How to position for TESLA outperformance

In all honesty, this week which includes an FOMC meeting, U.S Q2 GDP data, and a slew of earnings reports from U.S mega tech stocks, is not one we would normally look to add new positions to trading portfolios.

Additionally, the S&P500 has just about reached 4050, a level we have been calling for since late June as the target for a countertrend rally. While the rally may still extend another 1 or 2%, the so-called “easy money” from the rally is now gone.

Nonetheless, if there were a stock that I was looking to buy, Tesla would be front and centre after its stellar earnings beat last week.

As outlined by my colleague Joshua Warner here, Tesla delivered strong double-digit growth in sales and profits during the second quarter despite facing supply chain problems and Covid-19 disruptions in China.

The result was a 42% rise in revenue from last year to $16.9 billion in the second quarter, just below the $17.2 billion forecast by analysts. Adjusted EPS jumped 57% to $2.27 and smashed Wall Street’s estimate of $1.85.

With two new factories in Texas and outside of Berlin in Germany, Tesla has kept its soft guidance for “50% average annual growth in vehicle deliveries” over a “multi-year horizon.”

Following the earnings report, Tesla shares gapped higher and are now trading 10% above where they were pre the earnings report. Providing the Tesla share price remains above the $750/40 support area, there appears to be upside to the 200-day moving average at $900.

To take advantage of this, consider buying Tesla on dips towards $800 with a stop at $740. The target is the 200-day moving average at $900.

Source Tradingview. The figures stated are as of July 25th ,2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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