Tesla
Tesla (TSLA) shares are posting their best close since the stock rolled over in early March.
Shares of the EV manufacturer traded more than 5% higher for the day after Stifel initiated coverage of the stock with a Buy rating and a $265 target. The $265 target is more than 40% higher than the current average target price for Wall Street, currently sitting at $183 per share.
It is notable that the stock’s current price now exceeds the Average Wall Street target price by 7%. A break above the psychologically significant $200 level may have Wall Street analysts reassessing their outlooks and price targets, resulting in potential upgrades.
From a technical perspective, Tesla’s surge has broken the stock into a potential bullish volatility rally. Today’s close surged above the stock’s top Bollinger Band on heavy volume.
Over the last three weeks, the stocks traded in a tightening range, resulting in increasingly low volatility for Tesla. These low volatility situations often result in a surge in price movement.
The break above the top Bollinger Band indicates that the surge will take the stock higher, not lower.
Investors should focus on the $210 as the next hurdle and catalyst for the stock.
A move above the $210 level will put the stock back above its long-term 20-month moving average. This trendline is the line of demarcation between a long-term bull or bear market trend for a stock.
Amazon
Amazon (AMZN) shares traded almost 4% higher into the close today. That price pushes the stock’s market capitalization above $2 trillion for the first time.
Amazon stock traded above $190, a price that has stopped the stock cold in its tracks twice over the last three months. That break above the $190 price sparked activity in the options market with huge volume trading on the $195 and $200 calls that expire in July.
The options activity suggests that shorter-term traders are speculating that Amazon shares will post a strong “buy the rumor” rally ahead of the company’s late-July earnings report.
Looking at the stock’s chart, Amazon shares just experienced what I refer to as a “touch and go”. This pattern is formed when a stock’s 20- day moving average declines to converge with the 50-day moving average and then begins a new ascent.
This pattern is the result of a stock’s consolidation while in a strong long-term uptrend and often forecasts a strong breakthrough into another long rally.
Micron
Shares of Micron (MU) are trading 5% lower in late trading after the company posted their latest earnings results.
For the most recent quarter, Micron beat earnings per share expectations by $0.14. The company also posted revenue of $6.8 billion, which reflects an 81% increase over the same quarter last year.
That 81% increase is the best year-over-year revenue growth that the company has seen in much more than five years as demand for Micron’s High Bandwidth Memory (HBM), and data center SSD revenue hit a record.
Micron’s management issued guidance that is in-line with Wall Street’s expectations for the next quarter, which is why the stock is trading lower.
The company’s last three earnings reports were accompanied by strong guidance that was higher than what Investors were looking for, so the in-line guidance is a bit of disappointment for the market.
The selling response from investors takes Micron stock below its 20-day moving average for the first time since April. That break below the “Trader’s Trendline” was followed by a 10% decline in the stock over a three-day period.
A similar decline of 10% over the next week or so would result in the stock landing around $120, which is where we have seen strong support from the market since May.
Watch for support and a buying opportunity at $120 with a high likelihood that the long-term buyers will return eyeing a price target of $160 and higher.
