TSLA Setting Up for Another Breakout

by Separate-Variation

Look, I get TA gets a bad rap here. Anyone can draw lines and call it TA. A few things stand out when you use multiple overlaying indicators and studies. These become more pronounced when you see algorithms and the market use these as a basis for trading (MACD, VWAP, RSI for example).

No one can predict the market, trading is reactive, not proactive. With that in mind, using these lagging indicators which other algorithms or traders use can be informative from the chart.

  1. TSLA had strong support from $690 after the dump at $968, first red arrow. MM, institutions like Bridgewater, and other funds jumped in 4Q. I wouldn’t be surprised if they added to their holdings. There’s speculation of Chinese National Team money providing additional funding and liquidity (but that’s another thread).
  2. TSLA bounced on the 200 day moving average, where the 50 day moving average served as additional support (red arrows 2 and 3).
  3. TSLA again bounced on the 50 day moving average on 2/20, forming a quadruple bottom, consolidating at the 23.6% Fibonacci retracement from its all time highs.
  4. Trading on Friday 2/21/20 was super interesting. MM desperately tried to push below $900, eventually entering large amounts of trading at $888. TSLA had an extremely bullish close. It closed $901, over the $900 strike during a witching day.
  5. Vega is increasing drastically for far OTM options. I have 3, 4/17/20 $1500c that doubled in vega in a period of an hour or two. If you look at the 5D chart, during the last hour of trading, the 50 day moving average crossed the 200 day moving average.

Update 1: Market sentiment will be of course dependent upon coronavirus response. I personally don’t think the market still has priced in the risk of the virus. How South Korea responds will be closely watched, as the data from China cannot simply be trusted. The data transparency from South Korea will provide a model for how other modern countries such as the USA will be able to respond to an outbreak.

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Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.