- Tesla shares continue to make progress from May lows.
- TSLA stalled at $625 resistance from May 11.
- EV sector leader at a pivot with 21-day moving average.
TSLA shares retraced slightly on Friday as the stock closed at $625.22 for a loss of just under 1%. Tesla shares have staged a nice recovery since bottoming out just short of the strong $539 support zone in mid-May as the tech sector rebounded once inflation fears eased. The Fed took to the wires repeatedly in May spreading the “all inflation is transitory” and “we have your back” messages to the market. Investors were brow beaten into submission and rediscovered the previously beaten-down tech sector. Big tech heavyweights had also retreated to some strong support zones. Once the Fed message became clear and yields dropped there was really only one way for big tech and high growth names to go. Tesla moved from $546 to $625 in the space of a couple of weeks.
Now Tesla sits at a crossroads, excuse the pun. The stock has done some of the hard work in turning itself around as it seemed to be heading straight from $500 given the trend from the first half of May. Now it is at a pivot point. Really $667 needs to be retaken to turn the chart bullish and end the bearish series of lower highs. The momentum oscillators had signaled the turnaround in mid-May as the Commodity Channel Index (CCI), Relative Strength Index (RSI) and Williams %R showed that Tesla has slipped into oversold conditions. The rate of change (RoC) also showed up at a low level. Now Tesla shares have retraced and broken out of the downward trending channel in place since early April. However, the downtrend is not really broken until $667 is taken. Any return to the channel will target the strong support from the 200-day moving average before $539.
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