Short-Sale Set Up - Follow-Up to TSLA and YELP
|Published:||25 Feb 2018 19:34 ET|
It is not uncommon for stocks to rally 3-5% beyond their 50-dma or 200-dma and remain potential short-sale targets. That is precisely what we've seen over the past few days in Tesla (TSLA) and Yelp (YELP). TSLA pushed past its 200-dma and is now approaching resistance in the 360 price area. The move was fueled by news that the company has finally started to deliver on its Model 3 orders. With consistent short interest ranging in the 25-30 million share range, there are always enough shorts in the stock to fuel a short-covering rally when news hits TSLA is currently 4.1% past its 200-dma. Meanwhile, YELP has rallied 3.1% beyond its 50-dma. These both remain in play as short-sale targets, although we have yet to see the proper "triggers" necessary to initiate a short-sale. In their current positions, we would look for a break back below the 200-dma in TSLA and a break below the 50-dma in YELP as triggers for initiating short-sale positions. Keep in mind that these would likely only do so in conjunction with a general market move back to the downside, so will be dependent on the direction of the market "tide." With the NASDAQ's fourth-day follow-through of two Wednesdays ago still in force, a general market failure to the downside would be necessary to bring the short side of the market back into play in force. Thus we think short-sellers should keep these on their short-sale watch lists for now, ready to act as necessary based on the real-time evidence and the direction of the general market.
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