Tesla Motors Inc (TSLA): The Technicals Are Looking Good For The Stock

in focus spotlightMorpheus Trading: Thursday’s bullish reversal from a morning gap down was followed by Friday’s bearish reversal from a morning gap up. Stocks closed higher across the board; however, all averages closed well off the highs of the session and in the bottom third of the day’s range.

The selling was accompanied by heavy volume, producing a bearish day of churning (stalling at the highs).

Bearish reversal in Nasdaq

The Nasdaq Composite and S&P 500 have both held the 20-period EMA on the hourly chart the entire move off the lows. We’ve seen a few shakeouts below the average along the way (Which is normal….think of support as area rather than just a line or average), but the action has returned back above the 20-period EMA quickly and followed through to the upside. A break of the 20ema this week could lead to sideways action at the very least.

Bearish reversal in Nasdaq

U.S. markets will be closed on Thursday (11/27) and closing early (1 pm est.) on Friday (11/28).

Our weekend scans continue to produce bullish setups that are potentially actionable within the next few days. For a complete list of setups we are monitoring this week please see the bottom of today’s report.

On the ETF side, biotech ETFs $IBB, $FBT, and $XBI have formed a tight trading range the past few weeks and may be in play this week.

We are waiting for a few A-rated stocks ($ILMN and $TSLA) to produce low risk entry points this week. In $ILMN, which we discussed last week, we are looking for an undercut of the 20-day EMA around the $182 area, using a break of the 50-day MA as the stop (no entry yet, we are just watching).

To the Charts:

$TSLA PULLBACK

  • Tesla Motors Inc (NASDAQ:TSLA) gapped lower last Wednesday, so Friday’s follow through to the downside was normal.
  • There appears to be support around $240 from the previous range, so a test/undercut of this level is possible.
  • If $240 doesn’t hold, then there is the backside of the downtrend line around $236, followed by the 200ma at $230.
  • Asking for a dip to the 200ma might be a bit too much, so any reversal off the $240 level is probably in play with a stop below the 200ma.
  • $TSLA still has some work to do on the daily chart, as the 50ma is still trending lower.
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