out of here at 274.” I lost $300 or $400 because I only had a 500 share position to get started.

I was going to add if we got back below the 20 and the view app in through here, but we just never did. I stopped out with a 0.70 loss, about a 0.70 loss. And then, you could see literally seconds later, it rolled over and crashed, right? A couple of points to the downside here.

You know, right idea, just timed it a little bit wrong. I guess I paid for having a tighter stop, where usually my stops are way outside, way wide. But it’s Friday, I didn’t really want to give too much back, if the trade didn’t work. I knew it was a risky trade. But just one of those things where the trade didn’t work, or the timing was off, and that’s okay. We had the right idea, and it’s going on this afternoon, to continue to make the move that we wanted, right? It’s now into this pocket, and it’s really rolling over here. Really nice move.

This is the move we were looking for guys, and unfortunately weren’t able to be a part of it today, but you know what? It’s okay, it really is, and you just have to understand that the market’s tough right now, and you gotta be able to just keep grinding through it until the real momentum returns.

The truth of the matter is, is that Tesla this morning with this chop, was really tough to trade either way, right? It’s just kind of range bound. There’s no real momentum. We’re getting it now, but this morning it was tough to come by.

I was really confident that since we were failing this move back higher here, it was really going to roll over, and the sellers were really going to pile into this thing and drive it down hard. But unfortunately, it happened a little bit later. Just mistimed it a little bit. The technicals were right, idea was right, but just timing was just a little bit off.

Unfortunate, it’s the way to end the week, but we’ll come back next week and get some good trades. It’s definitely been a tough week. Just haven’t seen much continuation, haven’t seen much momentum really, at least in the large caps, and just ebbs and flows of the market.

You’ve got to stick with it, and keep doing what you know works. Don’t switch strategies or don’t switch approaches, because it’s just not working for a couple of weeks. We know the strategy works, it’s proven, it works, it’s just one of those times in the market where trading overall is difficult. Just play a lot of defense and be real cautious, and trade definitely a little bit more conservatively until we start to see the real momentum return.

Anyway, that’ll do it for today guys. I hope everyone has a great weekend and we will see everyone back here first thing Monday morning.

Oh hey, I didn’t see you there. Well, I was just working on the dream board for my next home run trade. Hopefully it comes soon. Until then, make sure you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing.