Has Tesla Achieved Escape Velocity? Shares Jump On Delivery Data After Breaking Through Resistance

Escape Velocity For Tesla?

In a prescient post last week (Could Tesla Be Bottoming?), The Market Ear noted things could get exciting for Tesla, Inc. TSLA shares in the short term if the stock broke through resistance:

Tesla's Short Term Set Up

The short term chart is showing some sort of inverse head and shoulder formation having formed over the past few months. $190/195 is resistance area. A close above it and things could get short term "dynamic". Note the 50 day has flipped to sloping positive and could be crossing above the 100 day soon.

Source: Refinitiv

The Market Ear did note that the long term trend for Tesla remained negative, with the stock needing to break through $220 to invalidate that, but given how strongly Tesla broke though the $190-$195 resistance level, it seemed on Monday that Tesla shares could break through $220 soon too. Intraday Monday, Tesla shares broke above $213, before closing at $209.86. They broke through $230 intraday Tuesday.

A (False) Rumor Of Record Sales In China

We wondered to what extent Monday's move in Tesla shares was due to posts like this one saying that Tesla sales in China hit a record in June.

Apparently, the "new high" claim was originally included in a previous version of this Weibo post by Tesla China, but subsequently removed.

If true, this would have been especially impressive, given the current EV competition in China, including a new entrant, Xiaomi XIACY, which is sort of like China's version of Apple.

As it turned out though, Tesla sales were actually down 24.2% year-over-year in China in June. But deliveries overall were better than expected.

Our Tesla Trade

In early April, we opened trades on three beaten-down EVs, one of which was Tesla.

Our Tesla trade was a vertical spread expiring on January 17th, buying the $200 strike calls and selling the $205 calls for a net debit of $1.63. We got filled on that trade at $1.63. Since the maximum gain on this trade occurs when the stock is over $205, this trade is on track for its maximum gain.

Another Trade On Track For A ~200% Gain

In a post last week (Another Trade On Track For A ~200% Gain), we mentioned that our Carvana, Co. CVNA and SalesForce, Inc. CRM trades were on track for 200% gains.

Remember, the way call spreads like our Tesla trade work, your maximum gain is the distance between the strikes (in this case, $5). Since $5 represents a ~207% gain from our entry point of $1.63, this is a third recent trade of ours on track for a ~200% gain. We just need the stock to be trading at $205 or higher in January (if we exited now, we'd be looking at something closer to a 70% gain).

If you want a heads up when we place our next trade, feel free to subscribe to our trading Substack/occasional email list below.

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