Tesla stock is moving lower after disclosing a series of price hikes on U.S. vehicles. Here’s how to trade the stock now.
The Austin electric-vehicle giant’s shares at last check June 16 were down more than 9% from a day earlier.
The action in the broad market isn’t helping. The S&P 500 has given up 3.5% and the Nasdaq is down 4.4% on the day. In the week through June 15, the S&P had fallen 2.8% and the Nasdaq had shed 2.1%.
Still, the bulls were likely hoping that Tesla could buck at least some of the market weakness, although investors broadly are concerned that cost pressures could hurt near-term profit margins.
The crash in bitcoin hasn’t helped matters, either. Tesla stock has also been in focus because its leader, Elon Musk, is always in focus.
Whether he’s getting political on which party he’s voting for or he’s addressing his pending acquisition of Twitter (TWTR) – Get Twitter Inc. Report, Tesla investors have every reason to feel distracted.
With the carmaker’s shares currently down about 50% from the high, here’s how to approach trading them now.
Trading Tesla Stock
Weekly chart of Tesla stock.
Chart courtesy of TrendSpider.com
If Tesla stock finishes lower this week, it will mark its eighth weekly decline in the past nine weeks.
While the $700 level was a reactionary buy level for investors, this level is now failing as support. The decline has the shares teetering on a potential move lower, as it leans on uptrend support (blue line).
This uptrend level comes into play just ahead of the $620 to $625 zone, which marks the 2022 low.
If this area breaks, traders’ focus should quickly shift down to the $540 to $550 area.
Not once, but twice, this level was significant support for Tesla stock in 2021. Given how it rallied after this level held, buyers will likely line up in this area should the share price fall that far.
If it breaks, the $500 zone is in play. A slight overshoot could put the $475 area in play, but this $25 zone marked a significant breakout point for the stock.
So what happens if support holds, either here or down at one of the other levels?
If Tesla stock holds the $620 to $625 zone and/or uptrend support, $700 and this week’s high near $707 are back in play.
Above that opens the door to the declining 10-week moving average, followed by the $760 to $780 zone, which flipped from support to resistance last month.