Tesla Leads a Rebound in the Nasdaq as Buyers Defend Key Levels

Tesla Leads Nasdaq Rebound Following Pullback in Technology Stocks

Buy the dip. Buy the dip. Buy the dip. That was the mantra on Wall Street today.

The Nasdaq-100 surged 3 percent, its biggest one-day gain since April 29. Tesla (TSLA), one of the most traded stocks in the entire market, led the bounce.

Elon Musk’s electric-vehicle maker jumped 11 percent following its biggest drop ever on Tuesday. It followed a busy series of events in recent weeks. First, TSLA rallied 83 percent to new record highs after announcing a 5-for-1 stock split. It stalled after issuing $5 billion of new equity to raise capital. Next it crashed after unexpectedly getting excluded from the S&P 500 index.

But then some potentially bullish chart patterns appeared. TSLA’s low yesterday was just $0.25 above its 50-day moving average, a key technical indicator. Trend followers often wait for high-flying stocks to retest the 50-day MA, and Tuesday’s level was close enough to qualify.

TSLA’s price action also resembled a “bullish kicker” candlestick pattern. That’s when a stock knifes lower and rebounds sharply the next day. The bounce also occurred around the $338 area where TSLA peaked in late July. Has old resistance become support?

Attention may remain focused on the company in the next few weeks with the Tesla Battery Day event scheduled for September 22. The agenda isn’t yet known but Musk is expected to reveal advances in electric technology. Keep reading Market Insights for more.

Tesla (TSLA), daily chart, with 50-day moving average and select events.
Tesla (TSLA), daily chart, with 50-day moving average and select events.

Finding Pullbacks Like Tesla and Apple

The S&P 500 and Dow Jones Industrial Average also had their biggest gains in over a month today. The big indexes fell last week as investors took profits on high-flying technology names like Apple (AAPL), Zoom Video Communications (ZM), Salesforce.com (CRM), Amazon.com (AMZN) and TSLA.

Given the recent weakness, traders may want to look for stocks that have pulled back after big rallies. Here’s a way to do it with TradeStation’s Scanner app:

  • Click on Add to create a new scan
  • Select “All Stocks” under the Symbol Universe.
  • Under Criteria, select Price → %Chg (52 Wk). Set it to greater than (>) 50. Find stocks up at least 50 percent in the last year.
  • Under Criteria, select Price → %Chg (5 Day). Set it to less than (<) -5. Find stocks down at least 5 percent in the last week.
  • Under Criteria, select Capitalization → Market Capitalization. Set it to greater than (>) 20000. Find stocks with at least $20 billion of market cap.

This scan turned up names like AAPL, AMZN, Alibaba (BABA) and Nvidia (NVDA) before the market opened this morning. It’s just one example of the many ways TradeStation’s award-winning technology can be used to help you track the market and discover potential opportunities.

Scan results showing pullbacks before the opening bell this morning.
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