Insights

Tesla Leads a Rebound in the Nasdaq as Buyers Defend Key Levels

10 September 2020  |  TRADING IDEAS

Buy the dip. Buy the dip. Buy the dip. That was the mantra on Wall Street today.

The Nasdaq-100 surged 3 percent, its biggest one-day gain since April 29. Tesla (TSLA), one of the most traded stocks in the entire market, led the bounce.

Elon Musk’s electric-vehicle maker jumped 11 percent following its biggest drop ever on Tuesday. It followed a busy series of events in recent weeks. First, TSLA rallied 83 percent to new record highs after announcing a 5-for-1 stock split. It stalled after issuing $5 billion of new equity to raise capital. Next it crashed after unexpectedly getting excluded from the S&P 500 index.

But then some potentially bullish chart patterns appeared. TSLA’s low yesterday was just $0.25 above its 50-day moving average, a key technical indicator. Trend followers often wait for high-flying stocks to retest the 50-day MA, and Tuesday’s level was close enough to qualify.

TSLA’s price action also resembled a “bullish kicker” candlestick pattern. That’s when a stock knifes lower and rebounds sharply the next day. The bounce also occurred around the $338 area where TSLA peaked in late July. Has old resistance become support?

Attention may remain focused on the company in the next few weeks with the Tesla Battery Day event scheduled for September 22. The agenda isn’t yet known but Musk is expected to reveal advances in electric technology. Keep reading Market Insights for more.


Tesla (TSLA), daily chart, with 50-day moving average and select events.


This article was written by David Russell, TradeStation Securities, Inc., part of the Monex Group Inc, published on 09/09/2020.

David Russell
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.


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