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Tesla stock has nearly doubled from the lows set on Jan. 6.
Justin Sullivan/Getty Images
Tesla
stock just won’t stop going up. Shareholders should feel happy, but they should keep asking themselves what comes next.
Shares are up 2.3% at $201.35 in midday trading Wednesday. The
S&P 500
and
Nasdaq Composite
are down 0.9% and 1.6%, respectively.
Tesla
stock(ticker: TSLA) is now up 63% year to date, and up 98% from its Jan. 6 52-week intraday low of $101.81.
It’s been quite a run. The last time Tesla stock closed above $200 was Nov. 4. The last time shares touched $200 was Nov. 15. Still, the stock looks like it’s due for a pause.
“Tesla is into resistance at the $200 level, former support, from where it broke down in early November,” says John Roque, senior managing director at 22V Research and market technician. “Former support often becomes new resistance.”
Roque isn’t a fundamental analyst. His is looking at stock charts to figure out investor sentiment and what could happen next. He is also the technical analyst who thought Tesla stock would approach $100, which they did in early January.
“The preceding crash and current spike have been as symmetrical as possible over a two-month time frame,” says CappThesis founder and market technician Frank Cappelleri. “The downturn got the stock overly depressed, and the subsequent four-week rally also appears overextended short term.”
He also believes Tesla stock is due for a pause, calling shares overbought. That’s a term technicians uses to describe a situation when stocks rise a lot over a short period of time. At certain levels, it can mean all the buying is done, for a while.
A pause for a technician can last anywhere from two weeks to two months. Typically something new has to happen to shake the stock out of a trading band.
One thing that could do that is the company’s coming investor event on March 1. Management should be talking about new platforms, plants and the coming Cybertruck there.
Maybe Tesla stock should pause, but it doesn’t obey all the rules. Shares are still about $24, or 10%, below the level where Tesla CEO Elon Musk bought Twitter. Late in 2022 he said he would find a new leader for his social media network. If he does, it could give Tesla shares a boost.
Tesla investors have been worried that Musk hasn’t been able to fully focus on Tesla because of Twitter. Investors have also worried that Musk would sell Tesla stock to fund losses at Twitter. Musk tweeted on Feb. 5 that Twitter was approaching break-even. That reduces the likelihood of future Tesla stock sales. Tesla stock is up about 6% since then. The
Nasdaq Composite
is down about 2% over the same span.
The $225 level is also very close to the stock’s 200-day moving average. That would be another level of resistance for investors to consider what comes next.
Barron’s wrote positively about Tesla stock on Jan. 6. Since that article appeared, shares are up about 78%.
We also recently suggested taking some profits. We still feel that it’s appropriate to lock in some gains. Tesla is a volatile stock, and banking some profits after run-ups can help investors weather the inevitable ups and downs of investing alongside Musk.
Write to Al Root at [email protected]
