The action comes after a surprise third-quarter earnings beat. The company delivered everything Wall Street needed to hear to believe that the all-electric car maker is back on track.
Positive commentary on free cash flow, the Model Y, Tesla Semi and the Gigafactory 3 in China was enough to send the shares rocketing above $300, at least temporarily.
Bulls are most certainly enjoying their day in the sun, particularly for this highly emotional stock. Now can Tesla stock maintain such lofty gains going forward or are investors in over their skis?
Let's look at the charts.
Trading Tesla Stock
Tesla stock is doing a good job maintaining Thursday's gains, although it's struggling to stay north of $300. While it will be somewhat disappointing for bulls to see TSLA close below $300, it's hard to ask for more after such a big one-day gain.
However, many positives can be taken from Thursday's rally. The stock held its 61.8% retracement this week and reclaimed its 50% retracement on the rally. It also reclaimed its 50-week and 200-week moving averages on the move. As it stands, the 38.2% retracement at $302.14 is acting as resistance.
Perhaps most important, though, Tesla stock surged through the key $250-ish area. The $245 to $260 was long-term multiyear support. Earlier this year, this area turned to resistance, highlighting an important change in sentiment.
With a series of higher lows (shown on the chart with a purple uptrend line), Tesla stock had developed an ascending triangle on the weekly chart. That's a bullish technical development where traders were looking for a breakout.
While it would be discouraging to see TSLA stock fall this far, as long as it stays above this area and the 200-week moving average, it finally looks OK on the long side.
Short-term investors may feel better about buying shares on a mover over the 38.2% retracement, or waiting for a pullback into the $280 area. Either way, the momentum is back with the bulls and it's up to them to maintain that momentum going forward.
Let's see if Tesla can get above and stay above $300. Otherwise, it may need to pull back before going higher.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.