Tesla stock is reacting well to the earnings report but it’s also trading right into a resistance zone.
While CEO Elon Musk said on the conference call that we’ll “probably have a pretty difficult recession this year,” investors seem to be ignoring any potential macro headwinds and focusing on the company’s results.
Further, Musk talked about strong demand for Tesla’s vehicles, saying, “I want to put that concern to rest.”
The stock has been trading much better lately and at one point was up nearly 12% on the day. Assuming Tesla stock closes higher today, it will mark its fifth straight daily gain.
Further, the shares are now up more than 50% from the January low.
That said, it’s been a rough ride. Tesla shares declined in five straight months, losing almost two-thirds of their value on the way to a peak-to-trough decline of 75%.
Trading Tesla Stock
With its post-earnings-report gains, we’re looking at the stock trying for its third straight weekly gain. The rally off the low is thrusting Tesla stock into a key area on the charts.
When the stock was declining, the bulls were hoping that the $150 to $155 area would support it.
It’s where the stock found a major breakout level, the monthly VWAP measure, as well as the 200-week and 50-month moving averages. This area was critical.
It failed as support — miserably failed.
After bottoming near $100 and rebounding, it’s back in this zone and trying to reclaim these very key levels.
If Tesla stock can take out the post-earnings high of $161.42, the $167 to $168 area could be in play. That was a bounce level in November and currently where the 200-week moving average comes into play.
But not many traders are playing Tesla for a move worth a couple of dollars per share. They want something bigger and if the shares can clear the key area they are near now, the door back up toward $200 opens.
For now the stock is trading into resistance. If it holds strong, look for potential support in the mid-$140s and from the rising 10-day moving average.
Below that could put $125 back in play, but we’ll likely need to reevaluate the stock at that point.
For now, keep a very close eye on the $155-ish area.