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Buy or Sell Tesla After Record Deliveries? Look at the Chart

Tesla stock is gapping higher amid a sea of red on Monday, following better-than-expected delivery results. Let's look at the key levels on the chart.

The overnight futures action didn’t look bad, but the market — particularly the Nasdaq — has been hit hard on Monday morning.

The same cannot be said for Tesla  (TSLA) - Get Tesla Inc Report though, as its shares are higher by about 1.3% on Monday at last check, despite the 2.5% drop we’re seeing in the Nasdaq. The stock was up 4.1% at one point. 

In fact, the other auto stocks are doing well too, as Ford  (F) - Get Ford Motor Company Report and General Motors  (GM) - Get General Motors Company (GM) Report are both higher on Monday.

The strength comes after Tesla announced it had delivered 241,300 vehicles in the third quarter, a new record.

After the results, Wedbush upped its price target to $1,000 per share. Let’s look at the charts again as Tesla is showing strong relative strength vs. the overall market.

Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

In September, I took a closer look at Tesla as the stock was breaking out over resistance. After a nice consolidation, the stock was able to again resolve higher, the exact pattern we continue to pound the table on.

After pushing through the key $781 level, shares were rejected by the $800 mark and pulled back to the 10-day moving average.

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With today’s gap-up, Tesla hit a high of roughly $807, but is currently back below $800. I’d love to see a close above $800 — and thus, last week’s high — allowing for a potential continuation higher.

If that’s the case, I have my eyes set on the 78.6% retracement near $823. Above that puts $850 in play, followed by the $880 mark. That level was notable resistance throughout the first quarter.

Despite multiple rally attempts, this mark continued to hold Tesla in check. A move over $880 puts the highs in play near $900. After that, everyone will seemingly have their targets set on $1,000.

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What if Tesla pulls back instead?

I would love to see $780 act as support. However, despite five days of clearing this level on an intraday basis, Tesla stock was only able to close above it once last week.

Instead, let’s see that the 10-day moving average acts as support. A close below this measure opens the door down to the 61.8% retracement at $762.50, along with the 21-day moving average.

Below all of these marks and a larger pullback may be in play.

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