Tesla (TSLA) is the Stock of the Day at Real Money Monday. According to a Reuters report, Tesla and a group of China banks have agreed to a new 10B yuan ($1.4B), five-year loan facility, for the company's Shanghai car plant.
(For more on Tesla, see Jim Cramer's Tesla Is a Phenomenon.)
In this daily bar chart of TSLA, below, we can see that prices have exploded higher since early October. Prices were trading between the 50-day moving average line and the 200-day moving average line, and then we see a huge upside price gap with heavy turnover or volume in late October. Prices surged higher and have not looked back.
We can see that the 50-day moving average line crossed above the bottoming 200-day moving average line in early November. This simple crossover of two moving averages is commonly called a bullish golden cross and can be an effective buy signal in long-trending markets.
The daily On-Balance-Volume (OBV) line turned upwards in early October and its rise tells us that buyers of TSLA have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in September for an outright go long signal and crossed to the upside in December for another outright buy signal.
In this weekly bar chart of TSLA, below, we looked at the movement over the past four years. We can see that prices have made a new high for the move up breaking out over the peaks of 2017 and 2018. Prices are well above the now rising 40-week moving average line.
The weekly OBV line has broken out to new all-time highs and tells us that buyers of TSLA have been more aggressive. New highs from the OBV line confirm and support the new price highs and that is a bullish combination that chart watchers love.
The MACD oscillator on this longer time frame is very bullish and pointed higher.
In this Point and Figure chart of TSLA, below, we can see that the software has projected a potential upside price target in the $583 area.
Bottom line strategy: TSLA has been a difficult stock to trade for a long time but its recent upside breakout has set the stage for further meaningful gains in 2020. Risk below $375 for now and use any available weakness to be a buyer. $450, $500 and $583 are the price targets in the months ahead.
