Tesla Shows Strength Compared To The S&P 500 Heading Into Another Big Earnings Week: What To Watch

Zinger Key Points
  • Tesla printed a bullish kicker candlestick on Friday but has entered into overbought territory on larger time frames.
  • Tesla is trading in a strong and consistent uptrend, making a series of higher highs and higher lows.
Tesla Shows Strength Compared To The S&P 500 Heading Into Another Big Earnings Week: What To Watch

Tesla, Inc TSLA was trading slightly lower on Monday morning, in line with the S&P 500 which is down about 0.4% in early trading. Although, the EV maker has recently outpaced the broad market index, as Tesla shares are up 43% over the past month compared to the S&P 500 gaining 5.7%.

The S&P 500 printed five green candles in a row last week and closed Friday’s trading session about 3% above the 200-day simple moving average, boosted higher by Tesla’s and Microsoft’s earnings, which beat analyst estimates.

Heading into the second week of big-tech earnings, with Advanced Micro Devices, Apple, Google and Amazon set to report between Tuesday and Thursday. Traders and investors will be watching closely on Monday and Tuesday to see how the market anticipates the companies' results.

The Federal Reserve is meeting this week, and will reveal its decision on an interest rate hike on Wednesday, which expected to affect the general stock market.

Although the S&P 500 closed Friday’s trading session green, the ETF printed a bearish shooting star candlestick, which indicates at least a short-term pullback could be in the cards.

Tesla also appears due for a pullback, with the stock’s relative strength index measuring in at 73%, but FOMO (fear of missing out) on a potential larger run to the upside may have hit Tesla traders. On Friday, Tesla closed with a big bullish kicker candlestick, which indicates the stock may rise again on Monday.

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The Tesla Chart: If Tesla doesn’t react bullishly to the kicker candlestick pattern and shoot higher, the stock may consolidate last week’s 30% rise by printing an inside bar pattern. If that happens, the pattern leans bullish for later in the week because Tesla was trading higher before forming the inside bar.

  • Tesla reversed into an uptrend on Jan. 6 and has printed a very consistent series of higher highs and higher lows on the daily chart. The stock’s most recent higher low was formed on Wednesday at $138.07 and the most recent confirmed higher high was printed at the $146.50 mark the day prior.
  • Eventually, Tesla will retrace to the downside to print at least its next higher low, which could provide a solid entry point for bullish traders who aren’t already in a position. A retracement is likely to happen soon because Tesla has become overbought on the daily chart.
  • If Tesla starts to retrace over the next few days, the stock may form a bullish cup-and-handle pattern, with the cup printed between Dec. 9 and Friday. If that happens, the measured move indicates Tesla could surge toward $230 eventually.
  • Tesla has resistance above at $190.41 and $200.51 and support below at $177.59 and $166.71.

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