Headlines and oversold stocks take the lead on today’s three big stock charts, as we take a look at the charts for Caterpillar Inc. (NYSE:CAT), Nvidia Corporation (NASDAQ:NVDA) and Tesla Inc (NASDAQ:TSLA) to determine whether one or all of these are ready to offer traders bullish opportunities as they potentially regain their recent highs.
Caterpillar Inc. (CAT)
Caterpillar shares plummeted on Thursday as news that federal agencies had raided some of their corporate offices. The stock’s dive was stopped by the 100-day moving average. This trendline has now served as support for Caterpillar shares three times since October 2016.
Typically, a headline-driven selling day like this can be hard to step in on, but a few other things didn’t happen that would have served as warning of greater declines.
First, CAT stock did not break below its lower Bollinger band, signaling that, as volatile as yesterday’s move was, it still fell within a somewhat normal distribution for the stock. Second, the stock didn’t move far enough away from its 50-day to imagine that we couldn’t see it move back above this key trendline today.
These two points, along with the fact that yesterday’s selling volume suggests that investors may have rushed out of CAT stock too quickly, leaving a vacuum that may be easily filled by buyers, now leads us to take a short-term bullish trade outlook on Caterpillar shares.
Nvidia Corporation (NVDA)
Say it ain’t so! Could this be it for the long-term bullish run in Nvidia shares? The stock broke through the psychologically important $100 level earlier this week and has seen an acceleration in selling since then. Now, shares are trading at $96.65 and looking helpless. Well, not exactly.
Nvidia is getting ready to hit potential support at its 200-day moving average. This is the same line that the stock came close to grabbing support from last week before a short-term bounce. In addition, Nvidia shares are also touching down to oversold reading of their RSI, indicating that the selling pressure that has been moving the stock lower may start running thin.
That said, what would a bullish trade look like on Nvidia? Well, we want to see support at $94.35 hold, as NVDA hits these oversold readings. This should be enough to trigger a short-term rally. From there, we want to see NVDA take out the 50-day moving average, which is currently at $107.63 (of course, after breaking above $100 again). This would put shares back into rally mode.
The risk? A break below $94, or rejection at $100 on a short-term rally, will likely open the path to another selloff that could see NVDA shares break to $80. This one is well worth keeping an eye on.
Tesla Inc. (TSLA)
Ahead of Tesla’s earnings we talked about the “buy the rumor” rally that signaled us to stay on the sidelines with the stock for the report. Well, the “sell the news” action took the stock back to its 50-day moving average where things are beginning to look more attractive for Tesla from a trading perspective.
The stock shed 13% after the report to hit its 50-day trendline at $240. Conveniently, the $240 has also showed some signs of round-numbered support and resistance in the past on the Tesla chart.
While shares did not hit an oversold reading on the RSI, they did work their way out of an extremely overbought situation that had developed ahead of earnings. This means that the stock would be moving against less of a headwind to rally higher from this point.
Our scoring system continues to rank Tesla shares as a “buy” based on the strong technical and fundamental results of the company with targets that are nearing the $300 level. The latest round of technical support should clear way for traders to take the stock back to its short-term highs at $280 over the next few weeks.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
