The surge of positive price momentum that's sent shares of Tesla Inc. (TSLA) more than 40% higher from its lows back at the start of April may have a lot further to run.
Year-to-date, Tesla has been extremely "technically obedient"...
In other words, Tesla's popularity as a trading vehicle means it reacts predictably to technical setups, including the one that led to the upside we're seeing in June.
Now, Tesla is showing off its third major technical buy signal in the last month, and the timing is especially interesting. That's because Tesla is expected to deliver second-quarter delivery numbers next week, once Q2 is officially buttoned up. Expectations surrounding this quarter's results.
Bulls and bears alike are waiting to see whether Tesla will hit the 5,000 a week Model 3 production goal that the company has been scrambling to hit.
Goldman Sachs thinks that Tesla will miss on a best guess of 28,000 vehicles that analysts are predicting.
Just to complicate estimates, there's also speculation that Tesla is holding back on deliveries in order to delay its 200,000 U.S. electric vehicle sale until the first week of July in order to keep the full $7,500 Federal income tax credit in place through Dec. 31.
While delivery numbers are likely to be a key price catalyst when they're released, Tesla's current technical setup provides some very important context right now. Put simply, buyers are still very much in control of shares of Tesla right now:
Tesla's ascending triangle pattern at the beginning of April set the stage for an end to the intermediate-term downtrend in shares at the beginning of this month. As expected, shares retreated a bit this week, bleeding off some overbought momentum, and giving Tesla's stock price the chance to re-test newfound support at its prior resistance level.
That level was successfully tested at the beginning of this week, leading to Tesla's 6% rally in the last four trading sessions (while the S&P 500 gave back 0.6%).
Long term, Tesla's recent breakout jives with a secular uptrend that's still very much intact right now:
The intermediate-term downtrend is highlighted in red on the weekly Tesla chart above. In the context of the primary trend, Tesla's weakness at the beginning of the year is actually pretty consistent with its price action stretching all the way back to the middle of 2013.
Simply put, Tesla still looks like a "buy the dips stock" in the long run.
Meanwhile, risk-averse traders should wait for delivery numbers to be absorbed by the market before jumping in.