Market Overview

Tesla Rebounds From Trip Under $200, But Will It Hold?

Tesla Rebounds From Trip Under $200, But Will It Hold?

Tesla Motors Inc (NASDAQ: TSLA) shares are trading higher by $5.90 at $206.32 in Thursday's session. While the broad market attempts to stabilize above its Flash Crash low, the same cannot be said for Tesla.

On that chaotic day in August, the issue bottomed at $195 and rebounded to end the session at $218.87. By mid-September, it was back within striking distance of its all-time high ($291.42), but the rally stalled at $271.57.

In today's session, Tesla surpassed that low, reaching $193.38 before rebounding back to its current level.

Interestingly, the recovery high was just a few days after Jefferies maintained its Buy rating and bumped its price target from $380 to $385. Earlier in the month, Oppenheimer became bullish on the issue and initiated coverage with an Outperform rating and $340 price target.

The rebound in Tesla coincided with a sharp rebound in the broad market that also flirted with all-time highs. It's certainly feasible the broad market will rebound from its current level, but the rally may be greeted with more sellers than before.

Related Link: Auto Industry In Largest Credit Bubble Ever, Morgan Stanley's Jonas Warns

The reason for that being, the rally off the Flash Crash lows did not have to contend with the Fed's first hike in rates, nor the looming threat of three more hikes in the upcoming year.

In addition, the automotive sector as a whole has been weak. Ford Motor Company (NYSE: F) has been going straight down from its Q3 report. The end result from the company raising guidance and a $1 billion special dividend was greeted with a $0.66 loss on the day. The bear raid has continued in today's session, as the issue has fallen under $12 for the first time since the Flash Crash.

Along these lines, General Motors Company (NYSE: GM) raised guidance and dividend on Wednesday instigated a sharply higher open. However, most of the gains were given back by day's end.

In today's session, General Motors was in the red by $0.50 and came within $0.03 of its recent low for the current decline ($29.42), when it rallied off $29.45 in today's session.

What can kickstart a meaningful rally off Tesla's critical $200 level? Will Wall Street analysts come to the rescue and raise earnings estimates and price targets ahead of its Q4 report?

Not likely, as analysts tend to be cheerleaders at the top in issues (evidence by September top) and are nowhere to be found when their issue goes into the tank.

Tesla may just gyrate around the $200 level until it delivers its Q4 earnings report on February 10. In that report, the company will need to end the horrid streak of four quarters of increasing red in EPS coupled with only slightly higher revenues.

If not, the Street may abandon the issue for good and $200 could very well become a major resistance point as opposed to a psychological support level.

Posted-In: Premarket outlookTechnicals Intraday Update Movers Trading Ideas Best of Benzinga


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