Tesla Stock – Tesla‘s too high to buy now; Beyond Meat perking up; GameStop shorts feeling pain: veteran trader
Joining Yahoo Finance’s Zack Guzman and Jared Blikre is Brian Shannon, CMT and founder of www.alphatrends.net, who breaks down the price action and levels of interest for Beyond Meat (BYND), Tesla ((TSLA)) and GameStop (GME).
Video Transcript
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ZACK GUZMAN: Well, it is time to get technical. Yahoo Finance’s Jared Blikre is joined here by Brian Shannahan– sorry, Shannon– CMT and founder of alphatrends.net. And Jared, you’re taking a look at a couple of tickers here, one our readers search every day, but one we haven’t talked about in a bit.
JARED BLIKRE: Yeah, and we’re going to start with Beyond Meat. And the reason I haven’t talked about it in a while is because it’s been largely going sideways. Brian, I want to ask you, what are you seeing in this stock right now? You see some signs of life.
BRIAN SHANNON: I do. You know, it had a really nice start to the year last week. It kind of popped up from low levels on some high volume. And it’s holding onto those gains really well so far, right at this 50-day moving average. Now I’m generally looking for the 50-day moving average to be flat to advancing. And it’s interesting that if you look back 51 days ago, that’s when the stock was 165. So that means on Monday, we’re going to have a rising 50-day moving average again. We’re holding on to these gains. And it looks like a nice risk-reward here to get involved right here at these prices.
JARED BLIKRE: And you’ve got a couple of other lines on here, anchored VWAP– I know it well. We have it on our website available. Actually, we had it implemented because of your promotion of it. Can you explain to the viewers what it is and how you use it to trade?
BRIAN SHANNON: Yeah the anchored Volume Weighted Average price, pronounced VWAP, is simply a representation of the average price paid for the stock from any period in time. You can kind of think of it, actually, Jared, as a dollar cost average. If you were to buy $1,000 worth of stock, you know, Apple every 12 months– every month for 12– for one year, your volume weighted average price is your dollar cost average. So it tells us the average price from a point.
So if we look at the red line on the chart, what we see is the volume weighted average price off the peak. And what we’re seeing there is that so far, the sellers have maintained control from that level. But now we’re coming up and butting up against it. It’s the buyer’s game to win right now. And it tells me two things, that the buyers have the potential to regain control. And if they do, then we’re going to see shorts are likely to scramble from these prices and help fuel the fire higher.
JARED BLIKRE: Yeah, so bottom line, good risk-reward on this. Now I want to turn to Tesla. This is a stock we talk about every day. Got some anchored VWAP lines on here, 50-day moving average. What are you seeing?
BRIAN SHANNON: Well, obviously, no shortage of opinions on Tesla. They’ve got earnings next week. So we have a big catalyst coming here. And, you know, you have the Tesla fan club would say it’s on its way to 1,000. And you know what? The trend is higher. So you have to look at and say the trend is your friend. But what are the risks? Would I want to be involved here with fresh purchase? Not personally. I think there’s a couple of things that we can measure risk against. And that’s what the name of the game here is risk management.
So the year to date volume weighted average price often becomes a benchmark for institutions to measure, do we want to lighten up on Tesla if it’s below the volume weighted average price for the year? And that price is currently just below the market at about 820. So if we were to break below that after earnings, I think you’ve got a very good chance that you’ll see a test of the 50-day moving average and the volume weighted average price from the last earnings report. Those both come together at about 660.
So I think the risk going into earnings for the new position is extremely high. But make your bets. Let’s see what the market says. I think you’ve just got to manage your risk there.
JARED BLIKRE: Yeah, we’ve got about a minute left here. I was talking to you about GameStop before the break. This stock is caught in an incredible short squeeze. What are your thoughts on what’s happening here today with this particular stock?
BRIAN SHANNON: You know, I think a lot of times what happens with a short is the stock will go up, and people will look at it and say, hey, that’s just GameStop, no big deal. It’s up too much. It’s not worth it. Whatever. So they’ll try to go in and short the stock. And then the stock rallies 10%, and they cover. And then, what happens is, it becomes kind of a perpetual short squeeze machine. It’s a game of musical chairs.
But one group keeps getting squeezed over and over to a new group. So if you look at short interest numbers, I mean they’re rotating extremely fast right now. So it’s a game of musical chairs, and if you’re involved in it, I’d say, you know, if you’re looking to short it, wait for it to break down. There’s no such thing as up too much if people are still willing to buy it. And so far, they are at GameStop.
JARED BLIKRE: Good advice, Brian. Thank you for joining us here. Zack, I’m going to send it back to you.
BRIAN SHANNON: Thanks for having me on, Jared.
