Here was a segment of my Strategy Session from this weekend about Tesla Motors, looking at what happens when strong momentum shows signs of wear and tear on multiple timeframes…
…now consider one of the hottest and most widely-watched momentum/short squeeze stocks in recent memory: Tesla Motors.
Here we have a stock which nearly tripled over a matter of weeks. After last week’s price action, we now have a bearish candlestick from Wednesday which started to confirm lower on Friday.
And the weekly chart really drives home the notion of not overstaying your welcome in a game of musical chairs, chasing popular stocks which have become very extended–It may indeed push higher yet if that is what the market wants to do. But with a weekly shooting star candlestick (often indicative of buyer exhaustion after a prior steep uptrend) entirely outside the upper weekly Bollinger Band, I will take a pass on this trade over the long run every single time with my money or yours.
