With low holiday volume, this is a time when it is easy for hedge funds to goose quarterly returns by selectively supporting a few of their portfolio favorites. While I don’t expect much from the Nasdaq overall this week, I do recommend looking for trades in select names.

I believe we saw the start of a tentative year-end mark-up on Monday, with nice moves in Alphabet (GOOGL) and Amazon (AMZN), and a hint of strength in Facebook (FB) and Netflix (NFLX).

Tesla, however, has gone nowhere over the last three months. Recently, I’ve been anticipating a surprise move in Tesla (TSLA), but so far the stock is hesitating. Nevertheless, given the 28% short interest , I consider TSLA to be a prime candidate for an end of the year and early January pop.

I don’t expect a news-driven rally; I’m looking for an advance without a specific catalyst; one based entirely on short-covering. This is often a theme in the Santa Claus period. Moreover, Tesla has a very low statistical correlation with the QQQ over the last six months, which means it won’t be held captive by a lackluster market.

Over the last few days shares have formed a small ‘bull flag.’ The immediate target is $248, which represents the next high volume node. Like electrons jumping from orbit to orbit, momentum stocks often move quickly from volume node to volume node and spend relatively little time in between.

Keep TSLA on your radar and make sure you don’t miss out.  

www.daytradingpsychology.com (Coaching for private traders.)

www.trader-analytics.com (Peak performance consulting to RIAs, hedge funds and banks.)

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