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Today’s Trading Edge: Tesla shares rally after strong third quarter Model S  sales

Posted by Joseph Trevisani on Nov 4, 2015 8:37:31 AM

Tesla Motors (TSLA) shares rallied over 10% to $233.95 after reporting a delivery record of 11,603 new vehicles in the third quarter.  The company also anticipates 17,000-19,000 shipments this quarter.  Third quarter demand for Tesla's Model S increased 50% over a year ago.  Production also impressed by making 13,091 vehicle despite being shut down for a week.  Investors chose to overlook both the -$0.58 earnings per share miss (-$0.50 expected) and the lowering of 2015 full year guidance with deliveries to 50,000-52,000, from a prior range of 50,000-55,000. 

Price action on the Tesla Motors daily chart highlights the key respect of the psychological $200 handle.  The recent bearish slide appears finally over after price broke above the downward sloping trendline that started with the September 25th high of $267.  If the bullish stance continues, price could target the 200-day SMA which currently trades at the $233.32 level.  Further upside target could target $245-$255 range.  A longer-term target includes the $282.00 resistance level. 

If this rally stalls, we see could range bound price action with key support at the $208 support level.  Consecutive daily closes below this key level could open the door for a major selloff that could target the 2015 low of $181.40. 

The Trade: Buy Tesla at $227.50, with a stop loss at $217.50 and a take profit at $247.50.  The Risk/Reward Ratio is 1:2 

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