Fall and Rise – Trading Tesla Stock | Podcast Episode #80

0:00
Hey everybody, this is Ryan Mallory with Swing Trading the Stock Market. What’s been the big stock that everybody’s been talking about? I don’t know, for the past couple of months. Is it Apple? Maybe, maybe it’s had a pretty good run. Is it Facebook? No, not really.

0:16
Is it Netflix? Nah, Disney, Walt Disney? Yeah. So there, there’s been some excitement about the whole Disney Plus thing and its impact on Netflix, but no, it’s Tesla symbol TSLA have to be living under a rock, not to know that.

0:34
But yeah, Tesla, this is the stock that everybody’s been talking about because it’s literally gone parabolic over the last couple of months. I mean, take it, take it this way. In the beginning of December, it was trading at $350 a share. This week, as a Tuesday’s close, it was trading almost at $11,000 a share.

0:57
So that means if you had options, you probably made some amazing gains on it, assuming you were buying calls and not puts. If you were just buying equities, still, you, you could have tripled the value of your stock. So this is a podcast that I’ve really been looking forward to doing after just seeing the the crazy price action, especially with the stuff that we saw this week.

1:18
What we saw this week was just absolutely bonkers. To put it in perspective, this, this stock was trading in the high sixes at the beginning of the week. By Tuesday, it was trading at almost $1000 a share. In fact, it got as high as $968.99 a share.

1:34
But no doubt, I’ve, I’ve been looking forward to doing this podcast since the events of this week have been unfolding because I felt like it’s a really good topic to talk about. And, you know, right now I’m doing this, it’s late at night, the, the futures are, are Doing their thing and it’s nice and quiet.

1:51
I, I have a clear mind when I can do it in the evening during off hours. Yeah, I got to edit. I don’t enjoy the editing part and I can’t really hire somebody to do it because I kind of know how I want it done. So I ended up doing it and editing probably takes 2 to 3 times as long as it does to record one of these things.

2:07
But to make it worth it for me. I like doing these things. I like pouring myself a, a glass of, of bourbon. I’m a bourbon guy. I don’t, I just don’t drink, you know, like Canadian whiskey or Irish whiskey or just plain whiskey. I, it’s got to be bourbon for me.

2:23
So tonight, the drink is 4 roses, small batch. Pretty good. for, for sipping, it’s, it’s an excellent bourbon. Uh, I get the big ice cube, like a 2 inch ice cube. I put that into the glass, and I just pour the bourbon on top of it. So it’s, it’s good.

2:39
Yeah, one of these days I might, I might man up and, and, and get a drink that has no ice in it, just drink it and eat, right? I mean, sometimes I’ll do that, but I, I like, I like having a nice size ice cube in there. It gives it a little bit of delusion, makes it a little bit easier on the palate. Anyways, it’s not a bourbon podcast, but I like to tell you guys what I’m drinking.

2:57
So 4 roses, small batch. Good bourbon. I like it. Uh, a couple of others that I like, Black Feather. I, I think both Black Feather and 4 roses, and this is in an ad, they’re not asking me to put this in here. But hey, if they want me to, sure, I’ll do it. But I, I just like talking about bourbon anyways.

3:13
But, um, price points pretty good on those things. I think I pay like $30 or something for each of those. Um, but yeah, check them out. Hey, if I get compensated for it, that’s awesome. I don’t even think they pay me that much anyways if I did do it. I don’t, I’m not that special. Uh, I’m not like these women on Instagram that, that have like 100,000 followers or 200,000 followers and they say something and people go out and buy the products.

3:38
I doubt any of you guys are gonna go out and buy my bourbon, or not my bourbon, but the bourbon I’m talking about. Uh, any case, all right, let’s, let’s get back on the topic, OK? Because the podcast is about the fall and rise of trading Tesla stock. Why do I call it the fall and rise and not the rise and fall?

3:53
Well, because it’s kind of been falling over the years and now all of a sudden it’s rising and it’s yet to really fall yet. I think that will eventually happen here. I, I look, it’s Cinderella story right now. Everybody’s hyped up, everybody’s talking about the next model that’s coming out, the truck that I don’t know, it looks like something from a, uh, Back to the Future movie, but I really just care about the chart, the price, the action, OK?

4:16
Let’s talk about that. So what’s been going on? Well, I’ve traded Tesla over the years, and to be honest, it’s always scared me to a certain degree. There’s been times where I’ve missed out on good trades on the stock simply because I was a little bit leery. I think it was in 2018 where Elon Musk talked about 420 funding secured going private.

4:38
And the whole stock just like went bonkers. The SEC got involved. He got caught smoking weed at one point on a Joe Rogan podcast, which by the way, that’s also a really good podcast. I don’t listen to all the episodes, but when he has an interesting person on there, I’ll definitely listen to it. So he created a lot of volatility in the stock.

4:55
It scared me quite a bit, if I’m just being completely honest, it scared me a lot. I held off on it. At that time, I didn’t have a do not trade list, but I did keep a mental do not trade list. Tesla was definitely on there. But I have traded it a few times, you know, here and there, and for the most part, yeah, there’s been times where I’ve lost money on the trade, but I, I’d say by and large, I, I tend to make money when I trade the Tesla stock.

5:17
I mean, I, I, there’s some trades that specifically come to mind. You can go to my past performance on my, uh, website, shareplanner.com, and you can see exactly how many times I’ve traded it over the last 10 years. But, uh, there’s a couple of times that I have in my mind where I know that I’ve lost money on the trade, but overall, It’s, I think it’s been pretty good to me.

5:35
It was good to me today and we’ll get to that later, but I’ve kind of avoided it for the most part unless it’s just a really cut and dry trade setup, just an unbelievable can’t miss trade setup. Man, I tell you, you guys, some of you guys who actually bought into this or have been holding it for a long time.

5:52
I have a friend here locally who, who’s talked to me a lot over the years about Tesla and how much he likes it, how he’s been a long-term buying, buy and hold kind of a guy when it comes to the stock, he’s gone through the, the valleys and now he’s experiencing the peak. My friend Ethan Sansoni, he’s been holding this thing since like the 200s and it’s done really good for him in the past week.

6:12
So I’m, I’m proud that he was able to see the, the fruit of his labors or the fruit of his patients because he’s been very patient with the trade. So you had the crazy history behind the stock, and then now you have the breakout. And the breakout really for me, if I’m looking at a multi year chart, The breakout Took place at around $372 a share.

6:36
And what’s crazy about that is is that I was, I was looking at that back in mid December and, uh, I just wasn’t quite sure I was ready to pull the trigger. It had kind of made a hard run up to that resistance level at 372 and it was a multi year resistance level. Again, I don’t have a ton of trust in the stock, but, um, you know, the stop loss probably would have had to have been about 15 percent.

6:57
So I was a little bit, a little bit uneasy about it, OK? Well, the thing blows through it and then the rest is history. It goes from 372 up to 969 a share. Guys, that was. I’m kicking myself for missing it, right? And not even missing it.

7:12
I didn’t even miss it. That’s the thing. I didn’t even miss the trade. I saw the trade. I saw it coming. I just didn’t like the risk reward on the trade. I showed a little bit of maybe too much prudence because granted, if once that thing really took off, it was amazing.

7:28
And, and, and, and you guys know the rest of the story, goes up to $969 a share. I’m on the sidelines watching it, right? But until today, so today, I didn’t make, you know, the double or triple like a lot of people have who’ve been holding this thing for a long time. But I tell you what, I bought the stock at $710 today, came back onto a pullback.

7:48
I was using Fibonacci retracements, so that’s basically, it breaks up pullbacks that tend to have. using Fibonacci math. One of the big ones is the 38.2 retracement level. I know I might be talking some foreign language to you folks that that aren’t familiar with the Fibonacci.

8:04
I would just, for the sake of trying to keep this thing relatively short, go check it out on Wikipedia. It is pretty self explanatory, but I use a 38.2 percent pullback level. It didn’t actually get quite to that level, but I saw some accumulation, saw some volume that was starting to pour into it early on this morning.

8:19
I knew. OK, this thing’s probably gonna run. It, it, it’s setting up for that. It didn’t pull back really hard this morning. It was instead just consolidating right where it opened up at. I thought there was a good chance it was gonna run. So I put a stop, stop order at $710 a share, immediately gets filled.

8:39
And this thing just keeps on running, running, running, running, running. So I got in at 7:10 and it makes us run. dude, I’m telling you, this thing gave me flashbacks of the 1990s. And yeah, I, I traded in the 90s. I’m, I’m 39 years old, I’ll be 40 this year.

8:54
But yeah, I, I traded in the 1990s. I was, I was in my teenage years, but I mean, and it gave me. be a horrible impression of what the stock market was. I, in my teens, I thought the stock market just went straight up every day. But that’s what Tesla’s been like these, these recent days. And, and when I was trading it today, my gosh, it was like I was up 10 percent, like an hour into the trade.

9:13
I’m like, this is crazy. I mean, just totally bonkers. I was thinking maybe if I get 3, 4 percent, I thought to myself, maybe I’ll swing trade this thing. I kind of went into it. I even the chart that I send out to the subscribers of the trading block. I said I was like, this may be a day trade. I’m not quite sure I even put the day trade rubber stamp on there.

9:31
I wasn’t quite sure I wanted to make this a swing trade, basically because I wanted to sleep at night. So I, I got into it. I think I had a, a stop loss at around 6:59 a year, and it, and it, and it took off, man. I never even got close. I, I don’t even think I was ever down on the trade. As crazy as it sounds, I was never even down on the trade, and that’s, that’s kind of hard to do.

9:50
Or at least I never saw myself down on the trade. It seemed like as soon as I got in at 7:10, the sucker was at 7:14, 7:20, 7:25. I went to the bathroom and I came back and it was at 7:47. I mean, again, just like what it was like in the 90s, except the only thing with the 90s, it, it wasn’t just like one stock that was doing this kind of crap.

10:11
It was every stock doing it. You had, you know, Qualcomm, you had Microsoft, you had stocks just going absolutely crazy. So I get in at 710, it goes up to like, I think I saw it go up to like 760 and then it started pulling back. Let me tell you, I’ve done a lot of trading over my years.

10:28
A trade like this, I really don’t enjoy it, even though I never was even down on the stock. I don’t enjoy it that much. It’s just, it’s so crazy with the price moves and stuff like that. You had to keep such a close eye on it, but it went up to like 760s and then it pulled back. I sold, I sold a third of it for $740.

10:45
I immediately felt better as soon as I did that. It’s like, OK, at least a third of my trade is going to be profitable. OK, I don’t know if it’s gonna go straight back down or not, but nonetheless, I, I did make a little bit of coin off of this trade. But then it goes all the way up to like 790 ish. I’m gonna say ish because I don’t know what the exact high of the day was, but it was pretty amazing.

11:05
And then I started pulling back. I got out for another 3 of my position. I got out that third of the position at $786 a share, took home 11 percent on that. Then I went ahead and raised the stop loss. I, I told you earlier, I think my original stopless was like $659 a share, or that’s where I would get stopped out at.

11:23
I moved it up to $760 a share. There was some support underneath on the 30 minute chart that I said, OK, if it breaks $760 I just want to be out. That would give me another 7 percent profit on that final third of the position. At around noon, maybe 1 ish, it, it took out the 7760 level.

11:40
So I walked out with 7 percent on the last third. So 1st 3rd, I made 4 percent. And I’m not giving you exact numbers, but it’s like 4 percent, give or take like a few 10th of a percent. I think it was over 4 percent for sure. Second, a lot of, or my, my, the 2nd 1/3 that I closed out, that was like an 11 percent profit and the last third was 7 percent.

11:59
So, I was thrilled about it. I thought there was actually a decent risk reward trade, doesn’t mean I enjoyed the trade all that much, even though it was profitable because it was a little bit, you know, much more stressful of a trade than what I usually take. But nonetheless, it was, it was profitable.

12:15
I have a risk rating on every trade that I make in the trading block. It’s on a scale of 1 to 5, so it can be, you know, decimals and everything. It could be like a 4.2 or a 1.8. This one was just a 5.0. There was no way around that. But a lot of people, I mean, they’ve they’ve made good money off of this and.

12:33
A lot of them though, have been chasing the reward without giving any kind of consideration to the risk at hand. And for some of you, you did OK. You might have saw it at 700 or 800 and you’re thinking, oh man, this thing’s going to go to 1500 and you get in and, and you see it go all the way up to 969.

12:52
Hopefully you got out at that point because it’s much lower than where it peaked at, or at least peaked at so far. At a 20 percent decline yesterday, on, on Wednesday, a lot of people became instant bag holders who were chasing it in the 900s. That’s sad.

13:07
Even in the 800s, you became a bag holder. Maybe it resumes. I don’t know. The, the candle that you had on Tuesday was a very bearish candle because it shot way up and then it gave back all the gains and to settle right where it closed the day at. That’s kind of like a, uh, shooting star candle pattern.

13:25
Those are considered to be bearish. Bearish candles, if you use Japanese candlesticks on your charts, that’s a bearish chart, or that’s a bearish bearish candle. But you always have to play. Your trades with risk in mind. So if you’re buying at $800 or if you’re buying at $900 you weren’t trading with risk in mind.

13:45
Even if you bought at $650 or even $700 yeah, you might have made a profit if you, you were able to get out. But did you really pay attention to the risk on the trade? Doing this is as long as I’ve done it, I’m pretty confident to say, no, you were, you were not trading with risk in mind because where are you going to put a stop loss at this point?

14:03
This thing could, this thing vacillates so quickly that it could pull back. To $600 and then resume the uptrend, you, you get stopped out with a trade that you got in at $700 and you’re taking a sizable loss. So you gotta, you really got to put the, the effort into this to not let the opportunity for reward or for profits guide your decisions.

14:24
It should be risk that’s guiding your decisions. So going forward, where do we stand? If you ever wanted to know what the 90s were like, and I said this earlier, look at, look at Tesla, look at what the stock’s doing. That’s what a lot of them do. And the 90s didn’t end that well.

14:41
After the 90s in it, you had 3 years of declines in the stock market. It was a rough time for about 3 years. I, I graduated in college. I’d graduated from UCF in 2003. I remember the job market was horrible, absolutely, absolutely horrible. And so not only does it remind me a lot of what we saw in the 90s, I think what really concerns me about Tesla going forward is How similar it is to the hype that I saw back in 2017 with Bitcoin.

15:08
Bitcoin went basically overnight from like a few $1000 a coin to $20,000 and then you had people Bitcoin mining and putting all this money into buying Nvidia. You want to know why Nvidia and AMD is so high today. It was a huge benefactor off of the Bitcoin craze because people were wanting to mine for Bitcoins to make money on the side from doing that as well, and their power bill, their power bills went through the roof.

15:32
But check this out. There is a lot of characteristics with Tesla’s stock that is very similar. To the Bitcoin mania that we saw a couple of years ago. I remember being in a coffee shop and somebody saw me looking at charts.

15:47
I was probably looking at like Apple or Netflix or some stock that I normally trade or Square. The guy’s like, is that, is that a Bitcoin? Is that cryptocurrency? I’m like, no, dude, it’s, it’s Microsoft. It’s a Microsoft chart. MSFT is right there on the screen. It’s like, oh, OK. What are those like squares on the chart?

16:04
It’s like those are candlesticks. It’s like, what do you think of Bitcoin? It’s like, it’s probably gonna crash. No, man, you’re out of your mind. You don’t know what you’re talking about. OK, like, Guy straight out of college. He’s got Bitcoin probably on his, he’s probably buying Bitcoin with his credit card, left the coffee shop, pissed off at me, pissed as hell.

16:27
Walks out. I don’t know. I didn’t even know this guy was gonna go to his car to get a gun and shoot me for having a bad opinion of Bitcoin, but he just drove off and I put a post out there on, on SharePlanner. You can go search on SharePlanner through the archives. There’s plenty of posts for us talking about this back in 2017.

16:45
I was like, guys, Bitcoin’s going down. When it was trading at 19,000, I was saying this thing is going down to 6000. Look it up. It’s there. And it did. I mean, in fact, it went lower than I even thought it was. I thought, man, I’m putting a pretty brave uh prediction out there and, and it actually came to fruition.

17:01
But it reminds me so much. I also think a lot of the people who are trading it. I’m not saying this about everybody. There’s some good people who are trading it. There’s some people shorting it they’re just getting steamrolled and they trust me, this run up has destroyed a lot of hedge funds that were shorted. There was a huge short flow.

17:17
They’re probably not in business anymore. But The people, the like you have a strong millennial presence in the Bitcoin trades. You also have a lot of people who’ve never traded before, just like with Bitcoin, they’re all of a sudden getting into Tesla. That’s, that’s their jam. That’s what they’re wanting to trade.

17:34
They I think trading’s easy. I’ve seen things on Instagram. I saw this girl in college talking about how she’s just quit going to class because Elon Musk is making her so much money by trading Bitcoin. She’s putting charts out there. It’s like, all you got to do is make 2 percent a day.

17:53
I’m like, dude, do you know how hard, if not impossible, to consistently make 2 percent a day? She’s like, well, if you put $500 in the stock market, make 2 percent a day by the end of the year, you’re gonna have $12,000. No, that it doesn’t work that way. What is that? 24x return? You don’t do that in the stock market.

18:10
Stock market’s not some kind of money tree that that you just water a little bit and it’s just gonna make you a lot of money. I mean, it’s just nuts, people are, they’re on Instagram, search it. It’s nuts. I can’t believe. I don’t know. I, I really can’t get past some of the lunacy that, that I’ve seen on, on Instagram regarding, or even just social media like Twitter regarding Tesla.

18:28
I mean, people think this is a $2000 3000 dollars stock. Some people say, oh, it’s $1 trillion dollar stock. Maybe it is. Maybe it is in the long run. People, but stocks don’t go from $100 million or $100 billion dollar value to to to trillion dollars overnight. So. If you don’t believe me, look at Apple.

18:44
It took Apple a very long time to get there. So should you short the stock? No, don’t, don’t short it. I mean, I know people are gonna buy puts and stuff like that. Look, this thing could keep going higher. It could go 1500 easily. I don’t know where it’s gonna go. I mean, I was scared as hell getting into it today and, and just day trading the, the darn thing, but It could go higher, but also I could see it tomorrow dropping below 600.

19:08
There’s just such a huge bandwidth of where it can go and how high it can go or how low it can go. And if you’re shorting it, I think there’s a little bit better stuff out there. I know, I know it’s eye candy to short it, especially after the, the candlestick that it put in on Tuesday.

19:24
Trust me, I even thought of it too, but I said, no, I’m not gonna do it cause I really don’t want to, one, miss out on a night of sleep cause I won’t sleep. And then two, I don’t want to wake up to a, a short position that’s gone up 20 or 30 percent in the pre market. I like to avoid those situations.

19:40
So what is this, uh, podcast all about? What, what have we been talking about? We, we talked about what’s likely to happen going forward. We talked about the risk reward in the trade and how do you trade it and can you trade it? The day trade that I made today talked about a lot of stuff going forward, how it relates to Bitcoin and some of the 90s mania.

19:56
Should you short it? No. So we covered a lot of ground. I think this is one of my longer podcasts that I’ve done in a long time, so, any case, that means it’s got a lot of editing to do tonight. Take care of yourselves. Always manage the risk, tread carefully with Tesla.