Momentum Names Feel Risky

Momentum names are losing it again today. I had a nice chart to lay out targeting the $40 area for SolarCity (SCTY). I still think it happens, but a $40 target from $48 is more attractive than from $46. In the short time it took me to upload these charts and type out a trade, that is how much SCTY lost in share price.

SCTY Source: StockCharts.com View Chart » View in New Window »

The idea being there was both a gap fill and a break of price support. The CCI has completely fallen out of bed and the moving averages are working against the bulls now. I liken SCTY to Tesla (TSLA), which is like comparing Jamie Lynn Spears to Britney Spears: They both look awesome but then personality, or rather valuation, eventually catches up with them. I still favor a diagonal put spread on SCTY, long the January $45 put and short the December $41 put, which was around $2.95 at the time the stock really started to break. (A hat tip to Mr. Stafford, who has been willing to learn about chart patterns from me over the past several months. The student has become the teacher. Or maybe he just got lucky. Still, he deserves acknowledgment.)...193 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.