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Trade Update: TSLA Getting Overheated


BotTrigger Trade Update: $TSLA Sold @ $269.42. This was actually a pretty tough call. I want to reinsure folks that there is NO hard sell signal on Tesla just yet. In fact, todays move is very strong and although we do have bearish divergence on the daily, it's still meaningless until we start seeing a breakdown in price action. In fact we're getting slightly bullish divergence on the hourly time frame with RSI. But these back to back bursts tend to give back at some point. So we're going to take the money and say thank you. Not a bad $70 gain since our $199 buy alert. Congrats longs!


TSLA hits a pre-market high of $275 & is down almost -$10. Pretend this happened intraday. This is yet another signal that a reversal / stall in momentum is getting closer.

More often than not, pre-market highs are usually tested at some point during intraday market hours. So we may see TSLA come back to the $275 level once more. We'll be watching the quality of the rally intraday. For example, if volume bars are strong during uptick then that suggest there's a high probability that $275 will be retested if not all together taken out sometime soon. Inversely if we see heavy long candle bars to the downside then tells us something else.

Short of a premarket new high getting reversed, 2.2 month long rally, & negative divergence showing up on the daily....we still don't have a hard sell signal on TSLA just yet. Regardless however, we'll be looking to sell our remaining position somewhere in this area most likely today. Why? Because $70 points has been good. This pre market reversal off the $275 level is the beginning of opportunity sellers showing up. Either way, we'll be following TSLA closely for when that hard sell signal does show up.

We'll update Members sometime today with our move.

--FEB 8 MEMBER ALERT-- (TSLA earnings date Feb 22 after market close)

Near Term Trend: Under pressure is our forecast

Intermediate Term Trend: Higher

Primary Term Trend: Higher

Tesla is now breaking out even further as we noted in yesterdays alert (posted below). What this suggests is that there's likely still more ahead on upside travel. Nearly all huge rallies will start to fizzle out by putting up a few more exhaustion bursts to the upside to corral chasers & help big boys get out higher. These bursts to the upside always feel like the stock is invincible and on it's way to $1000 a share. As you've noticed, the largest gains made thus far have been by buying pocket lows on stocks that are in a confirmed uptrend. That's always been the best strategy. There's a time & environment to buy breakout stocks and then there's a time/place to be buying ugly sentiment around great stocks that have behaviorally been strong trending stocks. So there are some reservations that need to be considered as we get ready to sell the remaining half of our TSLA position. We are looking to trade out and then back in on a lower entry.

There are several disciplines of analysis we'll layer and look to in helping guide our trading thesis. Classic technical indicators are one, the BotTrigger algo-trend-signal is our most prominent, & the other we often look at is behavioral in..what does previous trading behavior suggest is possible in the current rally/trend.

When we look back @ the monster rally that transpired in February of 2016, TSLA rallied off the lows about +85% higher for nearly 1.9 months before topping out. That size & duration of that move tells us that TSLA is simply capable of that kind of reaction. Now running +85% from $140 is going to be a lot easier then running 85% higher from $200. We're definitely not saying that an 85% rally from the $200 mark is going to happen. Instead we're looking at the previous highs on TSLA to get a sense of where major resistance is, and where it's comfortably traded before pulling back. So here's a calendar mark on TSLA's previous highs.

2014 high was $291

2015 high was $286

2016 high was $269

So lower highs yoy. & we do have negative RSI divergence on daily. But the pattern cultivation that preceded this recent action suggest a firm breakout from the $200 area as it's now making it's 4th retest of the highs. Chances are that this next incoming high will be a new high over 2016. Why? A few things.

1) Because stocks rarely visit the top range of a giant consolidation pattern like this if they're not making their way there to take it out. Very seldom do we have 4 retests of the highs like this where that retest fails from breaking out. TSLA has been trading in a giant annual long darvas box

2) Secondly, when we consider the analysis of pattern-cultivation, we can see that the formation of the previous patterns has put in higher lows & on top of that higher low we have a giant long bullish hammer on the monthly chart off the February 2016 lows. That bullish hammer reveals itself overtime. What it's revealed is a complete rejection of the capitulation lows that occurred back in Feb 2016. That's an important signal. It shows that sellers were very aggressive and swung the stock as low as $141 & then that buyers much more fiercely absorbed the stock and brought it all the way back up all within the same month. That was big big money coming in off the lows and saying enough is enough. It was orchestraic & much more aggressive than the sellers. That move marked the bottom and caused a 2 month rally that went on for an +85% move to the upside. And then consolidated. There was never a hard top. Just a giant consolidation.

So these 2 factor alone tell us with a high degree of predicability that TSLA is 1) unlikely to revisit those lows and 2) that TSLA is most likley going to break out of it's darvas box thsi year in 2017. Let's take a look below at the monthly chart:

So we can see that we're on the 4th retest here. But as we mentioned from yesterdays post...we still have concerns that we want to draw attention to because there are still signals on the near term & intermediate term trend that suggest that this current rally could be getting tired. That doesn't mean it would be a hard top but rather that we may get another consolidation pullback of some kind that pauses the current momentum. Earnings is obviously the one catalyst that could change that tune. But we do have continued negative RSI divergence on the daily chart with TSLA. So we're getting new surge breakouts of higher prices but happening on lesser RSI momentum then the previous high. So very simply, negative/bearish divergence is when you get higher prices but lower RSI. When we start seeing this back to back, it typically signals that a top is right around the corner. We can see this on virtually every pullback that has occurred on TSLA or nearly every stock for that matter. Sometimes you'll see it on the daily and other times you might need to look at the hourly. Even better is when you get both the hourly, daily, & weekly chart all showing negative divergence in confluence.

Here we do have bearish divergence forming on the daily. Take a look:

Largely due to this bearish divergence, we're going to protectively be selling any moment now...most likely at the open tomorrow if we get a failed gap up or even a gap down for that matter. Again, although the trend is higher in the primary term direction, we want to actively trade in & out of this when the value proposition is high to be selling and extreme overbought readings and be buyers at extreme oversold readings. Even if we were to sell and watch TSLA run up higher without us, we would just patiently wait for the next setup.

We'll update members soon with our next move.


BotTrigger Trade Update: $TSLA looked great when we bought it at the $199 area. But right up here this is the area we want to be reducing. Yes, TSLA can gap up and make a run towards the $270 area and you might regret that you sold too early. But think of it this way...THE EASY MONEY on Tesla has largely been made. The easy money rally from $199 to to the $255+ area was the easy part...holding up here has less of an edge than when we bought back down near $200 a share. We have participated in the bulk of this rally & you can be sure that if we get one more gasp to the upside we will be sellers. We may actually sell our remaining half position at any moment this week or next. We're looking for one last momentum burst to the upside or confirmed breakdown from this current trend. Anyone who is leaning more conservatively might sell their position early around this area. We're starting to get bearish divergence on the daily chart time frame. What that means is that we're getting higher prices but with less buying strength than in the previous momentum surges we've seen. Also, there are a few things to consider when you compare this rally to the Feb rally of 2016. In 2016, from trough to peak the rally lasted for 1.9 months long & went 85% from the lows. Here this current rally has gone on for longer at about 2.2 months long but put up about 42% in gains. So yes you, there might be more upside gains left but consider that TSLA is also getting tired as we're already 2.2 months into this rally. So it's prudent to consider that the party may be running course.


Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”

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