This Is Where Tesla Stock Catches Fire

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The recovery in Tesla Inc (NASDAQ:TSLA) shares lengthened its stride Wednesday. Aided by a snap-back rally in equities across the board, TSLA stock scored a solid 2.09% surge.

If last October’s breakdown in Musk’s flagship soured your view, it’s time to get over it. The technicals are finally turning and institutions are wading back into the waters.

It’s time to join them.

Since the gutwrenching down-gap on Nov. 2, Tesla stock has quietly cobbled together a 19% rally. The ascent was sharp enough to carry the stock back above its 20-, 50-, and 200-day moving averages.

Multiple resistance zones caved along the way, and now we have a full-fledged uptrend on our hands.

Source: OptionsAnalytix

Perhaps the most persuasive argument for optimism is the groundswell in participation during its latest two-week ascent. Four of the past seven trading sessions registered accumulation days.

These high-volume up days suggest institutions are back to the business of buying TSLA stock and will likely continue to support the stock moving forward.

Yesterday’s pop lifted the stock directly into overhead resistance at $348. All we need is one more push from bulls and a breakout will have officially arrived. Clearing this near-term ceiling should tee Tesla up for a retest of $362 and, eventually, its previous peak (an all-time high) of $389.

If sellers do somehow mount a counteroffensive, I would only be concerned if the stock falls back below its 20-day moving average at $327. Barring that, it’s game on for bullish plays.

A TSLA Stock Breakout Trade

The expensive price tag of Tesla stock options makes a spread trade a must here.

Buy the March $350/$370 bull call spread for $7.85. If TSLA stock sits below $350 at expiration, the calls will expire as worthless, and you will forfeit the initial cost.

Alternatively, if Tesla can go the distance, rising above $370 by expiration, then you stand to gain $12.15. That translates into a potential return on investment of 155%.

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want more education on how to trade? Check out his trading blog, Tales of a Technician.

For a free trial to the best trading community on the planet and Tyler’s current home, click here!


Article printed from InvestorPlace Media, https://investorplace.com/2018/01/this-is-where-tsla-stock-catches-fire/.

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