Thursday, February 23, 2017

Superior Profit Analysis of Tesla after Feb 2017 Earnings

From the desk of Sagar Nandi and Superior Profit

Superior Profit Analysis of Tesla after Feb 2017 Earnings

​Tesla had a stellar performance in last one year. Going up by 53% while SP 500 (SPX) went up by 21% in same period.

Out of that solid TSLA up move, last 3 months has seen a growth of 43%. SPX increased by only 7% in that period.

This lead to the quarterly earnings announced on 22nd Feb 2017.

What about so called experts' views after earnings data came out? Several of them came out with positive comments on Tesla like Baird's comment (seen from Thomson Reuters News): "Tesla Energy's potential is still undervalued", "Tesla suits the Made in America Theme ..." etc. And even went on to raise the price target of Tesla to 368. Tesla Close don 22nd Feb 2017, after earnings result was announced, at a price of 273. Huge potential upside - isn't it?

​All these may lead a Superior Profit Investor to buy Tesla now. Not so for Superior Profit Investors. Why?

To start with, Superior Profit Investors are not lured by news events to buy at the top. Following Superior Profit Way, they would have taken a Long position in Tesla many months ago. And they would book profit or protect profit at current levels. Tesla is currently at CUE Pendulum High level now - too high a price to enter Long. Superior Profit's optimal place to enter Long Term Investment is at Pendulum Low Level. ​​

Secondly (and secondarily; as Superior Profit Investors prefer to do their analysis rather than relying on others' estimates), though some analysts upgraded Tesla, the current target price of Tesla based on aggregate analyst estimates is about 245, which is about 10% lower than the current price. Current aggregate analyst recommendation is Hold and not Buy or Strong Buy. Also, though Tesla Q4 Revenue was somewhat above expectation, Q4 EPS came quite below expectation, and turned negative from positive.

Thirdly, as seen from the CUE Line Chart of Tesla using Weekly interval, it is at a resistance price zone and not at a support price area. This multi-peak resistance area is not a time to take a Long position in a Stock.

Finally, when we look at Tesla using CUE At  A Glance view, which combines Weekly Backdrop chart with Daily Hop On Template, we see several indications of not going Long. And probably even signs to take a Low-Risk Short position in Tesla right now. Why so?

In Superior Profit Way of Trading Profitably, Fake Breakouts at CUE Memory or Watermark levels accompanied by Heavy Activity often gives us a Low-Risk Entry Point. Weekly Backdrop chart of Tesla is showing such Fake Upside Breakout. What's more, the Fake Breakout is happening at the same level where CUE Bearish Headwind foretold a sharp drop in Tesla around July 2015. 

In summary, what is our view of Tesla for those holding a Long position? We suggest you book some profit. Or, at a minimum, tighten Stop.

In Superior Profit Way, we only take Low-Risk Trades that also have High Probability of success.

​If you decide to Short Tesla at the current price, you might book or protect profit using CUE Protection price level once the Risk Distance ( the difference between Short Entry Price and Stop Price) is reached or if Tesla hits a Support Price Level after your Short Entry.

Where is the current Stop Price level for any Short position in Tesla? CUE System Traders use CUE Protection level for deciding that. In the last up move of Tesla that started in Dec 2016, this same CUE Protection let Superior Profit Traders hold on to Tesla Long position for the long haul and get a very significant profit while protecting it along the way with Stop orders. This same CUE Protection indicator may now be used for the Short position as indicated in the CUE Hop Off Template chart.

There you go. With Superior Profit analysis of Tesla, right after its earnings announcement on 22nd Feb 2017.

Our traders share such trade ideas regularly in our Traders Community (in forums including Trade-Ideas from Superior Profit, Graduates-Club, the invitation-only club for traders from around the world, etc.), and we discuss them frequently in our Live Classes. You may check those out. They are open to the public for free. As a Superior Profit's way of saluting the serious trades from all over the world.

Trade Profitably!

Sagar
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