Just How Far Can Tesla Rally at This Point?

Tesla has rallied more than 80% in three trading weeks. Here's an updated look at the charts for the stock.
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Tesla  (TSLA) - Get Report has been so hot lately that it’s hard to imagine there are any long-time short-sellers left in the name.

From the Aug. 11 low to Tuesday’s high at $502.49 - a span of 15 trading sessions - Tesla stock has risen an astounding 84%.

The company now boasts a market cap of $460 billion. Even with Tuesday morning’s quick selloff, shares are back to flat on the day after the company announced it will raise $5 billion.

Why wouldn’t Tesla raise money at this point? Shares are up more than 600% from the March lows and 1,000% over the past year. A 10-bagger in 12 months at this size is simply incredible - there are no words to describe it.

On Monday alone, shares added 12.5%. That was the first day that Tesla and Apple  (AAPL) - Get Report began trading after splitting their stock prices. How much more upside could possibly be left?

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Trading Tesla Stock

Daily chart of Tesla stock.

Daily chart of Tesla stock.

On a post-split basis, shares have rallied from roughly $275 to almost $500 in a few weeks. That move is unsustainable in many ways, although there’s no need to step in front of a freight train.

The breakout on August 12th put a run to all-time highs in play. Once it cleared $2,000 though ($400 in a post-split world), that’s when we put the $2,500 ($500) target in play, as well as the 361.8% extension.

That got some push back, as many felt the move had already gone too far, too fast. But here we are, with Tesla stock temporarily clearing $500 this morning, leaving the 361.8% extension in play up at $517.63.

Above that will eventually put the four-times range extension in play near $565, followed lastly by the 423.6% extension, near $594.

Can it get there? I certainly won’t say it can’t, although a run of this magnitude is not a sustainable one. I’m not sure when Tesla stock will correct or how far it will decline when it finally does. However, it starts with a close below the 10-day moving average.

Believe it or not, but sub-$350 could be in play under the right circumstances. Even then, the setup wouldn’t be all that unhealthy, as Tesla simply returns to prior resistance from July.