Shares of Tesla Inc (NASDAQ:TSLA), although higher by just about 66% for 2017 thus far, have largely chopped back and forth since late June. For traders, this multimonth wide sideways range has, however, provided plenty of profitable opportunities, and if history is any guide, TSLA stock just showed us another good-probability trade signal.
Regular readers of this here daily column know that I always advocate not holding “trading” positions through any earnings report. To wit, Tesla is scheduled to report its next batch of earnings in a little under three weeks, on Oct. 25 — which is to say that the trade idea I am offering today at the most is only valid until the day before this next earnings report.
The last time I offered my thoughts on TSLA stock was June 19 after the stock had just staged a historically steep and long non-stop rally. At the time, I said that “TSLA ultimately could need a better move back to the high $200s or at least the low $300s to retest the previous area of horizontal resistance and formally mark this area as support” in order to work off some overbought readings and potentially become a better buy again through the intermediate to possibly longer term lens.
Sure enough, over the ensuing couple of weeks TSLA stock corrected about 18%, bringing it down into the low $300’s.
TSLA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Revisiting the multiyear weekly chart, we see that TSLA stock in March of this year staged a powerful and important break out of a multiyear sideways consolidation phase.
This move however exhausted itself by the second half of June and the stock slipped into a thus far healthy consolidation phase from this perspective (blue box on chart).
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart, note that since the second half of June, TSLA has largely chopped back and forth. The latest pull-back from mid-September into earlier this week measured 15% and this past Tuesday Oct. 3 promptly bounced off horizontal support from August, around the $333 area.
With yesterday’s 2% “follow-through” buying day this completed a buy signal by my proprietary B2 Reversal Indicator. While the stock could now move toward the $380 area as the next upside target, even more well-defined is the stop-loss area around $333.
Check out Anthony Mirhaydari’s Daily Market Outlook for Oct. 5.
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