Under pressure from a pair of bearish analyst notes from Goldman Sachs and JPMorgan, Tesla sold off, shedding 7.8% between Monday's open and Friday's close. That's a pretty stark contrast from where shares started the week, up more than 20% since the end of May and primed for even more upside from a technical standpoint.
Or is it?
To figure out where Tesla's likely heading after last week's selloff, we're turning to the charts for an updated technical look at this trade.
At the risk of spoiling the surprise, last week's burst of selling didn't derail the technical picture that Tesla was showing off heading into the start of July. In other words, the Tesla trade is still in play.
Here's the chart:
Simply put, Tesla's price action looks like it's putting its prior downtrend (the dashed red price channel in the chart above) behind it.
While shares got hit hard by last week's Wall Street-induced selling, buyers ultimately stepped back in around the $300 level, holding a series of higher lows set from Tesla's lows back in April. Not so coincidentally, that bounce also reaffirmed support at the $310 level, which Tesla never materially violated.
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That $310 level has significance stretching all the way back to January, and it marked the official change in control from sellers back to buyers when it got taken out at the beginning of last month. The fact that it's still intact here bodes well for Tesla's price trajectory.
So does relative strength, the side indicator down at the bottom of Tesla's chart. This stock's relative strength guage has been making higher lows of its own since April, signaling that Tesla continues to systematically outperform the rest of the broad market, even with last week's drop factored in.
Tesla remains a "buy the dips stock" this summer - and this week's upward move is officially a "bounce" off of trendline support.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.