WWM - Analytics


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    Today’s Trading Edge: Tesla shares rise after Q1 earnings and raising production guidance


    Tesla Motors Inc. (TSLA) delivered inline earnings and raised their delivery guidance target to achieve 500K unit production by 2 years to 2018.  The company affirmed 2016 delivery forecasts of 80-90K car deliveries. 

    Tesla reported a first quarter loss of $0.57 a share, analysts’ consensus eyed a loss of $0.54. Revenue printed at $1.60 billion, a slight beat than the estimated $1.59 billion.

    The company’s shares were up over 7% to $229.68 in after-hours trading, mainly due to production guidance. Price action on the Tesla 240-minute chart show that just before reporting earnings, price formed a bullish Gartley pattern.  Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 200.0% Fibonacci expansion level of the B to C move.  Price also received additional support from 38.2% Fibonacci retracement of the $135 low to $269.34 high rally.  If the bullish reversal continues, price could target the $240 zone.  If the Gartley pattern is invalidated, initial support will come from the $220 handle, with deeper support targeting the psychological $200 handle. 

    Price is poised to open tomorrow above all three key (200-, 100-, and 50- )day SMAs and the bullish move may continue as Wall Street is viewing the production guidance as positive. 

    The Trade: Buy Tesla shares at $225, with a stop loss of $220 and take profit of $240. The risk/reward ratio is 1:3. 

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