Three Stocks: Goldman Sachs, Tesla, and Nikola

Tesla

Tesla (TSLA) shares notched their fifth straight day of gains as the stock rallied almost 4%.

Tesla’s comeback rally has now attracted the attention of the investing crowd as analysts and the media are shining a bright light on the stock’s performance.

That attention is clearly driving large amounts of cash back into the stock as volume has been at its heaviest since sellers punished the stock in January.

Today’s buying frenzy is the result of CNBC and Barron’s coverage of the stock as a bullish pick.  The positive news on the company squelched an article published by the New York Times (NYT) reporting that Tesla’s shares of the U.S. EV market has dropped below 50%.

Last year, Tesla controlled almost 60% of the EV market.  According to the article, the U.S. EV market grew at 11.3% over the last year.

Tesla’s move above $250 has sparked additional activity in the options market.

Options traders are now focusing on the stock moving to the $300 price by mid-August.  The August $290 and $300 calls have garnered attention over the last two weeks as speculators are positioning for a better-than-expected earnings report from Tesla.

The company’s quarterly earnings report is due July 23, after the market close.

Shares of Tesla are now trading firmly in technical bull market territory.

The stock broke above its long-term 20-month moving average last week as it crossed above $210.  This is the level that investors should expect to see support if the company were to miss their earnings targets.

From a shot-term perspective, Tesla shares are trading in overbought territory.  This means that investors shouldn’t be shocked to see the stock make a “healthy correction” as buying pressure is likely to weaken as investors fear of buying the stock at its recent highs.

Short-term support should be expected at $225, which is more than 10% below the stock’s current price.

TSLA Price Chart

Goldman Sachs

Goldman Sachs' (GS) shares, along with many of the large financial banks, made a strong move higher today.

Goldman shares traded more than two percent higher as investors prepare for the beginning of the earnings season on Friday.  Large banks are the first to release their earnings results every season with JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC) each providing their earnings this Friday.

Goldman Sachs shares have outperformed the rest of the large banks handily since their last earnings report, returning more than 12% since April, compared to a loss of -2% for the KBE Bank ETF (KBE).

Large Bank Returns

That outperformance comes on the back of a strong earnings report in April that saw the Bank’s year-over-year revenue grow more than 16% and earnings that beat analyst’s expectations by $2.58.  Those earnings numbers put Goldman at the top of the banking sector from an earnings perspective.

Today’s move is part of a “buy the rumor” rally that is breaking the stock into new high territory.  That combination is creating a fear of missing out for Investors just days ahead of the earnings report on Monday.

Interestingly, Goldman shares saw a 6% selloff ahead of last quarter’s positive earnings report.  This is also stoking the FOMO trade ahead of next week’s earnings.

Goldman’s stock chart is strong as shares are trading in strong long- and short-term term bullish trends.

The stock just broke back above its 20- and 50-day moving averages.  Both trendlines are in bullish trends, acting as a catalyst for the pre-earnings strength.

Target a move above $500 on any positive earnings news, keeping in mind that the Bank’s comments on their interest rate outlook will help act as a long-term catalyst for buyers.

GS Price Chart

Nikola

Nikola (NKLA) shares are experiencing the perils of a stock that is in a bearish trend and trading below $10.

The stock shot more than 30% higher yesterday only to find resistance at one of the strongest psychological price levels - $10.

The stock’s move was sparked by the company’s announcement that they had wholesaled 72 “Class 8 Nikola” hydrogen fuel cell trucks for the second quarter of 2024.  That number was above the high end of truck sales guidance of 60 units.

Shares broke above $10 on the news, but long-term holders of the stock appear to have taken the opportunity to sell shares into the strength.

Nikola shares had added almost 60% to their value since the end of June after the company initially reported that Walmart Canada (WMT) was going to introduce NKLA's Hydrogen Fuel Cell EV Class 8 tractor to its fleet.

The rally also came following a reverse 30:1 stock split that was transacted on June 25.  The reverse stock split raised the price above minimum requirements for listing purposes, making the stock slightly more attractive to investors.

Expect Nikola shares to continue their bearish slide lower as the stock has entered the sub-$10 trading range again with a new price target of $7.50 over the next 4-6 weeks followed by a move to $5.00 following that.

NKLA Price Chart