Tesla’s 1Q16 earnings
So far in this series, we’ve seen how Tesla Motors’ (TSLA) gross margins continued to decline despite higher revenues in 1Q16. We also looked at Wall Street analysts’ recommendations for Tesla stock. While these recommendations can help long-term investors make investment decisions, technical analysis can help recognize key technical price levels in the stock. These levels may also act as potential stock price reversal levels.
Technical overview of Tesla stock
In our previous technical analysis update on Tesla stock, we mentioned $238.60 as a key support level. The negative price action after Tesla’s 1Q16 earnings release triggered a sell-off, and the price breached this key support level. This opened a possibility for a test of $190, the next horizontal support level.
A $190 price level is important because it’s a horizontal support level. But it’s also important because it’s roughly 61.8% of the upward price movement from $143.67 to $265.42.
Note that 61.8% is one of the key Fibonacci retracement levels. In general, this key retracement level is followed by many investors and traders worldwide. It’s the reason a 61.8% retracement level is regarded as the golden ratio in technical analysis.
Investors can look closely for the price to test the $190 support level. A positive price action from this key support level may reverse a short-term price trend to positive for Tesla stock.
While $138.60 previously acted as a support level, it should now act as the key resistance level. A violation of this key resistance level may attract fresh buying in the stock to take prices upward.
An upward price movement may see resistance around resistance levels. A downward price movement may hit roadblocks around support levels.
The auto industry in 1Q16
In the past two to three weeks, all the major US auto companies (IYK) have released their 1Q16 results. General Motors, Ford, and Fiat Chrysler posted strong results for 1Q16. However, Harley-Davidson’s earnings remained mixed, with falling margins and lower demand in North America.
Auto investors can read more about 1Q16 earnings of the auto companies in our following earnings review series:
- Ford (F): Higher Fleet Sales and the F-150 Drove Ford’s 1Q16 Earnings
- General Motors (GM): General Motors’ Rising 1Q16 Revenues: Trucks, Chevy, Innovation
- Fiat Chrysler (FCAU): Fiat Chrysler’s 1Q16 Earnings: Could It Meet Its 2016 Guidance?
- Ferrari (F): Your Heavy Horsepower Guide to Ferrari’s 1Q16 Earnings
- Harley-Davidson (HOG): Harley-Davidson’s Mixed 1Q16 Results: A Long and Winding Road