Is Tesla, Inc. (NASDAQ: TSLA) a buy at a discount right now?
The stock was down almost 10% yesterday after announcing earnings…
The company has also cut its vehicle costs which is impacting its bottom line.
And Elon Musk said the company will continue to cut costs in an effort to make its cars more affordable and drum up more buyers.
So is the company doomed to drop lower as margins are hurt?
Or will traders’ love of Elon and Tesla (myself included) be enough to hold the stock up?
But instead of trying to guess the future, I have a better plan…
Is Tesla A Dip Buy?
I don’t like to play guessing games.
And trying to guess the bottom in a stock that’s down on earnings is anyone’s guess…
When it comes to trying to dip buy ‘real’ stocks that are down on bad news or with the overall market — I have a specific approach…
Because I don’t want to get caught trying to buy a falling knife.
That just leaves you hurt, bloody, and angry.
So here’s what I like to do…
I wait for the stock to establish a base or a bottom over a few days, then break back out…
Yesterday was the first down day, so the bottom is undefined. Nothing is stopping it from going lower today or next week…
That’s why I like to see the stock consolidate and establish a low over a few days or weeks that I can use as a risk level.
Right now the stock is just dangling out there in no man’s land on the chart…
TSLA chart: 6-month, daily candle — courtesy of StocksToTrade.com
And this is an ugly downtrend over the last two days…
TSLA chart: 2-day, 5-minute candle — courtesy of StocksToTrade.com
So I wouldn’t be in a hurry to jump in. First, watch it for consolidation and sideways action.
I also like to look at whole dollar levels that can act as support.
Yesterday’s low could end up being the bottom, but without waiting for a stock to prove itself, you’re playing a risky guessing game.
Learn how I approach trade ideas and get more of my lessons during my Market Update videos three times a week.
Plus, when you get access, I’ll give you my next big prediction for TSLA and five tiny stocks you can watch along with it!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade