Chart of the Day: Tesla Motors Breaks Out

By RiskReversal.com  APR 01, 2013 1:45 PM

The question is whether there's a good trade in TSLA going forward.

 


Tesla Motors (NASDAQ:TSLA) Model S sales exceeded expectations, and Tesla reported that it actually expects a first quarter profit this morning. The news sent TSLA up more than 20% at one point today, and it’s still up 18% as I write.

I actually had a bullish trade structure on TSLA that I took off last month for a profit when the stock stalled near the $40 resistance level.  My profit was nothing compared to what I would have made if I still held the trade today. But hindsight is 20/20. The stock could have been down 20% today and my options would be worthless.

Leaving the past in the past, what’s more important is whether there is a good trade in TSLA going forward.   

Here’s the lifetime chart:


Lifetime daily chart of TSLA, Courtesy of Bloomberg

The $40 level (annotated with a red line) was resistance in 2012 and 2013, and it gapped through that resistance level today, on its largest volume since the stock’s IPO (lower panel).  I anticipate that $40 will be important support going forward, as all of those who missed out on buying the breakout will look for an entry in the 40-41 level.  For now, the stock is in uncharted territory, and with out reference points, I have little inclination to initiate a new trade.  But if the stock does offer a pullback opportunity to near breakout support, I’ll be ready to put on another bullish TSLA trade.

This item by Enis Taner was originally published on RiskReversal.com.

More from RiskReversal.com:

Chart of the Day – American Exceptionalism, $SPY and $TLT

Chart of the Day – $GPS and $LULU for Talking Numbers

Chart of the Day – $AIG, The Largest Hedge Fund Long

No positions in stocks mentioned.