February 25, 2014 (Chinavestor) The saying goes "don't fight the market". But sometimes exceptions make rules stronger. This is the case with Tesla Motors (NASDAQ:TSLA) today. Shares of this electric car maker surged in pre-market hours to the $230 range and up to the $250 after two hours of trading on Tuesday. Tesla Motors (NASDAQ:TSLA) was trading as low as $210 last Friday and $190 before earnings release earlier that week.
Tesla Motors (NASDAQ:TSLA) February 22-25, 2014
Such an unusual rally should place Tesla Motors (NASDAQ:TSLA) into an extrem overbought position, shouldn't it?Seriously, the stock is up $60 in just five trading days! Yet mathematics say the stock is NOT EXTREMELY OVERBOUGHT and is still trading within two standard deviation around its mean. For visuals, take a look at the following Tesla price chart. The white line is the mean price - or moving average price for Tesla (NASDAQ:TSLA). The azure bands represent one standard deviation (SD) of price moment. Tesla Motors (NASDAQ:TSLA) is less than one SD above its mean! This means that Tesla's stsock price is where 72% of the time it should be. So even after ruch a steep rally, Tesla's stock price is not unusually out of balance.
Another way to assess how Tesla Motors (NASDAQ:TSLA) is doing is by comparing it to other stocks. We have US shale oil companies and well known technology stocks lined up for a compariosn. Tesla Motors (NASDAQ:TSLA) is trading cloest to theoretical highs on the following screen. Yet it is paramount to point out that TLSA is just as close to theoretical highs as Continental Resources (NYSE:CLR) or Kodiak Oil & Gas (NYSE:KOG) are. Neither TSLA not KOG and CLR have REACHED theoretical highs. In other words, these stocks are safe from an immediate pullback.
Finally, let's not forget what's behind the rally. FUNDAMENTALS! US shale oil companies will start report earnings tomorrow and TSLA has already did. This is Tesla's revenue and earnings growth, quarter by quarter.