How to Trade Tesla After Earnings, Plus Four Other Highfliers

NEW YORK (TheStreet) -- High-flying stocks are tricky to predict as Tesla (TSLA) and four other momentum stocks have shown.

All five stocks hit highs after earnings and then lost momentum. The technical analysis below may help you find levels at which to buy and sell the stocks.

Tesla traded as high as $242.90 after the closing bell on Wednesday after it reported better-than-expected earnings. The stock then traded as low as $216.75 in premarket trading on Thursday, testing this week's key level of $217.44. This kind of volatility can be traded, but new highs have become illusive.

Here's an outline of post-earnings volatility for the other four momentum stocks. Revised performance measures and key trading levels will follow.

Apple  (AAPL) reported blowout earnings on April 27, and set an all-time intraday high of $134.54 on April 28. The high was a test of a key level of $134.41, where investors could have booked profits.

Amazon (AMZN) reported better-than-expected earnings on April 23 and set an all-time intraday high of $452.65 on April 24, and then faded.

Google (GOOGL) also reported on April 23, and despite a miss traded at a 2015 high of $584.70 on April 24. It now has a negative weekly chart.

Netflix (NFLX) kicked off the momentum-stock earnings parade on April 15 with a huge beat, and Bank of America/Merrill Lynch upgraded the stock to buy from underperform and raised its price target to $722 from $350. Netflix has faded since, setting its all-time intraday high of $577.10 on May 5.

Let's take a look at the momentum stock scorecard as of Wednesday's closes.

Apple closed at $125.01 on Wednesday, up 13% year to date. The stock, however, is below its 50-day simple moving average of $126.81. The weekly chart for Apple will shift to negative given a close on Friday below its key weekly moving average of $125.96.

Investors looking to buy Apple should place a good-till-canceled limit order to purchase the stock if it drops to $110.43, which will be a key level on technical charts until the end of 2015. Investors looking to book profits could have done so using a good-till-canceled limit order to sell the stock if it rose to $134.41, which was a key level on technical charts until the end of April. Two key levels on technical charts of $122.21 and $126.45 remain in play until the end of June.

Amazon closed at $419.10 on Wednesday, up 35% year to date. The stock is above its 50-day and 200-day simple moving averages of $387.44 and $339.22, respectively. The weekly chart for Amazon is positive but overbought with its key moving average of $398.62.

Investors looking to buy Amazon should place a good-till-canceled limit order to purchase the stock if it drops to $383.18, which will be a key level on technical charts until the end of 2015. Investors looking to book profits should consider a sell-stop order given a weekly close below the key weekly moving average which is rising at $399.04. There are two key levels on technical charts of $406.23 and $409.91 that will be in play until the end of June.

Google closed at $535.08 on Wednesday, up 0.9% year to date. The stock is below its 50-day and 200-day simple moving averages of $556.84 and $555.98, respectively. The weekly chart is negative with the stock below its key weekly moving average of $548.65.

Investors looking to buy Google should place a good-till-canceled limit order to purchase the stock if it drops to $526.68, which will be a key level on technical charts until the end of 2015. Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $605.84, which will be a key level on technical charts until the end of June.

Netflix closed at $560.54 on Wednesday, up 64% year to date. The stock is above its 50-day and 200-day simple moving averages of $478.50 and $427.74, respectively. The weekly chart is positive but overbought with the stock above its key weekly moving average of $508.72.

Investors looking to buy Netflix should place a good-till-canceled limit order to purchase the stock if it drops to $522.35, which will be a key level on technical charts until the end of this week. Investors looking to book profits should consider a sell-stop order given a weekly close below the key weekly moving average, which is rising at $509.72.

Tesla closed at $230.43 before reporting earnings after the closing bell on Wednesday, up 3.6% year to date. The stock is above its 50-day and 200-day simple moving averages of $205.24 and $227.19, respectively. The weekly chart is positive with the stock above its key weekly moving average of $213.35.

Investors looking to buy Tesla should place a good-till-canceled limit order to purchase the stock if it drops to $217.44, which is a key level on technical charts until the end of this week. That level was tested in the pre-market on Thursday.

Investors looking to book profits should place a good-till-canceled limit order to sell the stock if it rises to $239.50, which is the May 5 high.

A key technical level of $227.99 should be a magnet until the end of June.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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