And it hit that wall on the day after its earnings report vaulted it into the airy realm of irrational exuberance.
All over stock market social media, Elon Musk fans and TSLA shareholders were ecstatic as the monster stock, in the midst of a world-wide pandemic and facing the prospect of a dire economic downturn, virtually doubled in no time at all. TSLA has boundless prospects long-term – long-long-term – but its recent rocket ride was crazy. Even Musk said so some time ago.
So no surprise today as one of the oldest of Wall-Street adages strutted on stage yet again – “Buy the rumor, sell the news.”
The stock plummeted 163 point from its open today and 77 points lower than its close yesterday on higher than average volume, in other words the very definition of an outside day.
So what next?
Actually outside days are somewhat up in the air. In an up trend (and TSLA certainly is in one), it can be a mere bump in the road so to speak, but whenever violent action like that a happens, particularly on good earnings news, one has to see if anyone has been killed in the crash.
Today’s low, me thinks, is the line to live by. If TSLA rises above it, tomorrow, it’s a long with the today’s low as the stop loss. If it continues to drop, the low becomes the protective stop for the shorts.