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Shares in Tesla are trading a little lower ahead of the open today following a breakout move higher earlier in the week. Tesla shares started the week on a positive footing amidst encouraging signs that a debt ceiling deal will be done, preventing a default on US debt. However, lingering concerns around the details of the deal have caused some uncertainty which is hampering stocks. Fed hawkishness has also emerged as a key headwind into the middle of the week. With traders now bracing for a further rate hike in June, equities have come back under pressure, reflected in the drop we’re seeing in Tesla stock.
 

Musk Visits China 

In terms of company-specific news, investors have cheered news that CEO Elon Musk visited China for the first time in three years. Musk reportedly met with business leaders as well as government figures, including the Chinese foreign minister. In a sign that Musk is again strengthening his ties with China. Given the importance of China to the electric vehicle market, as well as the rise of BYD, the visit has been taken as an encouraging sign for stockholders in the company which should help keep sentiment supported near-term.  Tesla recently signed a new supply deal with BYD to use their blade batteries in Tesla’s electric vehicles, signaling further consolidation in China and more of an alliance between the two largest electric vehicle suppliers globally.
 

Technical Views

Tesla

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Following the breakout above the local bear channel, Tesla shares have run into resistance at the 207.71 level and longer-term bear trend line. With momentum studies bullish, the focus is on a further push higher while the price holds above the 170.22 level support, putting 255.61 into view as a longer-run target for bulls.  

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