It’s no secret that the “Magnificent Seven” stocks have been a significant driver of returns to the upside in the indexes. I do, however, take issue with the notion that those are the only stocks pushing this market higher. Of the “Magnificent Seven,” there had been only one real laggard – Tesla.
But, in case you missed it, the electric automaker finally snapped out of its funk, and exploded higher in the past couple weeks. Those trading with me in the TheoTrade chatroom were able to capitalize on this move. Here’s how we did it…
How Tesla Finally Got It in Gear
I’m going to walk you through the technical components of this trade, but first, I want to address the sentiment surrounding Tesla over the past few months. Granted, this isn’t something that can be taught outright. Rather, it comes with experience and observation.
Tesla was notably lagging its “Magnificent Seven” peers, which led many pundits and analysts to propose dropping the stock from this particular pantheon of mega-cap stocks. This type of sentiment is a classic contrarian signal – the crowd was ready to give up on the stock, but instead, it was the right time to pay attention.
Anyhow, the chart above displays a rounding bottom formation with plenty of time equity. I alerted traders in chat to the unfolding breakout on July 1, when I stated, “Buy TSLA at current price levels with a stop loss on a close below $197.88. Target $265 to reduce.”
The swing trade took, and Tesla soared up to $265 by July 9. This gave traders a 26% gain in just over a week. Initial profits were captured, and stop losses were raised on the remaining position up to a close below 231.26. I share these types of setups all the time, and sooner rather than later, I’m going to have an awesome way to share them with you in an efficient manner.
Until next time…
