Tesla, Inc. (TSLA) makes luxury electric automobiles, state-of-the-art batteries and solar panels for the home. The stock has had a volatile ride so far in 2018. After ending 2017 at $311.35, the stock stabilized and set its 2018 high of $360.50 on Jan. 23, which was above my annual pivot of $341.84. This level was a magnet between Jan. 11 and March 13. As Tesla slipped below this key technical level, bearish analysts' calls followed. The waves of bearish calls pushed the stock to its 2018 low of $244.48 on April 2. As the stock reached this low, there were even calls that Tesla would not be around within 12 months.
What turned Tesla around?
Investors and traders who continued to be bullish on Tesla noted that the stock tested its 200-week simple moving average during the weeks of March 30 and April 6, when this "reversion to the mean" was $253.88 versus the April 2 low of $244.48. Patient buyers took advantage of weakness to the "reversion to the mean" when it was tested at $157.09 in December 2016 and at $192.13 in November 2016. Patience is a virtue for long-term investors, just as it is for the buyers of the 400,000 back orders of the Tesla Model 3.
More recent news caused massive short covering. On June 7, Tesla CEO Elon Musk offered positive comments at the company's annual general meeting, and the stock accelerated higher. Now, the bullish analysts are touting raised expectations that Tesla will deliver 30,000 Model 3 cars this quarter and nearly 120,000 for all of 2018. On Tuesday, Tesla announced that about 9% of its workforce would be trimmed in reorganization among its 46,000 employees. (For more, see: Elon Musk Buys $25 Million in Tesla Stock Amid News of Layoffs.)
What do the charts say?
The daily chart for Tesla
The annual pivot for Tesla is the horizontal line at $341.84. Even after falling below this benchmark to the low of $244.48 on April 2, a rebound back to $341.84 was not out of the question. The stock was above my monthly value level of $276.36 as June began, which indicated upside potential to my quarterly pivot of $315.70, which is the horizontal line in the center of the chart. Holding that level on June 7 was the technical catalyst for a return to the annual pivot of $341.84.
The weekly chart for Tesla
The weekly chart for Tesla is positive, with the stock above its five-week modified moving average of $306.99. Note how the 200-week simple moving average and "reversion to the mean" provided buying opportunities. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 54.05 this week, up from 44.02 on June 8.
Given these charts and analysis, investors should buy Tesla shares on weakness to my quarterly pivot of $315.70 and reduce holdings on strength to my semiannual risky level of $378.69. My annual pivot of $341.84 will be a magnet for the remainder of 2018. (For additional reading, check out: Tesla Traders Bet Stock Will Rise 15% to Record.)