Tesla Stock Analysis: The Technical Picture

Tesla (TSLA) reported earnings last night and while it was received well initially, the Tesla stock price today is getting hammered as traders woke up to a totally different situation this morning. Tesla shares sold off by by the biggest amount that we have seen since the massive rally started in the stock back in December of last year. 

I’m not focusing on the fundamental story behind TSA’s reason to buy or sell, because I am a technical guy and I find that the charts tell a far bigger story here. 

Notice in the chart below the key declining support that this mornings sell-off tested and held:

Do you see that? That is massive multi-year support going all the way back to the July 2015 highs. Every time this area has been even slightly touched, it has resulted in a sharp reversal. So if you think that this level still means something, you’ll want to get long on this stock, because history suggests that it will likely attempt to bounce off of this price level again. 

For those who missed the massive rally off of the December lows, and there are plenty of them (myself included), will be looking at getting in this stock again off of key support to see if this is indeed a buying opportunity that will take it back above the February highs. 

Also, worth mentioning is the incredible stop-loss this stock is sporting. I mean just look at it, if TSLA drops below $247, you have there an established lower-low on the chart and no reason to hold it any further. So that is about $10 or so of downside. The upside is Getting back to $290 or $30/share and beyond. So at a minimum, if this trade works, pays off a 3:1 return. 

When Should You Buy Tesla Shares

That is something only you can answer. But I have noticed of late that buying stocks right after their earnings following a significant sell-off, hasn’t been the best of plans. Instead let it settle into today, see if it can hold key support today, and when tomorrow comes around, if it is still holding the declining support level, jump in it, and keep a stop-loss on, just in case. 

This is similar to the play in Amazon (AMZN) following its earnings. Getting in it on the day of earnings was not the smart move, But within a couple of day’s time it was marching higher and higher and now is trading at all-time highs. 

Keep an eye on TSLA and see what it has in store for you tomorrow. If it looks like it is doing a fine job of holding support that I’ve detailed above, then give it a shot as a long setup. Otherwise, I would just move on.