Tesla stock has been on fire this year, doubling from the January low. Can the rally continue?
The sharp move is not completely unexpected, given the way the shares fell apart in the second half of 2022.
Tesla stock ended the year on a five-month losing skid, giving back about 67.5% from the August high to the early January low and bottoming just above $100. From the all-time high, the electric-vehicle leader’s shares fell about 75%.
The selling pressure was intense coming into the year, fueled by concern for Tesla’s vehicles and following Elon Musk’s takeover of and involvement in Twitter.
Those fears have abated — at least for now — as the bulls continue to pile into this name.
Tesla stock continues to trade well after a solid earnings report in January, posting rises in seven of the past eight weeks. Can long investors continue to bet on this name?
Trading Tesla Stock
On Friday, Tesla stock tested its 21-day moving average for the first time since breaking out over it in January. It found support on this test, and on Monday it’s outperforming the overall markets and trading back above $200.
Given the rally, it would be constructive for the stock to undergo more consolidation. That said, it holds up very well given the backdrop of the overall market.
If Tesla stock can rotate over last week’s high of $209.71 — call it a move over $210 — then it opens the door to the 200-day moving average and the 10-month moving average. The 10-month was resistance earlier this month.
These measures come into play around $220. If the stock were to move above those levels, the door opens to the 61.8% retracement near $233.
On the downside, last week’s low at $191.78 and the 21-day moving average are two key levels to watch. If Tesla stock closes below those marks, it opens the door down to the low-$180s, then $175.
If it meets significant selling pressure, it’s not unreasonable to think Tesla stock could revisit the $150 to $160 area.