Tesla stock has been volatile over the past few sessions following Elon Musk’s purchase of Twitter. Here’s how to trade it now.
Tesla (TSLA) – Get Tesla Inc Report stock was one of a handful of tech names that were able to stand relatively strong amid the onslaught of selling pressure.
At one point, Apple (AAPL) – Get Apple Inc. Report, Tesla and Nvidia (NVDA) – Get NVIDIA Corporation Report were leading the charge higher, with the stocks cruising higher going into the end of March. In fact, Tesla stock rallied in 10 out of 11 sessions, with its lone down day being a loss of just 0.32%.
Even though it was rejected from an obvious resistance point on its post-earnings burst higher, the stock was still performing pretty well considering the market meltdown we’ve been enduring.
But times are changing — and doing so quickly now that CEO Elon Musk has agreed to a $44 billion takeover of Twitter (TWTR) – Get Twitter, Inc. Report.
Ever since then, Tesla stock has been volatile and struggling. Of course, volatility has been quite high over the last week and a half too, with multiple downward flushes.
That obviously doesn’t help, but neither does Musk’s selling of Tesla stock.
Now we have to wonder just how much staying power this stock has.
Trading Tesla Stock
Daily chart of Tesla stock
Chart courtesy of TrendSpider.com
Look at how the stock exploded off the mid-March lows, had a quick pullback, then popped on earnings.
After the pop, Tesla stock faded once more, found its footing near $975 support, then plunged below this level after the Twitter deal was confirmed.
Shares continue to trade in a wide range, bouncing between $900 resistance and $875 support. From here, we need to see which level gives way. Currently, it looks like support is the one that’s failing.
Tesla opened below $875 and tried to reclaim support. So far through the session, it has been rejected by this area though, which makes me think the bears are gaining some ground here.
Keep an eye on last week’s low near $822. A break of this area opens the door down to the $800 level and the rising 21-month moving average. The latter was support in February and in March of this year.
If it’s not support, investors need to start looking at the levels that Tesla stock was probing earlier this year, first near $750 then the 2022 lows near $700.
On the upside, keep an eye on $875. A close above that opens the door to $900, then a potential push up toward $940. Just ahead of that level, Tesla stock finds its 50-day moving average.
It’s an uphill battle at the moment, but that can change on a dime if the market turns around. Keep that in mind when trading this name.
