TSLA Trade on Jan 7, 2022 14:26 from JRockTrades: Tradervue User Stock Trades.

Big Picture:

Tesla has been back and forth in a wide range below the ATH since it ran up several months ago. They reported a strong beat on the delivery numbers recently, though inflation concerns have weighed on growth stocks like Tesla and it failed to move higher.

Technical Setup:

ATR: 66
VIX: 18
RVOL: 66%

Tesla had been selling with the market all day, though it on the overall was much weaker. It was definitely in the oversold category having moved just over an ATR by the time I put this trade on. I wanted to make a mean reversion trade, though they can be very tricky in this type of environment, so I was looking to make it a break even trade as quickly as possible. RVOL was low on this day.

Reading the Tape

TSLA (candles) and SPY (pink line) 1-minute Charts Overlaid

I was watching SPY and TSLA at the same time as Tesla was working towards the 1000 level. TSLA was much weaker, being in a downtrend for most of the day. The trend started to speed up as it moved into the 1010 level. As TSLA was at the LOD, SPY was simultaneously at VWAP. SPY broke to the downside, but TSLA did not (where crosshairs are in picture above). It held the 1010 level with buyers absorbing the selling. SPY made a move back to VWAP and I took a position in TSLA looking for it to finally break the downtrend. I was risking a new low.

Trade Management

I wanted to take off a significant portion of the position to cover all the risk as quickly as possible because calling bottoms is very tricky. As price moved in my favor I continued to take profits in single share increments as it retraced to VWAP. My last share got stopped out when price dropped VWAP.

Conclusions

I got really favorable risk to reward on this trade. It would have been nice to carry a larger portion of the shares to higher profit targets, but I was very sick on this day and not giving trades any room to work against me. I went with an appropriate share size and risk level and this trade just straight worked. Definitely I can see an improvement in my tape reading skills which is contributing to more wins.