It’s been a good start to the session for equities, as the inflation report for July came. Not only was it below expectations, but it was also down from the prior month, increasing the prospect that we’ve seen peak inflation.
But Tesla stock is in the headlines and on the move for a different reason.
And that’s CEO Elon Musk’s sales of more stock. He parted with nearly 8 million shares valued at about $6.7 billion, according to a recent Form 4 filing with the Securities and Exchange Commission.
As reported earlier by TheStreet: “Musk said he wanted to avoid an ‘emergency sale’ of Tesla stock if, ‘Twitter forces this deal to close *and* some equity partners don’t come through’ on the $44 billion transaction.”
Interestingly, though, Tesla stock is rallying, not falling, on the news. Let’s look at the chart.
Trading Tesla Stock
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We were quite fortunate with our timing last week, flagging the resistance levels around $930. That’s as Tesla stock ran into the 200-day moving average and the 50% retracement.
The shares pulled back, momentarily broke below the 10-day moving average, and have since begun rallying again.
Amid the recent action, the $840 to $850 zone has proved to be key. This level was resistance in July and support on Tuesday amid the pullback.
On the upside, the bulls will now want to see whether Tesla stock can push through last week’s high of $940.82. If the stock can do that, it will put it above the 200-day moving average and the 50% retracement.
In that scenario, it opens the door back up to the coveted $1,000 level and the 61.8% retracement. This is a level that many traders likely have circled on the chart.
At the same time, investors must stay aware of the potential downside.
If Tesla stock moves back below the 10-day moving average, the $840 to $850 zone is back in play, along with the 21-day moving average.
If the shares break below both measures, traders could see a retest of the $760 to $770 area and the 50-day moving average.
The bottom line: Tesla stock is posting a surprising rally on the Musk news. If it continues higher, $940 is the key to unlocking more upside. On the downside, $840 is key to keeping the bull move alive.