Tesla’s (TSLA) stock price has risen in the fourth quarter. So far, the stock has risen 41% sequentially. The stock has been rising since it posted surprise profits in the third quarter. The upward spree continued due to the announcement about Gigafactory 4 and Cybertruck. The stock is holding on firmly before 2020, which might be a high-growth phase for the company.
In the current scenario, Tesla stock is positive. We’ll evaluate the technical indicators’ position. The technical indicators include the moving averages, RSI (relative strength index), and implied volatility.
Tesla stock’s DMA crossover
Tesla stock’s rise boosted its 50 DMA (day moving average) by 29.9% sequentially. With that increase, the company’s 50 DMA crossed over its 200 DMA at the beginning of November. The company announced its third-quarter results on October 23. Since the crossover, the gap between both DMAs has expanded to date. Tesla’s 50 DMA was 10.4% below its 200 DMA on October 1. Now, the 50 DMA is 17.8% above its 200 DMA.
A crossover of a short-term DMA over a long-term DMA is considered to be a technically bullish sign. The higher stock price could accelerate even more. Also, the wide gap of 17.8% between both DMAs implies that the chances of Tesla’s 50 DMA breaking below its 200 DMA are bleak, which is a good sign.
RSI isn’t overbought
The RSI is a momentum indicator. The RSI shows whether a stock is overbought or oversold. If a stock’s RSI is above 70, it’s considered to be overbought. As a result, the stock price could fall. In contrast, if a stock’s RSI is below 30, it’s considered to be oversold. There could be an expected rise in the stock price.
Tesla’s 30-day RSI is 61. The RSI shows that the stock hasn’t reached the overbought territory yet—a favorable scenario.
Tesla stock’s implied volatility fell
The implied volatility in Tesla stock has fallen from 54.8% on October 1 to the current level of 38.5%. The implied volatility shows the market’s expectation of future volatility in a stock. The technical indicator is one of the critical parameters. Notably, the implied volatility is used in the option pricing model. Usually, a fall in the implied volatility shows that markets are bullish on a stock.
So, the fall in Tesla’s implied volatility sequentially suggests positive sentiments towards the stock.
Stock is positive
All three technical indicators for Tesla stock suggest that the stock is still in a positive zone. So, an immediate fall doesn’t seem likely.
Currently, Tesla’s 50 DMA, which crossed over its 200 DMA, is higher. The company’s RSI suggests that the stock hasn’t reached the overbought territory. Also, the fall in the implied volatility suggests positivity for the stock. The short interest in Tesla has been falling. To learn more, read Tesla Stock’s Short Interest: TSLA Bears Still in a Coma. Technical indicators might suggest that the stock has some more steam left before it could cool off a bit.
Even fundamentally, the stock seems to be on the right path. The company just turned to profits with its cost-saving exercise. In the next year, Tesla expects its Model 3 from Gigafactory 3 and Model Y to add to its overall volumes, which could raise its revenues and earnings. To learn more, read Tesla Stock: What Model 3 Means for the Company.
Wall Street analysts expect the company to switch from an estimated loss in 2019 to profits in 2020. Also, the company’s latest revelation, Cybertruck, has raised analysts’ expectations. Recently, Piper Jaffray raised its target price on the stock. To learn more, read Why Tesla Is a ‘Must-Own’ as per Piper Jaffray.
Morgan Stanley raised its bull-case target price on Tesla stock from $440 to $500. To learn more, read Morgan Stanley Thinks Tesla Stock Could Soar 50%.