stock is hard to figure. It always seems to surprise. Investors could always use help figuring out what comes next. Stock charts are as good a place as any to start.
(ticker: TSLA) reported fourth-quarter earnings that were good not great. Operating profit and net income were records. But operating profit trailed Street estimates, and net income was helped out by a lower tax rate.
Still, investors were pleased with what CEO Elon Musk had to say about demand and what Chief Financial Officer Zachry Kirkhorn had to say about profit margins. Namely, demand is much stronger after price cuts and, despite cuts, profit margins should improve over the course of the year after taking a dip the first quarter.
Tesla stock jumped 11% in Thursday trading, closing at $160.27. The
rose 1.1% and the
It’s been a breathtaking run for the stock. Shares are up 57% from their $101.81 52-week intraday low set on Jan. 6, just after the company announced significant price cuts in China.
Rallying on cuts was a surprise. But Tesla stock was very weak coming into the year. Shares dropped 54% in the final three months of 2022. During that freefall, investors paying attention to the stock charts had an inkling that the bottom in the stock was around $100.
Technical traders look at chart patterns to get an idea about investor sentiment, and when investors are likely to buy and sell any stock. Tesla stock had some long-term support around $100.
Shares bounced at that level, but now they are back at $160. The Tesla stock rally risked running out of steam around $152, the stock’s 50-day moving average. Moving averages can represent support, or a ceiling, for a stock.
The 50-day moving average represented resistance in another way. At about $152, Tesla stock would have been up about 50% from its lows, and might have been a good place to take profits based on the past. That gain “lines up with the biggest bounces [Tesla] stock had in 2022,” Frank Cappelleri, technical stock market analyst and founder of CappThesis, tells Barron’s.
But the stock powered through the 50-day moving average. The November low, at $166.19 a share, could offer some resistance. “That suggests that this is an adequate spot for the stock to at least pause,” said Cappelleri.
But Evercore ISI technical analyst Rick Ross sees more upside, to about $220 a share, based on his work. That would put the stock at its 100-day moving average—if it took a few days to reach that level.
“The $200 level would be a stretch with cloud-based resistance looming around $165,” says Fairlead Strategies founder and technical stock market analyst Katie Stockton. She, along with Cappelleri, expects to see Tesla stock’s gains pause at this point.
A stop or more gains ahead? That’s a completely different picture than the stock chart was telling at the end of 2022—a relief for Tesla bulls.
Write to Al Root at email@example.com