In a market struck down by the coronavirus, bears are clearly in the driver’s seat in Tesla (NASDAQ:TSLA) of late. The question now is whether TSLA stock deserves the green light for a purchase?
As much, let’s take a look at what’s happening off and on the price chart to reach a more informed risk-adjusted decision on shares.
A lot has occurred in Tesla shares over the past three-plus weeks, and for good reason too. Front and center, what had been largely a China health problem has snowballed into a global health and financial crisis and one which has seen drastic measures of all kinds taken.
The Italian government’s aggressive lock-down inside its borders takes the cake. But from Delta (NYSE:DAL) and other airlines smartly cutting routes, companies like Amazon (NASDAQ:AMZN) forcing certain employees to work from home or consumers hoarding hand sanitizers, many parties are obviously concerned. And they’re not the only ones worried either.
To say COVID-19 is no different than past panics would be a massive understatement. Following last week’s emergency rate cut by the Federal Reserve, the U.S. Administration is floating a payroll tax cut to combat damage to the economy, American wallet and stock market.
For a contentious Tesla stock the sum total of the coronavirus has unsurprisingly seen shares getting slammed following a spectacular and brutalizing couple months for the stock’s doubting Thomases. But are bullish investors in a position to regroup on the price chart?
TSLA Stock Daily Chart
I don’t hold the same long-term vision of ARK Invest’s Catherine Wood. Last month the renowned bull set a price target on Tesla of $7000 by 2024 based on the firm’s much publicized research. And if their thesis pans out stronger-than-anticipated, a rally upwards of $15,000 could be possible according to the firm. Yeah, it’s hard to buy into. All the same, I am bullish on TSLA at the moment.
For nimble investors buying shares today the possibility of a fast 20% of upside or a much larger leveraged return using the options market looks compelling.
The Bottom Line on TSLA Stock
Technically, the market is at Tesla’s back for this type of reaction rally following a historic sell-off in the broader averages. But it gets better for faster money investors. On the TSLA stock chart shares are backed by a pattern double bottom testing Fibonacci support and showing a positive oversold divergence from the stochastics indicator.
Now and with Tuesday’s intraday high confirming the second pivot low for the price pattern, shares are ready for purchase. That said, to make this a more confident and calculated position, minding the low and exiting for a small loss if necessary is mandatory.
But if all goes more or less according to plan, $750 – $760 for taking profits into the apex of a former triangle looks about right for today’s bulls off and on the price chart.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
