Tesla (TSLA) - Get Tesla Inc Report stock is about flat on the day, but it dropped more than 1% at one point as investors tried to sort out several bits of news and the stock flirted with a major breakout.
Shares are hovering near $950, testing a zone that Tesla stock could not clear in February.
The stock was initially under pressure on Tuesday over Model Y crossover production concerns due to a leaked email from Chief Executive Elon Musk.
But it follows Monday’s session, in which the shares jumped 7.3% following a report on positive sales trends for the automaker in China.
That move also broke Tesla out of a bullish consolidation pattern.
In any regard, investors are also digesting comments from the money manager Ron Baron. Earlier on CNBC, Baron said the stock could be worth $2,000 to $3,000 a share in five years. He further argued that Tesla could generate $1 trillion in revenue a decade from now.
We’re not looking out a decade from here, but let’s get an idea of how the stock is setting up.
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On June 3 Tesla stock gapped higher, up toward $900, before consolidating in a tightening sideways pattern all week. That led to this week’s gap up, with the shares clearing $900 and racing to $950.
The fact that the shares are flat today vs. a down day in the overall market and amid negative production reports bodes well for the bulls. But they don’t want to lose the $920 level and this week’s current low at $909.16.
Below that figure puts the 10-day and 20-day moving averages back in play, currently at $886 and $850, respectively.
While the bullish setup isn’t ruined on a retest of these marks, it saps the stock’s current momentum and makes a push for $1,000 more difficult.
To get to $1,000, Tesla needs to take out the February high at $969. Above that and even just a small push will get the stock to the four-digit club, joining others like Amazon (AMZN) - Get Amazon.com, Inc. Report and Alphabet (GOOGL) - Get Alphabet Inc. Class A Report (GOOG) - Get Alphabet Inc. Class C Report.
While Tesla may have sellers waiting at $1,000, a lot of short sellers’ stop-loss orders may be sitting there too. Combined with bullish enthusiasm, that could trigger a breakout rather than a sell-the-news reaction.
To find out, though, we first need Tesla to clear $969. Then we can start discussing $1,000 a bit more seriously.