Elon, The Joint & The Suits
We all know Elon took a puff from a joint and tweeted some stuff about how the stock was going to $420 and the SEC fined him yad yada. This isn't another story about it. This article will give statistics about the direction of the stock based on historical outcomes.
All Statistics provided were supplied by the Probability Tool Suite from Joaquin Trading at https://joaquintrading.com
My only comment about this, other than what I can gather statistically is this: I commend the man and think he is a visionary. I'm glad he smoked a little weed for all to see. (He didn't really. What he did wasn't really toking a joint.) The reason I am glad is that cannabis has never killed anyone in history, unlike all these pharmaceuticals.
Before we get into the probabilities, allow me to protect my own rear...
Probabilities on Daily data gathered since 2013.
Price, as of right now on Saturday, September 29, 2018, has a 46.43% probability of being higher than $264.72 10 trading days from now. This means that it also has a 53.57% probability of being lower than where it is right now, 10 trading days from now.
This particular signal is based upon the RSI indicator, on the daily chart. The oversold area is 37. We are looking at long trades only. Why did I choose 37, instead of the normal 30 are? This was done to see where price may be from the price point of TODAY. I wanted to know if the price had a good chance of recovering, based upon the historical data that we have already seen from this security.
We need to factor in the fact that Elon never smoked weed or promised all these things before. This may totally negate everything that I am speaking about today. I am basing my findings on historical probabilities only.
What else do we know:
According to 28 historical outcomes, in 10 trading days from today, price has a probability of closing above:
- $304 7% of the time
- $294 7% of the time
- $284 10% of the time
- $274 39% of the time
- $264 46% of the time
- $254 75% of the time
- $244 92% of the time
- $234 100% of the time
- $224 100% of the time
By looking at the data, we can see that every single time this particular scenario happened, price closed within a $20 drop a whopping 92% of the time. It closed above a $30 drop every single time. How much of this new cannabis & $20 & SEC news would cause these probabilities to break down?
Who knows? Only time will tell.
Price Touches
We also analyzed data to see how often price touched certain areas, based upon the parameters given. A touch means price doesn't necessarily have to close above a certain area; it merely needs to touch.
According to 49 historical outcomes, in 10 trading days from today, price has a probability of touching these price areas:
- $304 6% of the time
- $294 8% of the time
- $284 24% of the time
- $274 46% of the time
- $264 NA Price is already there.
- $254 51% of the time
- $244 24% of the time
- $234 10% of the time
- $224 2% of the time
We had 49 historical outcomes to look at because instead of looking at long-only signals, we are also looking at shorting opportunities.
How about Trading the actual stock?
Based upon 55 historical outcomes, If you are trading both long and short &set your take profit at $10 and your stop loss at $10, you would win the trade only 38.18% of the time.
However, if you are trading long only, your win percentage jumps to 45% but it's still no good.
If you were to move that stop-loss to $25 and your take profit to $25, you would have won this trade 56% of the time.
If you enjoyed this data and learned something, let me know what YOU would like analyzed in the future.
If you would like to see more of the Probability Tool Suite in action, sign up for our free Weekly Signals at https://joaquintrading.com