Chart Of The Day: Tesla Profit Surprise Tempts Traders To Expect More To Come
Investing.com | Oct 24, 2019 23:20
Tesla (NASDAQ:TSLA) yesterday caught investors by surprise when it posted an unexpected $342 million profit for its third quarter, a result in a totally different stratosphere from the net loss of $257 million that had been forecast.
Traders acted immediately, bidding up the stock as much as 20% in the aftermarket. The question now is whether this dramatic move was carried out by short term traders looking to take advantage of a suddenly undervalued stock, or whether this trajectory will hold for the longer term.
Will the first profitable quarter since Q3 2018 endure? Signs are mounting that investors believe so.
The stock dipped below but returned above the 200 DMA, which it had done earlier in the month, for the first time since October 2018.
The price has gained $46.97, or 18.44%, to $301.65 in premarket trading. When the market opens, it will have established the second peak to complete an ascending peak-trough formation — an uptrend for the first time in two years. The market dynamics of a rising trend are that, even if there's a decline, odds are much higher it's a correction within an uptrend, carried by the rallies.
h2 Trading Strategies/h2Conservative traders would wait for the second peak to establish the uptrend and wait for a pullback to confirm it.
Moderate traders may wait for a pullback for a long position, without waiting for trend confirmation.
Aggressive traders may enter a contrarian short trade, counting on a return move after such a dramatic jump, expecting profit-taking.
Trade Sample - Contrarian Short Position
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