Let’s take a brief break from my 20 Trade Ideas for 2020 and Beyond series, and play a little game.
I’m going to show you the chart of a stock, and you tell me whether you’d buy, sell, or simply avoid it…
It’s tough to make a call. The stock’s trend isn’t clear. It’s a “messy” chart, technicians would say.
And for investors who use a company’s fundamentals as a guide, we know nothing about the balance sheet or income statement behind the stock.
I also made sure to hide the stock’s ticker symbol and price range — no hints!
So, what’s your call? Is this stock a “buy” or a “sell?”
And any guesses whose stock chart this is?
A Crystal-Clear Buy Signal
I should also tell you that the chart above ends on November 22, 2019.
I chose to cut the chart off at that date because that’s when this stock appeared in my weekly Green Zone Stocks Hotlist.
For those of you who don’t know, I began sending a Wednesday-morning email to my Green Zone Stocks subscribers last October. That email hits inboxes by 8:30 A.M., giving readers time to scan the Hotlist and prepare any new buy orders they want to execute when the market opens at 9:30 A.M.
How do I come up with this weekly Green Zone Stocks Hotlist?
It’s simple… I collect the new buy signals generated by my Cycle 9 Alert algorithm in the preceding five trading days, and I share that Hotlist of “New Buys” with readers on Wednesday morning.
What does it mean when a stock triggers a “New Buy” alert, according to my Cycle 9 Alert algorithm?
It means that the stock is, already trending higher…
It means the stock is climbing faster than the broad market, and also faster than its own recent past…
And it means that over the following three months, the stock has a high probability of continuing its climb, outperforming the broader market and potentially even making a big momentum move that can set you up for sizeable profits.
So, How Did This One Turn Out?
Here’s a chart of the same stock I showed you above, now including the price action following its appearance in my November 22, 2019, Green Zone Stocks Hotlist:
The stock is Tesla (Nasdaq: TSLA).
Maybe you’ve heard of it? I jest…
Tesla is a “story stock” that people either love to love or love to hate. It helps that the company’s founder and CEO, Elon Musk, is a rather unconventional and polarizing figure.
But there’s also the fact that no one really knows exactly what will come of the electric vehicle, or when, or whether the company’s lithium battery technology is the real asset, more so than the cars.
Tesla’s in the news cycle all the time. But recently, it’s the “parabolic” (aka rocket-ship-like) move higher in its stock price that’s making waves.
Consider that shares of Tesla are up nearly 60% since last Tuesday — up more than 110% year-to-date — and an unimaginable 400% since the stock’s 2019 low of $176.99 made on June 3.
Now, Tesla certainly didn’t show up on my Green Zone Stocks Hotlist when it was trading at its lows last year.
Remember, for my trend-and-momentum buy signals to trigger, we must first see that a stock is already trending higher, and then it must also be doing so at a market-beating rate.
That wasn’t the case for TSLA shares in 2019.
The Change in Tesla
In fact, my Cycle 9 Alert system had Tesla classified as a down-trending market the whole year, up until the end of October. By then, the stock had recovered enough to be re-classified as “buy-qualified” since it was now in an uptrend.
Then on November 14, Tesla’s market-beating momentum surged enough to trigger our new buy alert.
All told, if you’d acted on Tesla upon receiving my weekly Green Zone Stocks Hotlist on November 19, you could have a +150% open profit in Tesla today.
And if you’d made a Cycle 9-style options trade on Tesla’s stock, you could be up three-, four-, or five-times as much for a truly incredible profit!
Notice though, I haven’t yet said anything about Tesla’s balance sheet, or income statement, or earnings prospects this year, or Elon Musk.
I’ve written before about Tesla and how, like everyone else and their brother, I do have an opinion on the company. But if there’s one thing I’ve learned in my investing career it’s that you can’t always trust your opinion, and you certainly shouldn’t rely on it to make your buy and sell decisions.
Instead, I’m a big proponent of following a systematic strategy. And that’s what Green Zone Stocks is all about. It’s about leveraging the emotionless data processing capabilities of my time-tested Cycle 9 Alert algorithm to find stocks that are poised to outperform and even rocket higher — like Tesla’s done.
The way I see it, you can’t have an informed opinion on every stock in the market. You can’t tell whether a stock is a “buy” or “sell” simply by looking at a chart of its stock price. And good luck figuring out Tesla’s fundamentals.
The good news is, you don’t need to follow those rabbit holes to make good money in the markets. A simple systematic approach can do much better, and may just be all you need.