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Asset Watch
Wednesday, October 16, 2024
Profit-taking plagued the S&P 500 on Oct. 15, as traders looked to de-risk ahead of some meaningful earnings releases. And as Tesla is already in the penalty box due to an uninspiring innovation update, sentiment has soured on the EV maker.
However, with the stock still in an uptrend and low expectations baked in for the Oct. 23 earnings print, could Tesla offer value at these levels?
While the Robotaxi update was met with jeers, Piper Sandler maintained its overweight rating and $310 price target. The analysts cited seasonally strong demand in China, increasing production of the Cybertruck, and the potential for lower interest rates to stimulate year-end deliveries.
“Investors’ focus will likely shift back to deliveries, and maybe that’s a good thing,” they wrote.
Despite the recent sell-off, the upward-sloping white line (labelled trendline support) highlights how Tesla remains in a daily uptrend. The stock bounced near the trendline recently, and the level is also close to price support from the July through September consolidation zone (marked by the horizontal white line).
Another critical factor is the 100-day moving average (the blue line). The metric was resistance from April through June before a breakout occurred, and then it became support in August during the ‘flash crash.’
More importantly, with the 100-day MA sitting between the upward-sloping and horizontal white lines, Tesla has several technical allies in the $215 to $220 range.
Investors are not expecting much from Tesla on Oct. 23, so the stock may only incur a mild move in either direction. But, since anything is possible, it’s important to determine your willingness to accept the fundamental risk.
Either way, the technical backdrop remains constructive, and the bulls deserve the benefit of the doubt until the uptrend is broken.
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