RATIO TRADE - LONG TESLA TSLA VERSUS SHORT PRICELINE PCLN
SINCE BOTH TESLA TSLA AND PRICELINE PCLN reported earnings and those are now out of the way, I'm willing to say that I think PCLN will underperform TSLA and continue the pattern here of a giant cup&handle formation. I was tempted to post this trade prior to the earnings, but didn't think it was worth the risk of a massive gap-move on earnings day.
I think the return will come from PCLN going down and TSLA going sideways, but this RATIO CHART is the daily price ratio of the stock prices. Think of it like a $16 stock with the ratio at 0.16 here. If it goes up to 0.19 it will be a relative 13% gain in TSLA versus PCLN. The risk is roughly 10% but the odds are high for a profit, from my perspective.
This is truly not a CUP&HANDLE in the truest sense of the definition - it isn't a show of "accumulation" of Tesla relative to Priceline, rather it is just a chart pattern that is similar to it. It doesn't have the LOGIC of the accumulation pattern that an actual stock will have.
Cheers.
Tim 10:45AM EST 5/9/2014
I think the return will come from PCLN going down and TSLA going sideways, but this RATIO CHART is the daily price ratio of the stock prices. Think of it like a $16 stock with the ratio at 0.16 here. If it goes up to 0.19 it will be a relative 13% gain in TSLA versus PCLN. The risk is roughly 10% but the odds are high for a profit, from my perspective.
This is truly not a CUP&HANDLE in the truest sense of the definition - it isn't a show of "accumulation" of Tesla relative to Priceline, rather it is just a chart pattern that is similar to it. It doesn't have the LOGIC of the accumulation pattern that an actual stock will have.
Cheers.
Tim 10:45AM EST 5/9/2014
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