SIA Chartsâ relative strength rankings not only help investors to identify stocks with increasing and decreasing strength either for investment or avoidance but also what type of investment strategy or style may make the most sense for a given opportunity.
Tesla Inc. (TSLA) one of the stocks that fell out of the so-called âMagnificent Sevenâ over the first half of this year, has been on the rebound lately. Boosted by better than expected Q2 vehicle deliveries, Tesla shares jumped 10.2% yesterday and they are now up 29.8% over the last month. Tesla remains down 6.9% year to date, however even with a gain of 38.8% over the last three months.
As a large cap stock in a high-profile sector, Tesla tends to attract significant attention from investors and the business press. Recent price gains have enabled Tesla to climb up out of the red zone in the SIA S&P 100 Index and move back up into the Yellow Neutral Zone for the first time since last October. Currently, Tesla is in 35th place, up 18 spots yesterday and up 26 positions over the last month.
A look at three-year relative strength chart for Tesla, however, shows that this kind of a bounce is not uncommon and also that it may not last for long. Within the SIA S&P 100 Index Report Tesla has spent the majority of the last three years bouncing back and forth between the red zone and the Yellow Neutral Zone. Spikes up into the green zone have been few, and far between and have not lasted for more than a few weeks. This suggests that Tesla seems to be more of a trading stock where there may be opportunities in trying to capture short to medium term upswings or downswings but long-term investors may find it challenging.
This five-year weekly chart highlights the significance of the recent breakout in Tesla (TSLA) shares. Since peaking back in November of 2021, Tesla shares have been under distribution indicated by the multi-year downtrend of lower highs. Earlier this year, the shares established a higher low, which was encouraging, and signs of renewed accumulation have emerged.
Last week, the shares broke out over $190.00 for the first time since January and this week they have launched into a new uptrend blasting through the $200.00 round number and snapping a long-term downtrend line. Initial upside resistance appears near $250.00, followed by $275.00 and the $300.00 to $310.00 area. Initial support moves up to the $200.00 round number.
Since the beginning of 2022, Tesla (TSLA) shares have been in a general downtrend, offset by a few significant upswings. Since bottoming at a higher low back in April, Tesla shares have been on an upswing that has been accelerating. In recent days, the shares have completed bullish Double Top and Spread Double Top breakouts signaling the start of a move upward.
Initial resistance appears near $247.95 based on a horizontal count, but the key test appears in the $257.95 to $263.10 area where a vertical count converges with a downtrend line. Whether the shares can get through there or not could be the difference in determining whether this is another dead cat bounce or the start of a new uptrend. Previous highs and lows suggest other potential tests on trend near $279.20 or $314.40. Initial support appears near $211.60 based on a 3-box reversal.
With its bullish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) increasing to a perfect 10 out of 10, TSLA is exhibiting short-term strength across the asset classes.
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