Stocks ended the week on a high note. As for me, I’m already enjoying my weekend…
And although I didn’t need it… my Tesla trade has paid for my entire family vacation to Turks and Cacos.
(Want to look over my shoulder and watch my trade, Millionaire Roadmap is the only place, sign up today)
Now, you’re probably thinking… “Tesla? I know that Jason drives a Tesla but I thought he only trades penny stocks.”
While it’s true, I primarily stick to trading penny stocks and smallcaps… I also know my fish hook pattern works with specific large caps too like Tesla.
And believe it or not… it’s not that much different.
For example, Tesla has been a recently beat up name, that cracked through some long-standing support levels. Furthermore, there were several catalysts in-play, like Elon settling with the SEC and why raising money has always been a go-to of theirs to take pressure off the stock.
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That said, I want to walk you through this trade in Tesla and how you can use my fish hook pattern to make money trading large caps.
I’m back fishing… and this time, I caught a big one.
No, I didn’t catch a marlin… but I did use my fish hook pattern to bank on a large cap trade.
I’ve been getting questions about how scalable the fish hook pattern is… and if they can be used on large caps, there are really no limits to how much you can make using this pattern.
Before we get into the fish hook pattern (oversold) pattern on Tesla (TSLA)… we have to go over some of the catalysts… if you don’t know about my trading strategy – I like to pair one of my three chart patterns with catalyst events.
Well, TSLA is one of those stocks that’s always in the news… and I figured it was one catalyst away from bouncing.
First, Tesla CEO Elon Musk settled with the U.S. Securities and Exchange Commission (SEC). Now, if you don’t know yet, the SEC was placing some pressure on Tesla’s CEO and TSLA price. Once that news was out that there was a settlement, well it relieved some of the pressure on the stock price.
Not only that, I had a feeling that Elon Musk would raise money… which took even more pressure off the stock.
Now, let’s look at the power of the fish hook.
What to Look for With the Fish Hook Pattern
With the fish hook pattern, there are a few things we’re looking for…
1) A steep drop in price.
2) The stock finds an area where it has a hard time breaking below.
3) The stock holds at the support level and catches a bid.
Here’s a look at the daily chart on TSLA.
Notice how the stock had a big drop, and finds some support just above $230. If you look closely, TSLA gets right to $231.50 three times and bounces right off that level. That lets us know that there are buyers there.
Not only that, you’ll notice an annotation about the relative strength index (RSI). If you don’t know, the RSI is a momentum indicator and measures recent price changes – allowing traders to identify when a stock is overbought or oversold.
Now, in general, a stock is considered oversold then the RSI breaks below 30. If the RSI is above 70, it indicates a stock is overbought.
Well, we actually saw TSLA’s RSI break below 30. In the last 10 months… TSLA’s RSI only fell below 30 one other time… however, it has gotten close to breaking 30… and all those times TSLA caught a nice bounce.
With the fish hook pattern, RSI below 30, and the potential for Elon Musk raising more capital… I figured the stock would catch a bounce.
Well, here’s what the stock did…
TSLA announced it planned to raise $2B yesterday, and today it announced it would raise the size of its stock and bond offering to $2.7B. That said, in just 2 days I was able to lock in nearly 20 points on TSLA, just by using the fish hook pattern – something I’ve been using in small cap stocks for years.
(Want to learn how to use the fish hook pattern? Click here to see how I use it).
Options on TSLA Would’ve Been Money
Now, for a lot of people TSLA is too expensive of a stock to trade. However, people can still trade TSLA, without buying stock… they could actually trade the options – which is a whole lot cheaper than buying TSLA outright.
That said, I don’t trade options… but Nathan Bear does. He actually alerted traders know about a bullish trade in TSLA using options. Now, his strategy allowed him to take advantage of an upside move in Tesla, while limiting his risk.
It might sound a bit complicated… but the way he teaches options makes it real easy for anyone to understand. That said, it was good to see some Millionaire Roadmap clients actually followed him.
05/02/2019 9:32 AM EST Nathan Bear: kaboom! sold TSLA lotto calls around $8, +400% and +27k on the day over a couple different strikes
May 2, 9:32 AM Jerry M. : Flat TLSA 348% Thanks Nate!!!
May 2, 9:36 AM Henry W.: 211% TSLA Calls
To learn more about Nathan, and what his trading journey has been like, make sure to grab a copy of the Millionaire Maker Blueprint eBook.