Current trend

Last week, shares of Tesla Inc., a leading manufacturer of electric cars, showed ambiguous dynamics: at first, they significantly adjusted downwards against the background of weak financial statements, but now they have resumed growth.

The share price fell by 12.0%, to the area of 214.45, after the company's financial performance for the second quarter did not meet market expectations. Representatives of Tesla Inc. reported that revenue from car sales decreased by 7.0% compared to last year to 19.9 billion dollars, while total revenue increased by only 2.0% YoY to 25.5 billion dollars. Adjusted earnings per share (EPS) were 0.52 dollars, below the preliminary estimates of 0.62 dollars, and operating margin decreased from 18.7% to 14.4%, the lowest level in the last three years. Experts believe that the emitter's problems are related to the increased competition in the electric car market, which forces Tesla Inc. to reduce prices, which, in turn, negatively affects revenues, although it allows to maintain sales volumes. Nevertheless, according to the forecast of Morgan Stanley analysts, the company's shares may grow by 40.0% next year due to measures to reduce structural costs and introduce new automated products, in particular, robotaxi.

It should also be noted that the overall support for the American stock market is provided by the monetary factor: investors are preparing for the start of interest rate cuts by the US Federal Reserve, which will contribute to the revival of the economy and consumer demand.

Support and resistance

The price rose to the level of 234.38 (Murrey level [7/8]), the breakout of which will ensure further growth towards the targets of 250.00 (Murrey level [8/8]) and 265.62 (Murrey level [ 1/8]). The key for the "bears" is the central line of Bollinger Bands around 212.00, after consolidation below which the downward dynamics may develop to the level of 187.50 (Murrey level [4/8]), but such a scenario is seen as less likely.

Technical indicators confirm the continuation of the uptrend: Bollinger Bands are directed upwards, MACD is decreasing, but remains in the positive zone, while Stochastic is preparing to leave the oversold zone.

Resistance levels: 234.38, 250.00, 265.62.

Support levels: 212.00, 187.50.

Trading tips

Long positions can be opened above the 234.38 mark with targets of 250.00, 265.62 and stop-loss around 224.00. Implementation period: 5–7 days.

Short positions should be opened below the level of 212.00 with targets of 187.50 and stop-loss in the area of 230.00.