Is It Time to Get More Bullish on Tesla?
Shares of Tesla (TSLA) - Get Report closed Monday at new highs for the month. For the day, the stock gained over 3.4%, putting it in the No. 2 spot of Nasdaq 100 gainers. Volume driving this impressive move showed a nice jump as Tesla begins to put some distance on a very solid support zone.
With earnings just over a week away, the stock is setting up well for a positive response to the first-quarter results.
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After an initial 15% post-Brexit bounce, Tesla stalled just shy of the $218 area. This heavy resistance zone was marked by the June 24 Brexit breakdown gap, the most damaging opening for the stock in over a year. In addition, both the stock's 50- and 200-day moving averages were flat-lining in this area. Despite the extremely strong downside pressure near $218, Tesla spent only a few days below before breaking through on July 11. Since then, the stock has moved past a key trend line that links the April and June highs while building a solid base above a trio of moving averages. This narrow consolidation pattern could provide the footing needed for a fresh bull run.
In the near term, Tesla bulls should take a more positive view of the stock and should consider shares a buy on weakness. If shares can remain above the $220 area ahead of earnings, a positive report next Wednesday afternoon could spark a fresh bull leg. Once past the $241 area, which would clear last month's high, Tesla has plenty of room to run. On the downside, a close back below the $214 level would violate both the 50- and 200-day moving averages while leaving behind a significant amount of supply.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.