The Daily Breakdown takes a closer look at charts for Tesla stock, as it continues to cling to key support. How long can it do so?
Wednesday’s TLDR
- Earnings could use a boost
- AMD, GOOGL, UBER sink
- TSLA holds key support…for now
What’s happening?
With all the volatility we’re seeing lately, earnings aren’t doing much to give investors a lift right now.
Meta is the only Magnificent 7 stock that’s higher since it has reported earnings so far this quarter. Tesla, Microsoft and Apple all moved lower or have since given up their modest post-earnings gains.
Last night, Alphabet, AMD, and Chipotle reported and all three are moving lower in pre-market trading. So is Uber, which reported this morning.
Hey! Where’s the positivity?
There is a silver lining here. Generally speaking, many of these companies are reporting pretty solid quarters. Even though the market is not reacting the way many investors would like, the numbers are pretty good.
However, the reactions are what matter in the short term and right now, it’s serving as a reminder that investors need to keep a level head. That’s particularly true since volatility has increased over the last few weeks. And remember, hedging is always an option — no pun intended.
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The setup — TSLA
Tesla initially popped higher on earnings last week, but has since given up those gains. On the plus side, keep in mind how much this stock had rallied since the election. Further, note how it’s holding a key support level too.
The support level I’m referring to here isn’t a moving average. Instead, it’s the Anchored VWAP measure. VWAP stands for volume-weighted average price and it shows the stock’s average price weighted by the total trading volume.
The “anchored” part of the equation lets the trader pick a specific time to start this measure. I chose the day TSLA stock gapped higher after the election. Users can choose any date they’d like — try it out on Tesla’s chart right here.
Ideally, bulls want to see TSLA stock clear $400. Not only would that put shares back above the 50-day moving average, but it would also mean that Tesla cleared downtrend resistance. That could open the stock up to more potential upside.
On the downside, a break of the anchored VWAP and recent support near $375 could accelerate the bearish momentum and send TSLA lower, potentially down to $360 or lower.
Options
Investors who believe shares will break out can participate with calls or call spreads. If speculating on the breakout rather than waiting for it to happen first, investors might consider using adequate time until expiration.
For investors who would rather speculate on resistance holding, they could use puts or put spreads.
To learn more about options, consider visiting the eToro Academy.
What Wall Street is watching
GOOG – Alphabet beat on earnings, but missed slightly on revenue estimates. Despite growing cloud revenue by 30% year over year, this segment slightly missed estimates too, contributing to the stock’s pullback this morning. Notably, Alphabet hit new record highs on Tuesday and just declared its first cash dividend.
PLTR – Palantir shares did not disappoint yesterday, opening higher by 22.8% and closing the day higher by about 24%. The firm delivered an impressive earnings report and with yesterday’s gains, Palantir cleared the $100 level for the first time while its market cap has swelled beyond $230 billion. Check out Palantir’s chart.
DIS – Disney easily beat on earnings per share expectations and topped analysts’ revenue expectations for its fiscal first quarter. Contributing to its earnings beat, Disney’s streaming division delivered its third straight quarter of profit, while Disney+ subscribers rang in at 124.6 million accounts — ahead of estimates.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.