Tesla
Tesla (TSLA) shares shot 6% higher today in a move that combines a “buy the rumor” rally with a technical breakout.
The stock surged above its 200-day moving average in a move that has the bulls buying the stock.
The Electric Vehicle maker was added to Wells Fargo’s Tactical Ideas list this morning ahead of the close based on the technical improvements in the stock. This follows Stiefl initiating coverage on Tesla with a Buy recommendation last week boasting a target price of $265.
The move comes a day before the company is set to announce their second quarter delivery results. Last quarter’s results, announced on April 2, were less than Wall Street’s expectations.
Last quarter’s delivery announcement preceded an announcement on April 15 that the company would be cutting 10% of its workforce responding to a slowdown in EV demand and competition.
Since the company’s last earnings, Tesla shares have rallied 53%, fueled by an outlook that includes the release of lower priced models by as soon as the end of 2024 or early 2025.
On June 13, Tesla’s 50-day moving average shifted into a bullish trend for the first time since January. That trend was quickly reversed after a 35% year-end rallied was reversed by reports of a slowdown in Tesla’s demand.
Investors that have been hesitant to buy into the recent trend may be better served to wait until the company’s delivery announcement has hit the wires. A miss on deliveries is likely to cause the stock to immediately slip below the 200-day moving average with a target price to test $200.
NVIDIA
NVIDIA (NVDA) stock is fighting a crosscurrent of headlines, analyst upgrades and a potential technical pattern that could spell more selling pressure for the stock.
The morning started lower for NVIDIA stock after Reuters reported that NVIDIA could be charged by French antitrust officials. It’s one of the stories that NVIDIA bulls have been fearing.
That news followed Barron’s panning of the company over the weekend in an article that opened with “NVIDIA stock has dropped—finally. But it’s not time to buy the dip just yet.”
In the last eight trading days shares of NVIDIA have lost as much as 16% as a technical overbought condition pushed investors to take some profits from the AI Giant.
Even Kathie Wood’s Ark Innovation fund got in on the selling, dropping almost 34,000 shares of NVIDIA on June 25.
Despite “who” is selling shares of NVIDIA, the stock now finds itself in two technical tight spots.
First, the stock is doing a balance beam performance that should land Jensen Huang a spot on the U.S. Olypic Team’s roster in Paris.
Each of the last six trading days have traded around the stock’s 20-day moving average with precision. That trendline represents technical support and resistance for short-term traders, meaning a sold break of the trendline would increase short-term selling.
The second technical that NVIDIA may find itself fighting is a “head and shoulders” pattern.
These patterns are identified by a consolidation in a rally (A), followed by a push higher (B), followed by a selloff and consolidation at the same price as the consolidation before the push higher (C). That consolidation price becomes the “neckline”.
A break below that neckline turns into a sell signal for algorithms and technical traders.
As it stands now, NVIDIA shares are likely to find support at $100-$100, another 10% drop from today’s price.
After that, the market will be looking to buy the dip at $100.
Be sure to check out my latest YouTube video on “buying the dip” in NVIDIA.
Goldman Sachs
Shares of banking giant Goldman Sachs (GS) are 2.5% higher today as the banking stock prepares for a bullish break out of 8-10%.
On Wednesday, June 26, the Federal Reserve notified Goldman and the other large banks of their Stress Capital Buffer ("SCB"). The test puts the banks through a simulation of a hypothetical recession to ensure their capital requirements would allow them to weather an economic storm like what was seen in the “Great Recession”.
Goldman was one of the banks that performed poorly in the tests, though all banks survived the Fed’s challenge, though some – including Goldman Sach – showed weakness due to exposure to consumer debt.
Goldman Sachs was among the companies that released their results along with their plans to return capital to investors. Goldman announced an increase of their dividend – to be approved by the company’s Board of Directors – from $2.75 to $3.00 a share.
Today’s rally places the stock just 1% away from making new all-time highs as the bank’s earnings season approaches.
Historically, the banking stocks post a 5-10% rally ahead of their quarterly earnings release as the market gets prepared for them being the first wave of earnings results.
Goldman Sachs’ results are slated for two weeks from today on July 15. A move above $265 should spark a strong response from investors after the company’s better-than-expected earnings per share results last quarter.
Those quarterly results were accompanied by strong revenue growth that surged 16% on a year-to-year basis.
