Tesla (TSLA) - Get Report continues to struggle with heavy resistance near its 200-day moving average. This key long-term indicator has kept a lid on further upside since mid-October. As we enter the final sessions of the year, the 200-day is still causing problems. For patient investors, it may prove wise to keep some powder dry until the December high is clearly taken out.
Tesla suffered a steep drop after the stock's powerful rally off the August lows ran out of steam. The stock recovered all of the August damage by mid-September but was unable to make any further headway. By mid-October, Tesla had dropped to within 3.5% of its Aug. 24 spike low. A quick rebound in late October reached the 200-day moving average, and since then, this level has served as a wall. The 200-day held multi-week highs in November and is doing the same this month.
As the post-October low consolidation has continued, Tesla has consistently put in higher lows. In November and December, the stock has left behind back-to-back higher monthly lows. Investors should be encouraged by this improving action but should remain cautious until a new up leg is confirmed.
In the near term, Tesla bulls should keep a close eye on the initial December peak near $238.60. A close above this level may finally provide the spark needed to convincingly take out the 200-day moving average. Until then, it's very likely that shares will remain range-bound, allowing the current overhead pressure to build even more strength.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long Tesla.