An ascending channel has formed in the chart of Tesla Inc. (TSLA). When the stock moves out of this channel, a significant move is expected.
TSLA is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities.
With a first-mover advantage in the electric vehicles space, the company’s growth potential remains strong. It is seeing robust demand for both the Model 3 and Model Y. Plus, its Shanghai Gigafactory and aggressive expansion efforts bode well.
The company currently has a current ratio of 1.9, which means it has more than enough liquidity to handle short-term debt. In its most recently reported quarter, TSLA’s revenues grew 130.4%, though its earnings per share were negative. The company is expected to grow earnings 37% next year.
TSLA’s stock currently has a trailing P/E over 1,000 and a forward P/E of 169.49. The stock has shown positive near- and mid-term momentum. This has led to a Momentum Grade of B in our POWR Ratings system and is reflected in the chart below.
Take a look at the 1-year chart of TSLA below with my added notations:
Chart of TSLA provided by TradingView
TSLA has formed an ascending channel over the past two months. A channel is formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to channels, any (3) points can start the pattern, but a 4th test or more help to confirm it.
A long opportunity could be if the stock breaks the trend line resistance. A short trade opportunity could be if the stock breaks the trend line support.
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TSLA shares fell $0.40 (-0.06%) in premarket trading Tuesday. Year-to-date, TSLA has gained 0.79%, versus a 11.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
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