Tesla stock fell on Friday, failing to take shares to akey leveltraders were looking for.
Coming into Friday trading, Tesla stock was down about 7% for the week, leaving share up about 1% year to date.
Shares of the electric vehicle maker fell 0.3% to $248.98 while the S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.7%, respectively.
The stock finished roughly $16, or 6%, away from $265, a level where it has run into resistance for months.
Resistance is a term used by technical stock market analysts that describes where investors have sold stock to take profits. It’s like an invisible ceiling for a share price.
Technical analysts don’t make fundamental calls on Tesla or other shares. They look at stock charts to get a sense of where a stock could go over the short and medium term.
Tesla shares broke through that resistance, closing at $269.19 this past Friday following better-than-expected third-quarter earnings. It was a sign that shares could be breaking through the ceiling.
But one close above $265 isn’t a trend and it’s a better sign if a stock can keep closing above key levels.
“A breakout would require two weekly…closes above that level to be confirmed [and] decisive,” says Fairlead Strategies founder and technical analyst Katie Stockton.
Confirmation didn’t happen. Tesla shares closed Thursday below $250, dropping 3%. The market deserved some of the blame. The S&P 500 dropped 1.9%, reacting badly to inflation data and earnings from Microsoft. Shares of the tech giant fell 6.1%
A failed breakout likely leaves Tesla stock trading in a range. The opposite of resistance is support. The $243 level is now “possible support,” adds Stockton. Below that, investors will be looking at 50-day and 200-day moving averages of about $$233 and $202, respectively.
It would have taken some heavy lifting to get shares north of $265. They needed a roughly 5% gain on Friday. Tesla stock has gained more than 5% in a day 227 times over its history as a publicly traded company, according to FactSet. That’s about 0.6% of the time.
It looks as if investors decided to take profits on Tesla stock, again, around $265. Earnings didn’t change that.
Through Friday trading, Tesla stock was up about 50 cents, or 0.2%, year to date. It’s a small move, but the path to flat has been wild. Shares were up about 80% from a 52-week intraday low reached in April. Shares were down about 10% from a 52-week intraday high reached after Tesla’s third-quarter earnings report.