Summary Tesla (TSLA) has been treading water around $600 since about mid-May after having reached $900 in January. There are several technical levels converging on $635-650 which if broken should start a leg up toward and maybe above the January high. I want to be long with January 2022 calls at the time of the breakout and am lowering the price threshold for the new Intermediate Term Buy Signal to $635. It's all I can do to not jump in right now, but there needs to be that upward momentum to confirm the price pattern. At $600 TSLA is sitting just above its 200 Day EMA. If it holds, the next leg up will follow. Charts This chart illustrates the convergence described above. If the recent high at $635 is taken out, $650 is a slam dunk. That's why I'm lowering the entry threshold to $635. Once price moves far enough above the 200 Day EMA (currently $580) it can be used as a stop, but a looser, natural stop, would be May's low around $550. With TSLA over the years the looser the stop the better. The second chart is a weekly (long term) chart. Note how well the breakouts from consolidation and retracement channels all ushered in powerful impulse waves higher. Coincidentally, the breakout of the current weekly channel is in the middle of our $635-$650 entry zone, adding weight to convergence at $635-$650. Also in this long term chart are the price targets based upon Fibonacci extensions. Although not always definitive these projections have provided accurate price guidance in the past when prices are caught up in long term trends, up or down. In this case the uptrend is targeting $884 to $1467 for the next leg up. A January 2022 call between $700 and $800 would be my choice to exploit a run to those levels in the months ahead. Using $550 as a stop should limit risk on the calls to 50% or less. Fundamentals Every other television commercial these days is a plug for a new electric vehicle coming from one of the major automobile manufacturers. But not a single commercial from Tesla. The company has never had to advertise, it's the news cycle that has been all of the publicity Tesla has needed. Now that the other auto makers are jumping into the electric transportation fray, every advertisement they make benefits and is an advertisement for Tesla. All publicity in any way for electric vehicles is publicity for Tesla, which has become synonymous with electric vehicles. Walk through any suburban parking lot and just try to find an electric car that IS NOT a Tesla. The company is 5 years ahead of the competition in technology, batteries, and sports a global charging market that is still dominating the charging sector. Tesla's exponential growth continues, as will its market cap and share price. Measurements such as sales, earnings, P/E ratios and other traditional cornerstones of fundamental analysis all pale in comparison to the disruptive innovation of this leading technology behemoth of the 21st century. Call Option Strategy Since it is unknown when and at what price the next Buy Signal will be triggered picking any particular call now is problematic. The 10,000% TSLA call winner from Dec 2019 was 13 months to expiration and 20% out of the money. An equivalent expiration and strike based on today's price of $600 would be the June 2022 $720C, currently trading at about $90 ($9,000). The Jan 2022 $750C, which provides better leverage would cost "only" about $5,500. Breakeven (at expiration) would be about $800, but if TSLA can reach $1,000 by expiration that call would be worth about $25,000, up about 450%. That compares to a 67% gain holding onto the underlying shares. When the next Buy comes we will pick the call and then sit back while Elon does all of the heavy lifting. ARK Invest TSLA Price Targets Source: ARK Invest Tesla Price Target for 2025 The Power of Three Back to The Big Picture and Bitcoin next week. A
