Getting technical: Don't buy Tesla 'on sale'

Yahoo Finance Video

March 19, 2021 at 1:12 PM

Yahoo Finance's Jared Blikre and IBD Multimedia Content Editor Alissa Coram break down the latest market action.

Video Transcript

- Welcome back to Yahoo Finance Live on this Friday. Still got a mixed market here. It is time to get technical right now, and bring in Jared Blikre with a special guest. Jared.

JARED BLIKRE: Thank you. As promised, we have this special guest from Investor's Business Daily, Alissa Coram. And you are a multimedia content editor there. I just want to start out--

ALISSA CORAM: Yeah.

JARED BLIKRE: Yeah. It's great--

ALISSA CORAM: Thanks for having me.

JARED BLIKRE: --seeing you, by the way. Thanks for making the travel distance into your own home.

ALISSA CORAM: Exactly.

JARED BLIKRE: I want to begin with Tesla here, because you sent me some charts earlier. We have them here. This is a 50-day moving average in the-- I'd call this chartreuse, maybe. And then in purple, we've got the 200. So what do you see in this?

ALISSA CORAM: Yeah. So Tesla, of course, one of the big winners in 2020. It's a fan favorite out there for many investors. You know, a lot of people love the company, love the story here with Tesla, and may be tempted to, hey, Tesla has come way off of those highs, maybe I should buy the stock on sale here. But we would caution against that. We really want to take a cue from the technical action. And if you rewind the clock to last November, that strength out of a little consolidation there, over the 466 level, we would have considered that definitely an actual entry for the stock. Went on a huge move after that.

We were pointing out, though, some climactic action at that point, the stock gapping up. We have a couple of different indicators that we look at to see when a stock is extended that you are drawing there, the gaps up in price, big weekly moves, getting really extended from the moving averages. And it was at that point that we were warning investors, maybe you want to take some profits into this strength if you were buying out at 466 area, or even earlier in the big move that we saw in 2020. It then started to trigger some more sell signals as the technicals broke down, first breaking below that 21-day moving average. That would have been another spot to take profits.

And then that 50-day line, as you were pointing out. When we see a big break of the 50-day line, or the 10-week line on a weekly chart, our research shows that it's at that point that stocks that have made big moves really need to take a break, at the very least. We've seen huge volume declines, and the stock is now hitting some resistance at that 21-day moving average, potentially living below that level. So we think Tesla needs some time here. So avoid that temptation of thinking the stock is on sale here.

JARED BLIKRE: Well, thank you for that. I mean, the stock was down over 40%, or just over 40% from high to low, and still off about 25, 30% from my calculations. So just maybe a little bit more time there. I want to move on to our next ticker. Now, this is an old high flyer. This used to be on my radar years ago, but then it was dead money for a long time. Freeport-McMoRan. What's the setup here? Because a lot of money has been flowing into this stock over the last six months.

ALISSA CORAM: That's right. We've noticed this year a real shift out of tech and into the industrial and cyclical plays. So strength in FCX we saw very notably towards the end of last year. And the stock has offered several buying opportunities along its run, with pullbacks to the 50-day moving average. And we think it's setting up here. But I think the bottom line here is, looking from Tesla to this, tech is not really where you want to be playing right now. Investing, it's all about putting the odds in your favor. We love combining that fundamental analysis with the technicals. And FCX a great example of a stock that is setting up here.

JARED BLIKRE: Well, I want to talk to you now, because we had Kathy Donnelly in last week, and she was able to share some stats with us about female performance versus males over time, and some of the strengths and weaknesses. I just wanted to get your take as a female trader, what's your assessment?

ALISSA CORAM: Yeah, you know, some of that information out there is pretty interesting. We've tracked over the last couple of years, I think that, in particular, may have been pointed out from a colleague of mine at one point. Elaine Lowe wrote on that topic, very passionate about that. I would say, as a female investor, I think that the market doesn't really care what I look like, where I'm from, my age. I look at it as being optimistic.

And everyone has the opportunity to succeed and take advantage of the great opportunities that the market provides. So there are endless opportunities out there, as long as you have a great set of rules and strategies that you are abiding by when you're investing, and making sure you don't blow up your account. I think that the opportunity out there is for everyone, and that females out there should just go for it, and not let stereotypes of Wall Street or the financial world get in their way.

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Video Transcript

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