Calling On Our Resident Car Expert

On June 6 at 9:07 a.m., I said in The War Room, “I’ve been tracking Ferrari (NYSE: RACE). I’ve never traded it… but it intrigues me.”

Since that mention, Ferrari has gone straight up!

Sensing that I missed the opportunity, I said on June 7, “I mentioned yesterday that I was looking at calls on Ferrari. In retrospect, I should’ve played [them]. It’s looking to gap up again this morning. But it seemed overbought to me yesterday – so I passed. And now it’s really getting extended.”

Line graph - Ferrari daily

Why the hesitation?

Well, I wanted to do some research before making a new play. And part of that meant consulting our very own car expert, Karim.

You may not know this, but Karim has always liked cars. He worked in a performance shop during his summer holidays in college, where he learned which cars were made well – and which were not!

Karim quickly concluded that Porsches are built to last. He told me they’re pretty much the only car you can take from the street to the track and back to the street again without doing a thing.

He would know, too. He’s owned three Porsches – and he’s getting ready to pick up another one for the fall driving season.

So when I came to him asking about cars – and specifically about Ferrari – I knew I could count on his expertise. He said, “Ferrari is one of the truly unique brands that capitalizes on its ‘wow’ and ‘rarity’ factors.”

He continued…

“Its classic- and limited-production cars are the highest-priced sellers at auctions. Their sales are off the charts, and they have very strong fundamentals. Revenues are still growing (albeit at a lower rate), but net income continues to grow impressively.”

Action Plan: Just like I said about Starbucks yesterday, I don’t like playing such a rapid upside chart higher. However, if we see a pullback to around the $145 level, we could have a possible entry point. The $145 level is the last instance where resistance turned into support. We’ll be tracking this play closely in The War Room!

More on Trade of the Day
facebook twitter
Popular posts