Tesla Inc. (NASDAQ:TSLA) opened about 7% higher on Thursday after plunging the same amount on Wednesday, to reach a new two-year low of $177.59.

Intraday, the stock ran into a group of sellers who knocked the stock down off the daily high, indicating Tesla may be settling into an inside bar pattern. The EV giant has declined about 24% since the market opened in November, partly due to Tesla CEO Elon Musk’s acquisition of Twitter and his related decision to sell another chunk of his Tesla stake to fund the purchase.

Cathie Wood-led ARK Investment Management took advantage of Tesla’s weakness and added to the fund's position, purchasing over 39,000 shares at an estimated valuation of over $7 million.

Tesla holds the second largest weighting of the company’s flagship fund, the ARK Innovation ETF (NYSE:ARKK) at 8.43%.

The early dip from Tesla’s daily high was bought by bullish traders and investors and when the S&P 500 began to gain momentum to the upside, Tesla bounced back.

Gary Black, managing partner at Future Fund, noted on Twitter that Tesla shares are trading at a one-year forward price/earnings multiple of 42 times, the lowest since 2019, and suggested the company implement a $10 billion stock buyback program to help lift investor sentiment.

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The Tesla Chart: Tesla’s inside bar leans slightly bullish because although the stock was trading lower before forming the pattern, Tesla reached oversold territory, with a relative strength index below 30%, which indicates a bounce is on the horizon. Traders can watch for Tesla to break up or down from Wednesday’s mother bar on higher-than-average volume later on Thursday or on Friday to gauge future direction.

• Tesla hasn’t formed the next lower high within its downtrend since Nov. 4, when the stock spiked up to the $223.80 mark. If Tesla breaks bullishly from Wednesday’s mother bar, traders can watch for the stock to print a potential bearish candlestick, such as a doji or shooting star candlestick, under $223 to indicate the temporary top is in and the downtrend will continue.
• The stock may also find resistance at the lower ascending trendline of a long-term triangle pattern, which Tesla broke down from with momentum on Nov. 4. If the stock can regain the trendline as support, however, it could be a good sign for the bulls.
• Tesla has resistance above at $190.41 and $200.51 and support below at $175.40 and $166.71.