Market Overview

Will Tesla Find Technical Support?

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It’s been a rough few months for shareholders of Tesla Motors Inc (NASDAQ: TSLA), and the news didn’t get any better on Wednesday when the company reported disappointing 4Q earnings.

The company reported a surprise loss of -$0.13 per share when consensus estimates for the quarter were for net profits of $0.31 per share. Tesla reported earnings of $0.33 per share in Q4 of 2013.

The Stock Reacts

Not surprisingly, the stock was hit hard on news of the loss. Tesla shares were trading down more than 6 percent in early trading Thursday, hovering near the $200 level. Tesla’s stock is now down more than 30 percent from its all-time high back in September.

An Ugly Technical Picture

Since peaking in September, Tesla has been firmly entrenched in a downward-sloping technical channel. Currently, the upper boundary of this channel is around the $220 level and the lower boundary is around $175.

Death Cross

In addition to the downward channel, Tesla’s stock experienced a “death cross” on its daily chart in January. A death cross is a bearish technical formation that occurs when the short-term 50-day simple moving average crosses below the longer-term 200-day simple moving average, indicating short-term weakness for the stock.

At $200, Tesla shares are now trading well below both their 200-day and 500-day averages.

Where Is Support?

Tesla shareholders are likely looking primarily for one single thing in Tesla’s charts: Where will the stock find support?

There are several potential support levels to watch.

The most short-term (and likely weakest) potential support level on the chart is the $185 level that provided support to Tesla in January.

However, the $180 level offers a much stronger potential support level. Not only does that level represent the bottom boundary of the trading channel, but the stock also found major support near $180 back in May of 2014.

Posted-In: Technicals Tech Trading Ideas

 

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