Tesla Shoots Higher After Elon Musk Says He's Finished Selling: Can The Stock Change Trend?

Tesla, Inc TSLA was trading up over 7% on Wednesday as the possible start to the “Santa Claus rally” got underway, with the SPDR S&P 500 rising over 3% between Friday’s low-of-day and Wednesday afternoon.

Tesla has been pressured down recently not only by general market shakiness but by its CEO Elon Musk dumping a total of 13.5 million shares, which comes roughly 20% short of the 10% of total shares he planned to sell.

In an interview with the Babylon Bee, Musk said he finished selling Tesla’s stock for the year, which may have helped to boost trader and investor confidence that Tesla will no longer be pressed down by insider selling.

Following the interview, released in the early hours of Wednesday, Tesla gapped up 2.89% higher to start the trading session and by noon the stock had printed a higher high above the Dec. 16 lower high at the $994.98 mark.

Although a possible trend change will eventually need to be confirmed by Tesla printing a lower high, the stock was able to bust through psychological resistance at the $1,000 level, which bodes well for bullish traders hoping a larger run is on the horizon.

See Also: Did GM Poke Fun At Tesla With New Hummer EV Image? Will Elon Musk Respond?

The Tesla Chart: Tesla broke down from a pennant pattern on Dec. 1, which indicated the stock was likely to begin trading in a downtrend. Tesla then made a series of lower highs and lower lows until reaching a bottom on Tuesday at the $886.12 mark.

On Tuesday, Tesla printed a hammer candlestick on the daily chart, which was an indication the stock would trade higher on Wednesday. The stock then reacted to the pattern and shot up higher on Wednesday to print the higher high, which negated the downtrend.

Tesla was able to regain support at the eight-day exponential moving average (EMA) but as of midafternoon had rejected the 21-day EMA as resistance. Bullish traders will want the stock to regain and hold above the 21-day in order for the eight-day EMA to eventually cross above it. Tesla’s next step will then be to regain support at the 50-day simple moving average, to indicate longer-term sentiment has turned bullish.

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

• Bulls want to see sustained big bullish volume push Tesla up above the three moving averages and then for momentum to push the stock above a support and resistance level at $1,045.02. Above the level there is further resistance at $1,075.02 and near the $1,200 level.
• Bears want to see Tesla continue to reject the 21-day EMA and for big bearish volume to come in and drop Tesla down below a support area at $900, which could pressure the stock down to make a lower low. The stock has support below the level at $877.95 and $821.