Tesla, Inc. (TSLA​) is the iconic manufacturer of luxury all-electric automobiles. Telsa is a strong momentum stock that stalled in mid-September as manufacturing issues surfaced that are delaying deliveries its Model 3 sedan.

Tesla stock has been trading above a "golden cross" on its daily chart since Feb. 1, when it closed at $249.24. A "golden cross" occurs when a stock's 50-day simple moving average (SMA) rises above its 200-day SMA and indicates that higher prices lie ahead. The stock held its 200-day SMA of $318.15 at its low on Friday and Monday. (See also: Tesla: 6 Secrets You Didn't Know.)

Tesla closed Tuesday at $331.53, up 55.1% year to date, and the stock is in bull market territory at 86.1% above its post-election low of $178.19 set on Nov. 14. The stock set its all-time intraday high of $389.61 on Sept. 18 and is in correction territory since then, currently 14.9% below this high.

Analysts expect Tesla to lose $2.27 to $2.54 per share when the company reports earnings after the closing bell on Wednesday. Some analysts have suggested that investors should not focus on earnings, as production bottlenecks for the Model 3 sedan should end soon. Owning a Tesla is a dream for many car buyers, and they are willing to wait until it's their turn to get behind the wheel.

The weekly chart for Tesla

Technical chart showing the performance of Tesla, Inc. (TSLA) stockCourtesy of MetaStock Xenith

The weekly chart for Tesla is negative, with the stock below its five-week modified moving average of $342.25. The 200-week simple moving average or the "reversion to the mean" is $241.36, last tested during the week of Dec. 23, when the average was $196.77. The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 40.19 this week, down from 48.72 on Oct. 27.    

Given this chart, my trading strategy is to buy weakness to my semiannual and quarterly value levels of $313.87 and $289.80, respectively, and reduce holdings on strength to my monthly risky level of $393.97. (For additional reading, check out: Tesla's Trampled Stock Shows Bullish Signs as Earnings Near.)

 

     

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