The Gilmo Report

April 5, 2017

April 5, 2017

So far, this week has brought us something I don’t think I’ve ever seen. Two big-stock NASDAQ names on my buy watch list, Amazon.com (AMZN) and Tesla (TSLA), posted simultaneous Jesse Livermore Century Mark Buy Rule signals. This occurred yesterday as AMZN catapulted through the $900 price level while TSLA finally cleared the $300 price level for the first time.

AMZN’s move came from a position where it was already extended from a base breakout point near the $800 price level. Yesterday’s move easily cleared and held the 900 price level, and this morning the stock was headed higher. By the close, however, it had reversed to close below its gap-up opening price on even heavier volume than that seen yesterday.

 

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TSLA, on the other hand, cleared the $300 level in conjunction with a breakout from a three-year, wide-ranging consolidation. That breakout occurred on Monday on a high-volume gap to the upside that did not, however, qualify as a buyable gap-up. Nevertheless, the stock kept going yesterday and cleared the 300 price level on strong buying volume.

That move above 300 ended today as TSLA gave up the Century Mark and reversed back below it on volume that was well above average and therefore still heavy. What is interesting here is that the stock could morph into a short-sale target here using Livermore’s Century Mark Rule in Reverse.

Once the stock failed to hold 300, it was shortable at that point, using the 300 price level as an upside stop. Frankly, with TSLA breaking out of a long, three-year consolidation, the irony could be that this is a failure point, so one must be open to that possibility, particularly if the general market begins to correct in earnest at the same time.

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