Shares of Tesla Inc (NASDAQ:TSLA) fell 3% on Monday. Although a 3% move in TSLA stock on any given day is hardly newsworthy given its volatile nature, Monday’s drop took place at a technically significant juncture that now sets up a new short-side trade for active investors and traders to sink their teeth into.
Every time I discuss TSLA stock, I must reiterate that in my thus-far 21-year trading career, I have never seen a stock where traders and investors are more passionate about their respective bull or bear thesis. This tug of war often leads to sharp bullish and bearish reversals that last several weeks on average as one side wins the argument for a while. This type of friction certainly brings about opportunities but also risks that traders must be able to properly risk manage through.
TSLA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Moving over to the charts, we see that the longer-term picture remains constructive, which is to say that TSLA stock continues trading above the blue horizontal bar that it originally broke and held above in the spring of 2017.
Although the stock has only traded directionally lower with lower highs since topping out in June 2017, it also remains trading above the red 200-week simple moving average.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
If we shift gears toward the daily chart, however, we see that the picture is not as rosy for the bulls. First, looking at the intermediate-term moving averages note that they are all pointing lower and any rallies for the time being should find at least some resistance anywhere from $300 up to $330.
Next we see that the blue horizontal band on the chart ranging from about $297 to $310 acted as good support from the spring of 2017 all the way into late March of this year. Since then however this area has turned into technical resistance.
Over the past few trading days TSLA stock has once again found resistance in this area, which was confirmed with Monday’s 3% drop.
Active investors and traders could now try TSLA stock on the short side against the $312 area as a last resort stop loss and a first downside target at $270.
The market environment in recent months has changed notably, and trading and active investing opportunities have increased, including in stocks such as that of Tesla.
One of my favorite “trading” setups that is working particularly well in this market environment takes place in the first hour of the trading day. Today, I am holding a special webinar for InvestorPlace readers to present the details of this cash-flow/income trading setup. Register here.
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