Tesla stock is volatile. Shares have ranged from roughly $102 to $218 this year.
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Tesla
stock repierced the $200 level, leaving investors to wonder if they should take some profits, double down, or do nothing.
The question isn’t so easy to answer. A look at the auto maker’s stock charts can help.
For starters, Tesla (ticker: TSLA) is a volatile stock. Buying and selling too much is a bad idea, but profitable trading is possible. How often to trade partially depends on your investment style. Traders buy and sell more often because they are seeking short-term gains. Investors should, theoretically, hold their positions for a longer time.
Both groups can use stock charts, or technical analysis, to help make decisions. Technical analysis can help in understanding sentiment surrounding a stock, whether it’s a little too euphoric or too miserable.
Optimism is building around Tesla’s stock. Shares closed at $201.16 on Tuesday, the first close above $200 since the end of March.
“The stock now is overbought again and testing its 200-day moving average,” says CappThesis founder and market technician Frank Cappelleri.
An overbought condition occurs when a stock’s price rises very fast and very quick. It’s usually measured by the relative strength index, or RSI, which fluctuates between 0 and 100. A reading around 70 or higher is typically considered overbought. Tesla’s RSI is around 70 now.
One thing to watch is Tesla’s moving averages, which show the range shares typically trade around. This can be helpful in understanding how far shares could fall during a selloff or how high they might go without significant news.
Back in February, when shares went from roughly $100 to $210 in about five weeks, Tesla stock failed to break its 200-day moving average. There just wasn’t enough positive news to get investors to push shares north of that level.
Today, Tesla stock is trading above its 200-day moving average of about $195 and its 50-day moving average of about $180. The stock was down 1.1% at $198.97 in Wednesday trading. The
S&P 500
and
Nasdaq Composite
were down 0.4% and 0.5%, respectively.
Holding above that $180 level in a selloff would be a positive sign for the stock, says Fairlead Strategies founder Katie Stockton.
If the stock can’t hold above its 50-day moving average, investors should watch the $140 level. If Tesla were to break below that level, it would bring January lows of about $102 back into play, says Rick Bensignor, founder of The Bensignor Group and former Morgan Stanley chief market strategist.
These observations are just guides to help understand how a stock like Tesla might trade in the future—and when investors might want to adjust the size of their positions.
Shares have traded in a range from about $102 to $218 in 2023. The $116 gap is about 60% of the current stock price. For comparison,
Apple
shares (AAPL) have ranged from about $124 to $179 a share. The $55 gap is about 30% of the current stock price.
In coming weeks, Tesla will report second-quarter deliveries and earnings, giving investors and analysts a chance to see how demand and profit margins are holding up. Those are fundamental data points that will show up in the stock price—positive or negative.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/tesla-stock-price-buy-sell-hold-profits-e4d247b2?siteid=yhoof2&yptr=yahoo