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How to Trade Tesla Stock After Muted Earnings Reaction - Buy or Sell?

Tesla delivers an earnings and revenue beat, yet the stock is declining. Here's how investors can look to trade it now.

Tesla  (TSLA) - Get Tesla Inc Report stock isn’t giving us the type of fireworks we have become accustomed to after the electric vehicle company reported earnings.

Shares have fallen about 5% on the day, but it took awhile to get to this point.

The stock opened higher by a mere 88 basis points, climbed 1.35% at its highs and reversed lower.

Tesla has been a bit of a roller coaster over the past few months, but not quite the roller coaster that bears were hoping for.

There’s been a lot of drama surrounding the company and the CEO’s take on Bitcoin, but Tesla has continued to deliver solid results.

At the beginning of the month, Tesla delivered a record delivery result for the second quarter.

Then Tesla delivered a top- and bottom-line beat, logging more than $1 billion in profit as revenue nearly doubled year over year.

But what do we do with the stock?

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Trading Tesla Stock

Daily chart of Tesla stock

Daily chart of Tesla stock

The stock continues to chop around its daily moving averages. I was tempted to use a weekly chart, but thought the daily chart may be of visual importance to traders. 

Tesla stock is being rejected by the 21-day moving average, failing to hold the 200-day moving average and trading down into the 50-day.

Honestly, seeing it fail to hold this level might be for the best. That can usher in a move down to the 50-week moving average, a measure that has guided Tesla higher for quite some time.

A close below the 50-week would raise some eyebrows though, potentially opening up Tesla to further downside.

However, given the stock’s rather muted response to earnings, it’s hard to imagine a large selloff occurring without the overall market trading notably lower too. Of course, the market is under pressure on Tuesday, which doesn’t help matters.

So the downside is rather simple: Let’s see if Tesla stock can hold $600 and the 50-week moving average.

On the upside, a rotation over this week’s high would be best. Not only does that put Tesla over the post-earnings high, but also over all of its major daily moving averages.

That would open the door to $700-plus, then $780. For now, let’s go one step at a time and see what support level holds. For now, it’s the 50-day, but the stock may weaken in the days ahead.