Trading Strategies For Tesla Stock Post Q3 Earnings Miss

Tesla Inc TSLA was plunging more than 8% on Thursday, receiving a bearish reaction to its second-quarter financials, which Benzinga pointed out was a likely scenario due to technical analysis prior to the print.

Several analysts weighed in on the stock following the earnings print with three firms dropping their price targets, according to data from Benzinga Pro.

GLJ Research analyst Gordon Johnson believes that low demand for the new Model 3 and the Cybertruck may lead to traders and investors turning their back on the stock.

Wedbush analyst Daniel Ives maintained an Outperform rating on Tesla and lowered a price target from $350 to $310. Morgan Stanley dropped a price target from $400 to $380 and Wells Fargo lowered a price target by $10, from $260 to $250.

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With that being said, bullish traders looking to enter a position may choose to wait for signs that the local bottom has occurred.

Traders and Investors looking to play the possible upside in Tesla stock but with diversification may choose to take a position in the AXS 2X Innovation ETF TARK. TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of Cathie Wood-led ARK Innovation ETF ARKK, the latter which holds a 9.97% weighting of Tesla.

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The Tesla Chart: When Tesla plunged on Thursday, the stock retraced to near the 200-day simple moving average (SMA) and was attempting to bounce up from the area. The 200-day SMA is a strong area of both support and resistance and when a stock is trading above the level, it’s considered to be in a bull cycle.

• On Thursday, Tesla was working to print a doji candlestick, which could indicate the local bottom has occurred and the stock will bounce on Friday. There’s a gap between $230.61 and $242.68 that was left behind and if Tesla trades into the gap over the next few days, it may find resistance near the top of that empty trading range.
• Tesla is also likely to see higher prices over the next few days because Thursday’s drop caused the stock’s relative strength index (RSI) to drop to about 30%. When a stock’s RSI reaches or falls under that area it becomes oversold, which can be a buy signal for technical traders.
• Tesla has resistance above at $225.03 and at $234.35 and support below at $213.13 and at $200.51.

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