Tesla
Elon Musk did what Elon Musk does over the weekend.
He flew his plane over to China, had some meetings, and now The Wall Street Journal is reporting that China is preparing to give Tesla (TSLA) tentative approval for Tesla's Full Service Driving (FSD) technology.
The move would potentially open the door to another new growth catalyst for the EV manufacturer. Of course, it would also help with easing fears that TSLA's growth would remain neutral or reverse in the coming years.
This is what I mean when I said last week that I had to give Tesla shares room to move higher after their earnings report. There’s just no telling what a cornered Elon Musk will do… but now we know.
The stock’s move took it 15% higher by the end of the day, flirting with the round-numbered $200 level as potential resistance. Shares also crossed above their top Bollinger Band. Breaking the top band is typically a sign that a stock’s volatile move is ready to settle back into a trend.
Here’s how to approach the stock.
TSLA’s bearish 50-day moving average sits at $175. The bears will watch for a move below this price to signal that the stock has finished its 35% dead-cat bounce. A move below that price and trendline will increase selling pressure as the market falls back into the awareness that the “trend” is not Tesla’s “friend.”
There’s another way this could play out. The same 50-day trendline could act as support as the Tesla bulls see this as an opportunity for a comeback. In that case, we see support at $175 and the stock heads back towards a $200 print.
Alphabet
Shares of Alphabet (GOOGL) dropped more than 3% on Monday after last week’s 20% rally.
News that the company is continuing to lay off some employees as part of cost-cutting moves may have tiled shares a bit, but for the most part, this is part of a profit-taking bid on the stock.
Shares fell back below the $170 price point on Monday, which is also the location of its top Bollinger Band. As with Tesla, it is normal for a stock to regress to its mean after a volatility rally such as the shares have seen over the last few days.
Alphabet picked up bullish coverage from Barron’s magazine this weekend following the company’s impressive quarterly earnings results last Thursday.
The stock may face some headwinds from the market later this week as the Fed meets for their interest rate decision, an event that may add selling pressure to the overall market.
Alphabet’s stock chart shows support at $160. Buyers should come in to purchase the stock at that price as they’ve already seen the results of Alphabet’s quarterly results and a glimpse at what value the market put on those results based on last week’s $175 price tag on the stock.
Marathon Petroleum
Shares of Marathon Petroleum (MPC) rose 1% today ahead of tomorrow morning’s earnings report.
Year to date, shares of MPC are trading an impressive 35% higher as the company has operated well in its business segment.
Analysts are expecting $2.54 per share in earnings on just over $32 billion in revenue for the quarter. Outlook from the company will be key as rising oil prices and inflation have caused some pressure on revenue over the last year.
Shares of MCP have seen a 10% correction over the last three weeks, an indication that investors may have been spooked ahead of the report.
We’ll take this measure as a “sell the rumor” move, which suggests that MPC will quickly trade back to its $220 per share highs and beyond in a relief rally should the company best expectations.
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.