TSLA Stock – 2 Trades to Make Amid Tesla’s Model X Launch

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Shares of electronic vehicle manufacturer Tesla Motors Inc (NASDAQ:TSLA) reversed lower along with the broader market last Friday, closing near the lower end of its recent trading range. However, Tesla is set to launch its much-anticipated Model X SUV on Tuesday.

Beat the BellActive traders have two potential trades to look at as TSLA stock reacts to the news.

Major product announcements, just like earnings reports, have the potential to push a stock significantly in one direction or another. Whether this week’s Model X launch will do so for TSLA shares remains to be seen, but the charts do set up nicely for a binary outcome.

Before looking at the charts, let’s also note that TSLA stock as of last Friday’s close is lower by roughly 4% for the quarter, and has thus shown some relative giddiness versus the broader market. The S&P 500, in comparison, is lower by about 6% for the third quarter as of last Friday’s close. This relative strength is notable and could be a reason why Tesla stock sees further support or relative strength this week as fund managers play their window-dressing games.

Of course, investors’ reaction to the Model X may easily overshadow the quarter-end fun.

TSLA Stock Charts

Looking at the multiyear chart of TSLA stock, we see that shares continue to work within the framework of higher lows that are pressing up against horizontal resistance around the $285 area. Even the August lows so far have marked the chart with another higher low.

While the longer-term outlook both from a fundamental and technical perspective look promising, the near-term reaction to this week’s Model X launch could go either way.

But that does mean juicy opportunities for active investors.

Tesla stock chart weekly
Click to Enlarge

Moving over to the daily chart, we note that the sharp V-shaped reversal since late August has since pushed TSLA stock back above its 50- and 100-day simple moving averages (yellow and blue lines, respectively). Over the past eight trading days, Tesla has been consolidating above those two moving averages in a right trading range and looks to be eagerly anticipating a call for better direction from this week’s Model X release.

Last Friday’s 2.36% drop in Tesla stock has brought it back down to the lower end of the trading range.

Tesla stock chart daily
Click to Enlarge

Active investors may now want to wait for an initial price reaction in TSLA stock on Wednesday (the Model X release takes place Tuesday evening) and react to one of the following two scenarios:

  1. Tesla rallies and holds above the $265 area, which could set up a trade toward the $285 area.
  2. TSLA stock sells off and drops below the the $250 area, which could set up a trade to sell short the stock for a move back down toward the $230 area.

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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/tsla-stock-tesla-model-x-launch/.

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