Investing.com - Financial Markets Worldwide

Here's Why It's Time To Short Tesla

ByNicholas Santiago
Published 09/30/2013, 02:26 PM

Tesla Motors Inc. (TSLA) is quickly approaching $200 per share. There is one key reason to short this stock and it has nothing to do with technical or fundamental reasons.

Oldest Trick In The Fund-Manager's Book
Simply put, through the end of this quarter (ending today), millions of shares are being bought in Tesla for window dressing. Put another way, window dressing is one of the biggest tricks perpetrated by fund managers around the world, who want to show their clients that they owned the top-performing names for the quarter.

One of the best performers has been Tesla Motors. So they buy the stock into the end of the quarter, which creates an artificial bid on the stock, moving it higher. Investors see it on their statement and rejoice, not knowing it was bought at the very end of the quarter at all-time highs.

Once the new quarter starts, these fund managers can dump it or cease to buy it. Is that legal? Yes. Is it ethical? No.

Strike Price
As swing traders we can use this to our advantage. I will look to short Tesla Motors on a break of $200 a share. That will be a near-term short trade that should give profits within a week or two. I expect approximately a 10% pull back, possibly more.
Tesla Motors
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com

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