Tesla (NASDAQ 🙂 surprised investors yesterday when it made an unexpected profit of $ 342 million due to a result in a totally different stratosphere than the expected net loss of $ 257 million.
Traders acted immediately and offered no less than 20% on the aftermarket. The question now is whether this dramatic movement was carried out by short-term traders who wanted to make use of a suddenly undervalued stock, or whether this trajectory would apply for the longer term.
Will the first profitable quarter continue since the third quarter of 2018? There are signs that investors believe that.
The share fell below but returned above 200 DMA, which it had done earlier this month, for the first time since October 2018.
The price has risen $ 46.97 or 18.44% to $ 301.65 in premarket trading. When the market opens, it will have set the second peak to complete a rising peak-to-valley formation – an upward trend for the first time in two years. The market dynamics of a rising trend is that even if there is a fall, the odds are much higher, it is a correction within an upward trend, supported by the rally's.
Trading Strategies
Conservative traders would wait for the second peak to establish the upward trend and wait for a pullback to confirm it.
Moderate traders can wait for a pullback for a long position, without waiting for trend confirmation.
Aggressive traders can enter into a contraire short trade, counting on a return movement after such a dramatic leap, expecting profitably.
Trade sample – Contrarian short position
Admission: $ 300
Stop loss: $ 305
Risk: $ 5
Target: $ 285
Reward: $ 15
Risk: reward ratio: 1: 3
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