Chart Wars: Tesla vs. Nikola

Ed Ponsi

In June, electric vehicle manufacturer Tesla celebrated its tenth anniversary as a publicly traded company. During that time, the stock has run from $17 to over $1000. 

Naturally, competitors would like to enter Tesla's space and grab a piece of the iconic company's market share. Enter Nikola, a Phoenix-based electric vehicle manufacturer. Nikola went public in early June, after a reverse merger with VectoIQ. 

A reverse merger occurs when a privately-held company, in this case Nikola, merges with a publicly traded company. The deal allowed Nikola to go public without having to undergo the complex process of an actual IPO. 

Let's go to the charts and compare the technicals of these two competitors.

I've recently stated that Tesla will reach $1200. That move is based strictly on technical analysis, and could happen sooner than expected. 

Tesla has formed an ascending triangle formation (black dotted lines). This bullish consolidation pattern is particularly effective in an uptrend, as it appears here. 

Notice how Tesla's volume is dropping as the stock consolidates its recent gains (shaded blue). This is normal price action during a consolidation phase, which Tesla is experiencing now. 

Right now, Tesla is hugging its 20-day moving average (blue). My only concern is an unfilled gap (shaded yellow). In order to fill the gap, the stock could pull back to an area just below $900. 

TSLA

Bottom line: like a SpaceX rocket, Tesla is on the launchpad for its next leg higher. The stock will reach $1200, it's just a question of when. 

Nikola is also in a consolidation phase, but unlike Tesla, the stock's chart is neither bullish nor bearish. 

Like Tesla, this stock has formed a triangle, but in Nikola's case, it's a symmetrical triangle (black dotted lines). Unlike Tesla's bullish ascending triangle, Nikola's symmetrical triangle has no directional bias. Whichever way the stock breaks will determine the direction of Nikola's next move. 

NKLA

Both stocks have benefited tremendously from a massive rally in U.S. stocks. The S&P 500 rallied from 2191 on March 23 to 3233 on June 8, for a gain of over 47% in less than three months. That rising tide lifted many ships, including Tesla and Nikola. 

Keeping that in mind, Nikola's next move is market-dependent. The froth and speculation of a raging bull market can certainly push it higher, but this stock has yet to be tested by market adversity. 

Tesla, on the other hand, appears to be untethered at the moment. It is likely to maintain momentum in its current direction, independent of the overall market. 

Final thought: keep in mind that this isn't a zero-sum game. Both names can be winners, but based on the charts, one is more likely to win than the other. 

Comments (5)
No. 1-2
El Toro
El Toro

Going off chart, Nikola has some of the biggest players in the Class 8 trucking business involved in the company including Iveco, Meritor and Bosch. At some point, Tesla's quality will catch up with them in their little cars and they will have a hard time dealing with customers that have performance demands, instead of customers who are making a fashion statement.

Trader Pat
Trader Pat

Awesome, happy to see this site up.. Thanks for the content, may the followers grow!
Are we gonna be doing some Forex Technical's at all Ed Ponsi?