This Is Tesla's Must-See Chart After Strong Deliveries Lift Stock

Tesla reports better-than-expected first-quarter deliveries but the chart for the stocks slams into resistance.
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Tesla  (TSLA) - Get Report shares were well off their premarket highs, but investors have to be pleased with the stock’s 6.8% gain in midday Friday trading.

That’s as the S&P 500 is down about 1% on a much worse-than-expected labor report for the month of March. Tesla’s rally isn’t coming out of left field, though.

Shares of the automaker rocketed higher by more than 15% at one point in premarket trading. With Ford  (F) - Get Report, General Motors  (GM) - Get Report and Fiat Chrysler  (FCAU) - Get Report all reporting disappointing first-quarter sales results, expectations were not high for Tesla.

Consensus estimates called for deliveries of just 79,900, while Tesla reported first-quarter deliveries of 88,400. On top of that, the all-electric automaker produced more than 100,000 vehicles in the quarter despite having to halt or slow production both in the U.S. and China.

Despite the results though, shares are well off the session high near $515. Further, after Friday’s rally, Tesla stock is still down about 50% from its high in February. Let’s take a closer look at the charts.

Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

A look at the daily chart shows both the explosive rally up to $950 resistance and the deflating pullback in Tesla stock. Generally when this stock pulls back, it’s usually due to a company-specific issue or has something to do with CEO Elon Musk. In this case though, the decline is purely thanks to the coronavirus.

After being rejected from $950, Tesla stock embarked on a quick pullback to the 50-day moving average, bounced higher and then topped out near $800. Shortly thereafter, the stock lost the 50-day moving average as support.

These are important developments, because it showed how shares lost bullish momentum. The rally up to and failure at $800 allowed the stock to form a lower high, and thus, also form a downtrend resistance mark (blue line on the chart).

Friday’s rally took shares up toward the 20-day moving average, a metric Tesla shares haven’t been able to reclaim, as well as downtrend resistance. If the stock can reclaim these marks, it puts a rally up to $600 on the table. 

On the downside, it would be constructive to see TSLA hold the 50% retracement for the one-year range near $480, as well as the $450 mark, which is near the April low thus far. Holding these levels would allow a series of higher lows to form, showing that bulls are slowly but surely regaining momentum.

Ultimately, Tesla bottomed around $350 and quickly reclaimed $400 in mid-March. Should $450 fail as support, it puts the 200-day moving average and $400 mark back in play. With elevated volatility, it’s important to have discipline and go from level to level without bias. That’s particularly true for a stock like Tesla.