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Asset Watch

Should you prepare for a Tesla U-turn?

Tuesday, February 21, 2023

After plunging by more than 30% in December, Tesla has lapped the competition in 2023. Expecting more upside, Barclays Analyst Dan Levy initiated coverage with a $275 price target on Feb. 15. He wrote:
“Tesla stands out in the ‘Two Clocks’ framework, with its near-term financial strength + leading the way on EV and software. Every Model 3 or Y Tesla sells today not only benefits its near-term financials, but also furthers its long-term objectives.”
While the fundamentals remain resilient, is caution warranted in the weeks ahead?
Despite closing higher on Feb. 16, Tesla faces weekly resistance from its May and June lows. Therefore, even though the daily price can fluctuate within a ~$30 range, it’s essential to keep this in mind.
Tesla Stock Chart Trading View

More importantly, Tesla’s 50-week moving average stands at $238.68, and the key level has acted as long-term support and resistance since late 2019. Tesla rallied above its 50-week MA eight times from July through September 2022. However, sellers emerged each time, and a significant downtrend followed. Likewise, Tesla’s weekly RSI peaked near 55 during that stretch, and the EV automaker ended last week with an RSI near 53.

As it stands, Tesla is roughly 15% away from its 50-week MA. So, although more upside may materialise in the days ahead, the easy gains have likely already occurred.

Should you ride the hot hand or park your money elsewhere?


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