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Chart of Day: A Higher Risk Trade Opportunity with Tesla

Feb 28, 2017

Tesla (TSLA) hasn't exactly been a great place to invest these days.

The other night, Tesla beat sales estimates by $100 million.  It even saw global net orders jump 49% year over year for its Model S and X combined.  The stock even began to jump, gaining nearly 3%.  The next morning, reality hit.

What traders managed to ignore was the fact that the company had a nearly $1 billion cash burn rate, a number that is only set to rise as the company rolls out even more growth initiatives.  Other traders ignored what some analysts called a “phantom beat,” given the exclusion of the SolarCity acquisition costs from estimates. 

On that realization, TSLA slipped $13.50 and then fell even more after that.

However, traders look to be stepping back into the trade, as the stock catches support at the 50-day moving average.  SHojld that hold, teh stock could bounce back even more than it did today.  One way to consider trading it is with the TSLA March 250 call up to $8 and or the TSLA April 250 calls at market prices aboe $12.50.

Or, you can even sell a put option here by selling to open the TSLA April 250 put for a credit of $14.

 

Chart of Day: Adode (ADBE) Exhausted, Ready to Reverse

Feb 27, 2017

After a beautiful run north, shares of Adobe (ADBE) look to have exhausted at current prices. Since 2014, the stock has a history of putting in a higher high above its 50-day moving average, pulling back to test it and then running a bit higher. With the stock now oversold on Money Flow, MACD and RSI, a retest of the 50-day is now overdue.

Consider buying to open the ADBE April 2017 120 put at market, and, or the ADBE April 2017 115 put at market as well.

Chart of Day: Century Aluminum Pays on the Short Side, too…

Feb 23, 2017

Just days after banking a win on the CENX stock, we noted the following on the night of February 20, 2017:

As much as we’ve enjoyed watching the price of aluminum soar in recent months, we have to be smart about the trade. On December 20, 2016, when we first spoke about the potential of Century Aluminum (CENX), it traded at just $8.55 a share. It’s now up to $15.25 where it’s beginning to slip from its highs. Even Williams %R, MACD and RSI tell us it’s time to pack it in and take our gains here.

Even the Dow Jones U.S. Aluminum Index is beginning to turn lower. The last thing we want to do is be caught with long positions when it all comes falling down. But we’re not done with CENX just yet. We may be taking our longs off the table, but there’s still a great short opportunity here. In fact, if CENX breaks down from here, it could eventually retest near $8.43. One way to trade that potential is with the CENX June 15 put up to $2.55 and, or March 2017 15 put up to $1.30.

When the market opened the next day, the CENX March 15 put traded 90 cents. It’s now up to $1.84. Sell to close half. The June 15 put traded around $2. It’s now up to $2.26. Not a big gain yet. But give it time.

Chart of Day: Never Fear Chaos... Buy it.

Feb 22, 2017

Sometimes, to make money, run into chaos.

On February 2, 2017, DSW Inc. (DSW) was sitting at bottom of trend, having its back-end handed to it in a tough retail environment. The fearful sold. The brave ran in, as we recommended. Technically, as it began to recover on reversing, and very oversold RSI, MACD and Money Flow, as well as with Williams’ %R, the stock was ready to bounce. Since hitting $20.88 on the day of recommendation, the stock is now up to $22.07 and ready to refill that bearish gap around $25. Once it breaks through its 50- and 200-day moving averages, it could take off big. We’ll still recommending a long position on it.

Chart of Day: Gains shouldn’t be this easy

Feb 21, 2017

Talk about easy.

On February 14, 2017, we noted:

After falling on earnings, shares of GIMO have become technically undervalued on our momentum indicators, including RSI, MACD and Money Flow. In fact, all three indicators are beginning to reverse higher as we speak. With a likely bearish gap refill at $43 at some point, near-term, we may be able to do well with the GIMO April 2017 35 calls up to $2.65 and, or the March 35 calls up to $1.60.

A week later, we’re already taking gains off the table, as GIMO jumped to $36.40 today. The GIMO April 35 call – which could have been picked up at $1.90 – now trades at $3.20. The GIMO March 35 calls – which could have been picked up at $1.25 now trade at $2.35. Sell to close half of each.

As the underlying stock begins to rebound, we’d eventually like to see a potential bearish gap refill near $45.

 

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