Another stock that's moving within range of triggering a big breakout trade is
(TSLA - Get Report)
, which designs, develops, manufactures and sells electric vehicles and electric vehicle powertrain components, including the Tesla Roadster, an electric sports car. This stock is off to a decent start in 2012 with shares up around 16%.
If you take a look at the chart for Tesla Motors, you'll see that this stock formed a double-bottom chart pattern a few months ago at $26.83 to $27.11 a share. After marking that bottom, shares of TSLA have started to uptrend strong hitting a recent high of $34.50 a share. During that uptrend, shares of TSLA have been making mostly higher lows and higher highs, which is bullish
technical price action
. This stock has also started to move into breakout territory, since it's cleared some near-term overhead resistance at $32.80 a share. That move is now pushing TSLA within range of an even bigger breakout trade.
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Market players should now look for long-biased traders in TSLA if this stock can manage to trigger a bigger breakout trade above some overhead resistance levels at $34.50 to $34.68 a share, and then above $35.75 a share with high-volume. Look for a sustained move or close above those levels with volume that's near or above its three-month average action of 1.2 million shares. If we get that action soon, then TSLA will have a great chance of re-testing and possibly taking out its recent highs of $38.47 to $39.95 a share.
One could buy TSLA off weakness to anticipate that breakout and simply use a stop just below the recent
of $32.80 a share. If you buy off weakness, then I would add once TSLA clears those breakout levels mentioned above with high-volume. A higher probability trade would be to buy off strength once TSLA triggers that breakout, and then simply use a stop a few percentage points below $34.50 a share.
This stock is a favorite among the short-sellers. The current short interest as a percentage of the float for TSLA is a whopping 48.6%. This stock has some gigantic short-squeeze potential off any high-volume breakout. With that many shorts, TSLA could see some monster spikes higher if the stock can manage to clear some of those overhead resistance levels.