In a prescient assessment last week, The Market Ear highlighted the potential for Tesla, Inc. (TSLA) shares to surge if they broke through resistance levels. The recent surge in the stock’s value has left investors wondering if Tesla has truly achieved escape velocity from its previous downtrend.
Tesla’s Short Term Set Up
The technical analysis by The Market Ear pointed out an inverse head and shoulder formation on the short-term chart looming over the past few months. The resistance level at $190-$195 was deemed crucial. A breakthrough above this resistance level could ignite short-term dynamism in Tesla’s share value. Notably, the positive slope of the 50-day moving average, potentially crossing above the 100-day moving average, added to the bullish sentiment.
A (False) Rumor Of Record Sales In China
Amidst the surge in Tesla shares, speculations arose regarding record sales in China. Initially fueled by a Weibo post from Tesla China claiming a new sales peak in June, the rumor was later retracted. Further analysis revealed a 24.2% year-over-year decline in Tesla’s sales in China for June. Despite this setback, overall deliveries exceeded expectations, contributing to the positive momentum in Tesla’s market performance.
Our Tesla Trade
Reflecting on their earlier investment decisions, traders recalled opening positions on several beaten-down EV stocks in early April, including Tesla. Their trade on Tesla involved a vertical spread set to expire on January 17th, showing potential for significant gains if the stock continued to rise. The trade, initiated at $1.63, indicated progress towards its maximum gain target with Tesla’s recent upward trajectory.
Another Trade On Track For A ~200% Gain
Another successful trade highlighted was on Carvana, Co. (CVNA) and Salesforce, Inc. (CRM), both showing a promising track for around a 200% gain. The strategic use of call spreads demonstrated the potential for significant returns, with a focus on reaching or surpassing the $205 price point by January. This success story added to the growing list of trades poised for substantial profitability.
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