What a ride it’s been. First the stock caught fire, then the car itself caught fire. But when it’s over, it’s over.
No matter what happens from here, Tesla has without doubt been the stock of 2013, and Elon Musk is surely a lay-up to be Time’s person of the year. This exit signal however helps underline an important point.
There is a big difference between a company, its enigmatic founder, its compelling story, its unrivaled products, and its stock. You can only trade the stock. So, no matter what feelings may be aroused by this company or its products, the final arbiter for my trading has to be price action alone, and by that measure we must now take our exit signal which will be executed at Thursday’s open. As of Wednesday’s close we are up 56.8% on the position.
Tesla ($TSLA) +56.8%. Original 5/28 entry post here. Also, this post from 7/16 gave an important update, which several people were later gracious enough to credit for keeping them in the position for far greater gains.
There are many lessons contained in this trade, perhaps the most important one being to keep our analysis to the price action, remove any bias, and ignore noise. And God knows it got very noisy at times. At no point in this trade did we need to reason the price movement, or if TSLA’s earnings, or lack thereof, could possibly justify such a valuation. We are in the business of identifying strong trends, riding them, and exiting when the trend is over for our particular risk parameters and timeframe. That time is now. Receiving this exit signal doesn’t have any other implications, it isn’t in any way predictive of future price movement, $TSLA could literally do anything from here. I’d be happy to re-enter should it set up again, but for now I have to stick to my process, my rules, and step aside.