Stocks could be in for a near-term rebound as the indexes move away from an oversold condition. However, it’s way too early to say the worst is over. We’ll know soon enough.
In the meantime, there could be many swing trading opportunities as buyers return. While there might be a lot of low-hanging fruit, our focus will be on companies that could have technical upside beyond a bounce, dead cat or not.
Tesla, Inc. (TSLA) is this week’s COW (chart of the week). Elon Musk’s car company has been stuck in a trading range between $270ish on the downside and $315 at the top. TLSA shares appear to be making their way back to the top of the channel and trade at $287.81 as we type.
A little deeper look, and we see the electric car maker is on the verge of the “golden cross”. That’s when the 50-day average moves from below to above the 200-day average. Another day or two of flat to up trading and it will happen, which will likely attract some computerized trading.
A golden cross, combined with the bounce trade, could be enough to push TSLA to the top of the box once again. If we widen out the time frame lens, Tesla could be poised for a lot of upside, or downside too.
Stocks tend to move aggressively when they bust loose from the restraints of a trading channel. That means TSLA will probably pop if it can drive by $315 and blow a tire if shares close for less than $270. Right now, a few more things line up in pop’s favor.
Remember, short-term trading is only for the most aggressive investors who can afford to lose lots of money in very short timeframes.