Stocks look for relief, while Tesla stock is trying to find technical support at a key area on the charts. The Daily Breakdown examines it.
Wednesday’s TLDR
- Market volatility remains high
- TSLA bulls look for support
- CRWD falls on earnings
What’s happening?
Volatility cut in both directions yesterday as tariffs began going into effect and as retaliatory measures increased trade tension. This brought stocks to their lowest level in months — but there was relief during the session as well.
After a hard tumble on Monday, the SPY ETF was down about 2% at one point on Tuesday, tagging its lowest level since early November before the election. Yep, that’s right — all those election gains are gone already.
But this is where volatility really comes into play…
The S&P 500 actually turned positive later in the day, before rolling over again late in the session. The QQQ ETF told a similar tale, falling almost 2% in early trading, before being up about 1.4% in afternoon trading and eventually finishing slightly lower overall.
In the short term, it’s hard to have much confidence in which direction markets will go, so investors need to remember the type of bumpy environment we’re in and use caution if trying to trade. For long-term investors though, some of the recent pullbacks may finally be offering an opportunity.
Want to receive these insights straight to your inbox?
The setup — Tesla
Tesla stock has been decimated, falling more than 40% from the recent highs and has declined for six straight weeks. Can it find support in a critical area?
Using the weekly chart below, notice how Tesla stock has pulled back to the key breakout area from the election, as well as the rising 50-week moving average. It’s also where uptrend support happens to come into play.
If TSLA can find its footing here, it could offer investors a tempting risk/reward setup. That’s because the risk level is so well-defined.
While shares could always gap-down and continue to trend lower — putting buyers in a tough position — holding this level as support could help set up a nice rebound.
If Tesla stock can’t hold the $265 to $270 area as support, buyers could simply exit their position for a modest loss. If it does hold though, we could see a move back above $300 and potentially higher if the stock is able to garner more momentum.
This approach may seem best for short-term active investors. However, long-term investors who believe in Tesla can also use technical analysis to their advantage when it comes to initiating a position.
Options
Buying calls or call spreads may be one way to take advantage of a pullback. For call buyers, it may be advantageous to have adequate time until the option’s expiration.
For those that aren’t feeling so bullish or who are looking for a deeper pullback, puts or put spreads could be one way to take advantage.
Remember the environment, though. Implied volatility or “IV” is a component to options pricing. The higher the IV, the more expensive options become. When volatility is lower, the IV is lower as well and options pricing becomes a bit cheaper. We’re in a high-vol environment, so options pricing will be more expensive.
To learn more about options, consider visiting the eToro Academy.
What Wall Street is watching
CRWD – Shares of CrowdStrike are moving lower this morning, falling about 8% in pre-market trading. Earnings of $1.03 per share beat expectations of 86 cents a share, while revenue of $1.06 billion eked past analysts’ estimates. However, guidance left investors wanting more.
GLD – Gold continues to shine as volatility remains elevated. The GLD ETF rallied 0.9% yesterday and is up more than 2% so far this week, hovering just below its record high from February 24th. So far, it’s up more than 11% in 2025, reminding investors of the benefits of diversification.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.