PreMarket Prep Stock Of The Day: Tesla

Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. EST. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to a recording, Benzinga will highlight a stock of the day that was featured on the show.

Stock Of The Day: Tesla

If you've missed out on Tesla Inc. TSLA over the last few months, you won't feel too bad today as the issue is deep in the red.

Late in Tuesday's session, the issue swooned $100 in matter of minutes as some profit-takers were coming into the issue. After peaking at $968.99 (as greedy traders were looking for four digits in the issue) at 3:40 p.m. EST, it cratered to end the session at $887.06.

Catalyst For The Drop, Besides Profit-Taking

Just as Wall Street analysts walked the issue to these exaggerated levels by raising their price targets, one analyst has said enough is enough. Before today's open, Cannacord Genuity downgraded the issue from Buy to Hold and maintained a $750 price target.

The downgrade has instigated a much needed pullback in the issue. When it was being discussed on the show, Tesla was trading in the $840 area. With such a parabolic move up, only potential support levels were given to cover possible short sales in the issue.

Simple Technical Analysis

At the 62-minute mark on today's show, the author of this article offered this analysis. The first target on the downside was Tuesday's low of $833.38, which was reached early in the session. The next identifiable area of support was potential gap-fill (void in price) created from Tuesday's much higher open.

To fill the void in price, it needed to reach the top of Monday's range, $786.13, which it has as the issue continues to make new lows in the $770 handle. Based on the daily charts, the next possible support level doesn't come in until Monday's low of $673.52.

Tesla traded around $768.66 per share at time of publication.

Disclosure: The author has a long position in Tesla.