Profit from Tesla's Rocketing Stock Price

It is no secret that Tesla TSLA +4.33% stock is on fire right now, leaving investors breathless and wondering what they should do next. Taking a profit is something that no one ever had to worry about going broke, so perhaps they should follow this adage.

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It is estimated that Tesla stock (ticker: TSLA) surged 41% in January, its best month since October 2021, when the stock grew 44%, closing at $371.33, according to Trade Algo. There was a $173.22 closing price for Tesla at the end of January.

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The pace of the recovery is unlikely to continue for long, but for Tesla [stock] to continue to make progress, it has to prove it is capable of digesting these gains in a constructive manner, says CappThesis founder and technical analyst Frank Cappelleri. It would also be beneficial if the stock paused, formed a bullish pattern, and then broke out again after a short period. As far as chasing it in the short term is concerned, it's challenging to do so.

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As far as Cappelleri is concerned, he is referring only to the stock chart. This is not the case when he talks about the fundamentals of EVs, such as the price of the cars, and the demand for EVs. The goal of market technicians is to gauge investor sentiment by looking at chart patterns in order to determine what next comes for the stock market or a particular stock.

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I was told by John Roque, the market technician for 22V Research, that Tesla stock would have a downside of $100 in late 2022. During the week of Jan. 6th, shares of the company reached a low of $101.81.

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About Tesla's current state, Roque tells that $175 to $180 is possible. “I would sell it there.”

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In Roque's case, he may not be thinking like a long-term investor, but he does look at the chart as well.

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After huge runs in stocks, there is a tendency for stocks to pause and drop because of psychology. Like Cappelleri explains, there is an expectation that the good times will not last forever, so there is a sense of expectation. In addition to losing money won so quickly, it is also painful to lose money won so quickly. There is a dynamic creating selling that results in rallies running out of steam as a result of that dynamic.

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In the end, it is all a matter of technical analysis and there is only one way to view the stock. Stock prices are largely influenced by the fundamentals of the company over the long run, in the long run. During Tesla's March 1 shareholder meeting, investors will be able to get some fundamental information. There is a possibility that Tesla could announce a lower-priced electric vehicle in order to increase its market share in the near future.

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Tesla stock received a favorable review on January 6th. In only 17 trading days, shares of the company have gained about 60% since then. As far as we can tell, things did not seem to be rebounding as quickly as we had expected.

In the long run, it probably makes sense to sell some of the position in order to lock in gains, but we are not money managers.

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One portfolio manager who wishes to remain anonymous once told us how he managed Tesla's position. A little below his target weighting, he took his position when shares went on a run and seemed expensive to him. His position grew a little beyond his target weighting when shares came down and looked more attractive.

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It seems reasonable to plan that way.

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Since Tesla shares were more volatile than any other stock he owned, he took a more active approach to managing the stock. As a matter of fact, he had an idea as to what Tesla was worth, as well as what it was wise to own in a diversified portfolio as far as Tesla stock was concerned.

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A report by Trade Algo stated that Tesla plans to boost production at its Shanghai plant to 20,000 cars a week during the month of February and March. Approximately one million cars can be produced at that plant every year, which is roughly the peak capacity of that plant. Regarding production, Tesla did not respond to a request for comment.

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Despite that, it is a bullish sign. There is a possibility that investors may expect shares to rise as a result of this news. In spite of this, Tesla stock is already up about 38% year-to-date. There is a 6% increase in the S&P 500SPX +0.71% and a 10% increase in the Nasdaq CompositeCOMP +1.95%.