Earnings Play: Tesla

Look for a bounce off of the 50-day SMA, if that fails, be very cautious.

Tech (1)

Today, after market, Tesla (TSLA) is anticipated to report third quarter EPS of $0.55 compared to $0.37 a year ago on revenue of approximately $8.3 billion vs. $6.3 billion last year. The company manufactures electric-vehicles and its expected move based on front-month options is 7.7%. The last time the company reported earnings the stock dropped 5.0%.

Looking at a daily chart, Tesla's stock price recently broke out to the upside of a short-term symmetrical triangle pattern that began to form in early-September. The RSI calls for caution as it is currently holding just above 50. A symmetrical triangle is considered to be a continuation pattern and Tesla has been in a strong uptrend since mid-March, therefore the bias remains bullish. Tesla's stock price will likely bounce off of the 50-day simple moving average (SMA) and advance to retest the all-time high of 502.00 and change. If price can breakout above the record high, than the next two targets would be 620.00 and 682.00. With that being said investors and traders should be very cautious because if Tesla closes below its 50-day SMA, it would be a very bearish signal. The last time that Tesla's stock price closed below its 50-day SMA, price dropped roughly 40% in 7 trading days. Given the RSI reading and how Tesla appears to only use a SMA as support for roughly 2 bounces, their is a chance that Tesla could break down, and if it does, price does not have strong support until 330.00.    

Source: GAIN Capital, TradingView

More from Earnings

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.