This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Slow Down -- Tesla Curves Ahead

However, just because a hedge fund manager is among the brightest on Wall Street, doesn't mean he or she always get it right. This is especially true during wild short-term swings, as demonstrated in Tesla's recent trading sessions. However, a short-seller's mistake doesn't necessarily equate a terrific buy for an investor.

If you're quick on the trigger or willing to accept gigantic volatility, you can profit from short squeezes. Otherwise, more often than not they become money losers for short sellers and investors alike. Short sellers buy to cover to lock in gains or stop losses, and late to the show momentum buyers can wind up buying at the top of the move. Look at the volume of the 30-minute bars in Tesla and you can see that the majority of volume for Thursday and Friday occurred during spikes followed by weakness.

Another great example of a recent short squeeze is First Solar (FSLR).

In early April, First Solar's shares spiked higher from a short squeeze. Looking at the 30-minute bars on the chart, it becomes clear that chasing the stock only works if you're exceptionally fast at exiting or if you're lucky and the stock has follow-through you hold through retracements. The buyers who waited until the next day to buy First Solar saved over $2 a share.

If you want to buy Tesla as an investment, make certain you're buying on a dip. Consider selling a relative number of put options to collect on the high volatility, too. Don't let the price action enthusiasm to overcome sound logic. Otherwise, you may have the keys to an investment that has lost before it crosses the starting line.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TSLA $222.56 0.00%
AAPL $94.19 0.00%
FB $118.06 0.00%
GOOG $695.70 0.00%
YHOO $36.00 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs