Tesla
Tesla (TSLA)’s stock is on the brink of its next big move.
The stock has spent the last month bobbing in a tight range between $160 and $180, but its riskiest break looks imminent as it threatens to move below its bottom Bollinger Band with a close below $160 today.
Bollinger Bands are used to gauge volatility in a stock. Breaks above a top band usually trigger fast and aggressive rallies higher, while breaks below the bottom bands precede aggressive selling.
The last similar break happened January 11, 2024, triggering a 20% decline in the stock over a ten-day trading period.
Like today, the “lower band break” break occurred just prior to the company’s January earnings date. More exact, eight trading days ahead of the quarterly report.
Tesla is slated to release their earnings in eight days, on April 23.
The move is part of a broader market selloff but also has all the signs of a pre-earnings run out of the stock just like last quarter.
Watch for the very real potential for Tesla to head to $120.
Rivian
It’s a bad day to be an EV manufacturer, as Rivian (RIVN) shares are also lower on heavy trading volume.
If you missed last week’s video on Rivian’s bearish technical break, you can catch it here.
The stock crossed the $10 mark on Thursday, signaling a high likelihood that the stock would decline another 20% to $8. Two trading days later, shares are trading at $8.37.
Options traders are now moving in on the trend, as the April 11 puts are seeing increased volume with one trade accounting for 9,000 of the 17,000 contracts traded so far today.
Rivian is slated for their earnings call on May 7. Last quarter’s earnings saw buying despite mixed results, as investors responded to management’s forward-looking comments.
This stock has been following one of the simplest technical rules, avoid buying stocks with declining 50-day moving averages.
Rivian’s 50-day trendline started declining two days ahead of its February earnings results. Since then, Rivian stock has lost 49% of its value.
We should see short-term support at $8, but it would be wise to avoid trying to catch this falling knife before it bounces around $5.
Nvidia
AI giant Nvidia (NVDA) has been drawn into the broad market selling.
Nvidia shares are trading 1.5% lower against the market’s decline of the same. The selling comes on no news, indicating that the move is almost completely based on the ebbing market flow. That’s not to say that the move isn’t concerning.
With a year-to-date performance of 75%, a well-timed “healthy correction” was needed for Nvidia. Since the stock has spent the entire month of April fighting technical resistance from its 20-day moving average and the round-numbered $900 level.
The short-term chart suggests that we may see Nvidia shares decline further to major technical support at $830. That price is where the stock’s bullish 50-day moving average sits. The price is also the short-term bottom that we saw just a week ago.
A break of $830 would target further declines to $800, where the stock would be almost 20% from its highs, signaling a technical correction.
With earnings more than a month away, investors and short-term traders will likely jump at the opportunity to buy Nvidia at a 20% discount from its all-time highs ahead of earnings.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.