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Stock of the Week #1: Tesla, Inc.
A new series for y'all... let me know what you think.
Learning how to analyze & learn from winning charts is one of the most underrated skills any trader can develop. Repeating this action over and over again will help you spot winning charts in real time BEFORE they go to make their massive runs. One way I want to continue to master this skill as well as facilitate it to others is by sending out a markup of one of the names that stood out to me the most during the past 5 trading sessions:
This week’s Stock Of The Week is Tesla, Inc:
Over the past couple of months, Tesla has been one of the strongest and most liquid stocks. It recently broke out of a 15-week double-bottom base at the traditional buy point of $207.79 (which it gapped above).
Here are the key points to recognize:
1. Undercutting the prior low in the Double Bottom base shakes out the weak holders. Tesla does this on April 20, and bottoms 5 days later.
One thing to note as price conoslidates is that average volume is decreasing. This is telling us that distribution is not overwhelming even as price decreases.
2. After building out a solid pattern under the 10EMA, TSLA then triggers an Oliver Kell Wedge Pop. This is potential buy point #1.
You could have put a decent position on here with only 4% risk below the prior couple days’ consolidation. Solid R/R.
3. 7 days later, Tesla retests the Wedge Pop and then follows back through to the upside with some force to reclaim the 10/20EMAs. This offered potential buy point #2 or an area to add shares.
Risk here to the prior consolidation lows is again about 4%. Another point here is that the RS line reclaimed it’s moving average, a short term strength signal and one that would give extra conviction to buy during that session.
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4. Tesla reclaims the 50DMA 3 days later. This is another area to put on a starter position if aggressive.
One thing to note over the coming sessions is how volume increases once price has reclaimed 50DMA. This is a buy signal for many institutions and long-term trend followers, so it makes sense to see follow on buying especially as the market rallied.
5. Price retests the 50DMA/10EMA confluence and provides an incredible point to add shares or start a position if not already long.
In hindsight this is the point I should have never missed in TSLA. Incredible action here and one of those trades you want back.
6. Only a couple of sessions later, TSLA gaps above the traditional Double Bottom buy point around $207.
I bought shares here this day and sold a couple days later, as I thought the name was ‘extended’ and was going to consolidate into the $217 prior high area. Would have been a much different trade if I was in at any of the prior 5 buy points :)
7. The strongest trends hold above a rising 10EMA. Let’s see what happens over the next couple of sessions.
If there’s one thing to learn from NVDA this year, it’s that the 10EMA can act as incredible support when a stock is trending. TSLA has found buyers in this area 2x in the same amount of days, so we’ll see how this ends up by this time next week.
I hope this has been valuable! I look forward to posting one in-depth dive a week.
Let me know your main takeaways ↓