Tesla Moves Toward Gap Fill As Market Volatility Increases: The Bull, Bear Case For Elon Musk-Led Stock

Tesla, Inc TSLA stock fell over 6% on Monday, entering a lower gap that Benzinga pointed out on June 12.

The move lower comes in line with a downturn in the general market, which has seen the S&P 500 Index retrace 2.71% lower since topping out at 4328.08 on June 16.

While the CBOE Volatility Index (VIX), tracked by the ProShares Ultra VIX Short Term Futures ETF UVXY, and other tickers, fell with the stock market initially, that index closed over 6% higher on Monday, signaling that stock market volatility is increasing.

While not the largest holding in the S&P 500, Tesla ranks high on the list and often moves in tandem with its big-tech counterparts. If Tesla continues to fall lower, the VIX may continue to rise.

Traders wishing to play the potential volatility in the stock market can use MIAX’s SPIKES Volatility products. The products, which are traded on SPIKES Volatility Index SPIKE, track expected volatility in the SPDR S&P 500 ETF Trust SPY over the next 30 days.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Tesla Chart: Tesla confirmed a new downtrend on Friday by printing a lower high within an inside bar pattern. The lower high was formed at the $261.35 mark and the lower low, which negated the downtrend, was printed at the $248.25 mark on June 22.

• On Monday, Tesla formed an inverted hammer candlestick, which suggests a bounce may be in the cards for Tuesday. The second most likely scenario is that Tesla prints another inside bar to consolidate Monday’s drop.
• If, over the next few trading days, Tesla continues to retrace, the stock is likely to find temporary support at the lower gap, which exists at $235.23. Bullish traders looking for a possible bounce can watch for the stock to print a reversal candlestick, such as a doji or hammer candlestick, at that level.
• Bearish traders want to see the stock fall under the 21-day exponential moving average, which could signal a more intense move to the downside. If that happens, Tesla is likely to find support at the 50-day simple moving average.
• Tesla has resistance at $254.98 and $271.71 and support below at $234.34 and $225.03.

Read Next: Cathie Wood Loads Up On Chip Stocks Amid Correction

Photo: Tesla