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Christian Tharp, CMT

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Five Star Stock Watch: Tesla Motors

Tesla has been the beneficiary of good earnings receptions over the last few quarters, but maybe not this time.

After the bell Wednesday, the company reported a loss of $49.8 million for the first quarter as research and development costs surged.

Revenue was $620.5 million, up ten percent from a year earlier but less than one percent from the fourth quarter of 2013.

Tesla stock was getting hit after the release, but how bad? And is there reason to be concerned?

The company: Tesla Motors

Ticker Symbol: (NASDAQ: TSLA)

Sector: Consumer Goods

Industry: Auto Manufacturers - Major

Tesla designs, develops, manufactures and sells electric vehicles and electric vehicle powertrain components.

Related: Five Star Stock Watch: Oracle 

The company also provides services for the development of electric powertrain systems and components, and sells electric vehicle powertrain components to other automotive manufacturers.

Please take a look at the 1-year chart of Tesla below with added notations:

Since its November 2013 bottom at around $120, Tesla rallied nicely to a peak of around $270 while settling in at around $200 Wednesday.

During this stretch the stock has formed a well-defined trendline of support that has been tested four different times.

A hold of this line should lead to higher prices for the stock, while a break of this line will most likely be followed by more selling.

The stock closed Wednesday at $201.20.

Related: Five Star Stock Watch: Twitter

Tesla isn't set to release earnings again until August, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key.

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