SCTY SolarCity – ‘Elon Musk Gap And Go Pattern’

by Olivier on October 16, 2013

It looks like the market has found its new momentum darling. Everything Elon Musk is involved with turns out to be a winner. First Paypal, then TSLA – Tesla, now his even greater  involvement with SCTY – SolarCity after the company announced Elon Musk will buy shares in SCTY’s recent secondary offering. To make a long story short, I see the following:

  • Gap up
  • Huge volume
  • Huge white bars
  • Bullish ascending triangle pattern
  • Inches within a new ATH (all time high)
  • Likelihood of TSLA shareholders taking their profit and looking for another ‘Elon Musk price appreciation experience’ with SCTY

The stock is highly shorted and everybody doubts SolarCity’s ability to be a disruptive company. I do see the huge story stock potential going forward. My personal opinion doesn’t matter though as I trade on technicals. If the chart says ‘buy’, I buy. If the chart says ‘sell’, I sell. Simple as that. That being said, I am smelling blood here. There is no way I would want to be short this stock right now. Being short in this kind of scenario can mean going out of business for a trader. You guessed it – the perfect set-up for a potentially epic short squeeze. Sentiment is easy to read with this situation. Everybody knows about TSLA’s most recent superstar performance. The truth is, most have likely missed that trade. They now might view SCTY as their second chance. If this is indeed the prevailing sentiment SCTY is about to run into year end. I have a position.

Click the chart to maximize:

Company description from SCTY’s website:

SolarCity is a national leader in clean energy services. We make clean energy available to homeowners, businesses, schools, non-profits and government organizations at a lower cost than they pay for energy generated by burning fossil fuels like coal, oil and natural gas. Our approach is to install systems to the highest engineering standards while making the switch simple for our customers. We’ve revolutionized the way energy is delivered by giving customers a cleaner, more affordable alternative to their monthly utility bill. We call this Better Energy™

Always go with the choice that scares you most, because that’s the one that is going to help you grow.


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