Hi Shoppers,

I like Tesla (TSLA) to keep working higher as it closes the gap it left on July 23rd:

That gap starts at $374.01. That's where Tesla (TSLA) closed the day before second quarter earnings, and the stock gave up 14.5 percent the following session. Record revenue of $28.24 billion didn't matter once traders saw operating income down 57% and operating margin at 1.4%.

The selling ran another week after that. Tesla printed a 52-week low just under $298 on July 29th, with the 14-day RSI (Relative Strength Index, a momentum gauge that reads oversold below 30) sitting near 27.

That low held the bottom of my pitchfork channel (a three-line trend tool that maps where a stock should find buyers and sellers) and bounced.

Add the upward trending line on the stock beginning at that July 29th low. Add the same upward line to your RSI beginning at that oversold point. Higher lows in price plus higher lows in momentum is what I need before I'll trade a bounce.

The MACD (Moving Average Convergence/Divergence, which tracks whether short-term momentum is pulling ahead of long-term momentum) is crossing zero on the histogram. That means the MACD line just crossed above its signal line, which is bullish.

We've rallied into the top section of the channel and closed inside it several days running. Alan Andrews' rule of thumb says that once price clears the median line, it works up to the upper parallel roughly 80% of the time. My target sits at the top of that channel: $379.26.

Two levels sit within about five points of each other, and that's what I like about this setup. The gap fill at $374.01 and the channel top at $379.26. Buyers have already taken back about three quarters of the earnings drop to reach $354.81, so the last stretch is under seven percent.

Use a close below your upward moving trendline as your trailing stop loss. If the stock closes under that line, the higher-low pattern is gone and so is my reason for being long.

One more thing worth watching. Traders dumped Tesla in July for spending heavily on AI and robotics, and they've spent August paying up for that same spending as Optimus production started at Fremont and Nevada cleared a larger robotaxi fleet. The chart turned before the headlines did, which is the whole reason I read charts.

Sector rotation like that is exactly what Tim Colby does for a living. Just in case you missed it, here's the replay of Tim's Macro Gauntlet debut. Tap it when you have the time. He's a wizard trading market sectors.

Trade Accordingly,

Licia Leslie