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Tesla shares surged more than 6% on Friday, having their best day in more than two months. Technical momentum is building, and bullish crossover signals are confirming the uptrend. Analysts remain mostly confident, with Wedbush still targeting $500 in the coming months.
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Shares of auto-giant Tesla Inc (NASDAQ: TSLA) jumped more than 6% on Friday, finishing at the highs of the day in what was its strongest single-day performance in more than two months. The move came after almost two weeks of steady declines and looked like a stunning show of strength for bulls hoping the stock could reassert its uptrend. |
Technically, the stock had already staged a breakout earlier in August from the tightening pennant pattern that we had flagged, and which traders had been watching closely. While the breakout was decisive, carrying shares higher for several sessions, momentum eventually stalled before it got around to testing longer-term resistance near the $360 mark. |
A pullback then followed as the market probed the downside. Friday's pop was a firm rejection of those bearish efforts and a strong indication that buyers remain firmly in control. Heading into September, there's a lot to like about Tesla's setup, so let's jump in and take a look. |
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Technical Signals Flash Green for Tesla Stock |
First and foremost, the uptrend remains very much intact. Tesla added another 2% on Monday to extend Friday's gains and is starting to look ready to test the $360 level again in the near future. The technical picture in the background supports this idea. |
Take the stock's Moving Average Convergence Divergence (MACD) indicator, for example, which recently had a bullish crossover. The MACD measures the difference between short-term and longer-term moving averages of a stock's price. When the short-term line crosses above the longer one, it signals that near-term momentum is accelerating relative to the longer trend. It's a classic bullish setup, and the fact that it's happening right now for Tesla should be enough to make most investors sit up and take notice. |
There's also the fact that the stock's Relative Strength Index (RSI) is trending higher. The RSI tracks the speed and magnitude of price changes to measure whether a stock is overbought or oversold. Readings above 70 are often considered overheated, while those below 30 signal oversold conditions. So Tesla having an RSI around the 60 mark means it's at a healthily bullish level with lots of room to run higher. |
Wedbush Stands by Its Bullish Case for Tesla Stock |
All this momentum on the chart is being matched by confidence on Wall Street. |
The team over at Wedbush has been reiterating its Outperform rating on the stock this month, as well as its $500 price target. |
Tesla closed out Monday just above $345, which points to a targeted upside of more than 40%. |
Wedbush has consistently been one of Tesla's strongest backers, even during times of uncertainty. |
They've often highlighted the company's progress in self-driving, its growing global presence, and its potential for long-term profits. |
With fundamentals intact and technicals aligning, the latest rally provides a degree of validation for those bullish forecasts. |
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Tesla Positioned to Benefit Disproportionately From a Dovish Fed |
A final reason to be excited about the stock's potential right now is that a friendlier macro backdrop is also helping the move. The broader market is firmly in rally mode, with equities having climbed through August as investor expectations grow for a cut to interest rates. Federal Reserve Chairman Jerome Powell's recent comments suggested the central bank may be preparing to do this sooner rather than later, a shift that has investors leaning into growth names once again. |
This is because growth names, including Tesla, are most affected by falling, or indeed rising, interest rates. Cheaper financing improves consumer affordability for high-ticket purchases like EVs and lowers borrowing costs for the likes of Tesla, which is investing heavily in innovation and expansion. Hence, growth stocks with long-term cash flow potential, such as Tesla, tend to benefit disproportionately when markets anticipate a more dovish Fed. |
For investors on the sidelines, Friday's surge was the kind of price action that can mark an inflection point. After nearly two weeks of grinding lower, the decisive reversal and confirmation on Monday suggest buyers are ready to push the stock back toward resistance. If Tesla can clear the $360 level in the coming sessions, it would likely put $400 back on the radar and potentially open the door to a sustained test of last year's high. |
Written by Sam Quirke |
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