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Tesla Beat Earnings Expectations But Must Hold Key Levels

Tesla
TSLA
beat earnings-per-share estimates reported after the closing bell on Monday, July 26. The daily and weekly charts favored a positive reaction to earnings. The stock was above its 200-day simple moving average at $643.98 with a high of $673.79 at 4:05 P.M. Monday afternoon.

This morning, Tesla is trading back and forth around its 200-day SMA at $645.08. It’s also trading just below its five-week modified moving average at $646.57. If the stock closes below its 50-day simple moving average at $631.85, the downside risk is significant.

The Daily Chart for Tesla

Tesla has been trading up along its 200-day simple moving average as it rose from $582.56 on May 13 to $645.08 this morning. The stock is consolidating a 40% bear market decline from its all-time intraday high of $900.40 set on January 25 to its 2021 low of $539.49 set on March 5.

Note that the 50-day simple moving average at $631.85 fell below its 200-day SMA at $645.08 forming a death cross. Failure to hold the 50-day indicates significant downside risk as its semiannual and annual value levels lag at $421.72 and $390.81.

If it ends this week above its weekly pivot at $657.21, the upside is to its quarterly risky level at $758.56.

The Weekly Chart for Tesla

The weekly chart for Tesla is neutral with the stock just below its five-week modified moving average at $646.57. It’s well above its 200-week simple moving average or reversion to the mean at $216.11. The 12x3x3 weekly slow stochastic reading is rising at 51.50.

Trading Strategy: Buy Tesla on weakness to its semiannual and annual value levels at $421.72 and $390.81 and reduce holdings on strength to its quarterly risky level at $758.56.

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