To say that it’s been a volatile stretch for Tesla (TSLA – Get Report) would be an understatement. Whether that’s with the C-suite and SEC, the production line or the stock price, we’ve seen a constantly changing situation.
What does that do to an investor’s outlook?
Despite the stormy conditions, it seems that Tesla has navigated the waters pretty well over the past month. The stock was perched precariously near the $250 level and the long-term support level of the 200-week moving average ahead of earnings.
After releasing its better-than-expected third-quarter results, Tesla shares have since vaulted higher and are now trading just under the $350 mark. Some investors are positioning for more upside, while many bears are calling for this short-term pop to fizzle out at anytime. Let’s look at the charts to see who’s right.
With Tesla’s rally from $250 to $345, the stock made a series of significant hurdles. Getting over the 50-day near $290 is notable, but it’s how the stock handled the $300 to $310 range that really makes it impressive.
For starters, this area has been significant for both support and resistance over the last 18 months. Second, it’s an area that contains the 50-week moving average, the 100-day and 200-day moving averages and downtrend resistance. To hurdle this level with as much ease as Tesla just did is nothing short of impressive.
It also gives bulls an excellent layer of support.
The stock was able to fill two gaps (highlighted on the chart with purple lines), as it now consolidates between these two marks. If the share price resolves lower, look for stout support from the $310 level. If it fails, bulls will want to consider cutting ties with Tesla — especially below $300.
Should the stock price resolve higher, look for a rally up to $360. This level is significant for two reasons. The first, it’s been a line in the sand in terms of resistance for more than a year. Second, Tesla has almost $1 billion worth of debt that’s convertible at ~$360 coming due in February. Above this price and Tesla can convert shares to pay the debt. Below this mark and it needs to come up with the cash.
In that sense, the $360 level is a critical one, not just for the bulls but for Tesla’s bank account too.
