Technician Says Tesla Targeting $160 Into Earnings

Technician Gary Kwapik says that Tesla Motors Inc TSLA is targeting $160 if a head and shoulders pattern comes to fruition after today’s earnings report. He notes that implied volatility is very pricy, indicating a $20 move is expected. Tesla is currently trading below $210, down nearly 4 percent on the session.

According to his charts, Kwapik identified a head and shoulders pattern, with the neck line at $216 to $217.

Fundamentally, Kwapik says that poor China sales and Apple Inc.’s AAPL potential electronic car competition has the stock in a vulnerable position.

If traders are bearish on the stock, Kwapik recommends looking out to the March or April expirations for lower implied volatility. Long-term put spreads could be the most cost-effective way to take advantage of a move lower, he says.