It's time to check in on Tesla (NASDAQ:TSLA) as the markets recover from virus volatility and head into the pre-Christmas rally. At least that’s the theory: With Santa’s workshop in full swing, and as his helpers load the sled for the annual run, bringing good cheer to one and all, will this apply to Tesla, too?
The daily chart has developed much as expected. Regular readers will know the defining candle on this timeframe is that of Nov. 9, which was largely triggered by Elon Musk selling stock. It, nevertheless, set the pattern of what we were likely to see in the forthcoming days and weeks, which has indeed been the case. Once this candle appeared, coupled with high volume and the volatility trigger as the price action had moved outside the average true range, either congestion or a reversal would follow. And in this case, we are witnessing the former.
Moreover, the likelihood of this happening was further reinforced by the presence of the volume point of control at $1,050 per share, which, while representing the fulcrum of the market, where price agreement has been reached, provides support. Within the range of the VPOC is where price will remain until we see a firm move away, coupled with increasing volume.
Yesterday’s price action was a result of indecision. The session closed with a Doji candle on good volume, thereby confirming the current lack of direction at present, with Tesla remaining range-bound between $1,020 and $1,175 per share. It's a wide range by any standard, but for Tesla, it is one that can be breached in a day’s trading. A rally to the upside and through the $1,175 per share moves the price into a low volume node on the VPOC histogram and, hence, into easier waters for a further run higher. On the downside, a similar low volume node awaits in the $975-per-share area. If approached, this could lead to a fall, possibly even to $800.
However, in the meantime, patience is required as we wait for meaningful levels to be breached. Volume, as always, will confirm any sustained move as the primary indices struggle for direction and move in whipsaw. Santa definitely needs to bring his influence to bear. But whether he will, only time will tell as we approach the final trading weeks of the year.