By Doug Busch
With earnings largely in the rearview mirror for most of the Magnificent Seven ( Apple remains my favorite), Tesla now warrants a closer look.
The company reported earnings on Jan. 29, leaving investors underwhelmed and sending the stock down 3.5% on the day. Early today, shares briefly slipped into bear market territory, trading more than 20% below their most recent 52-week high set on Dec. 22. That area coincided with a bearish shooting star candle just shy of the very round $500 level.
The stock is now finding a potential floor near the very round $400 level, just above its upward sloping 200 day simple moving average. This marks Tesla's first test of that long-term trend line since it broke above a symmetrical triangle in September. The brief dip below $400 appears similar to the November pullback, which lasted just two sessions. From here, a rapid move back toward the $500 area by the end of the first quarter wouldn't be surprising.
On the monthly chart, the influence of the $400 level is hard to ignore. The stock first tested this area in November 2021, printing a doji candle, often a powerful signal of a potential trend change. That ultimately proved prescient, as shares worked their way back toward the very round $100 number in January 2023, when a bullish piercing line gave investors the green light to catch the proverbial "falling knife."
The stock returned to the $400 area again in December 2024 and January 2025, though that attempt resulted in a double top. Fast forward to today, and Tesla has now logged five consecutive monthly closes above $400, increasing the likelihood that this former resistance level has transitioned into a durable floor of support.
I think one can enter here and use a stop below $370. At current levels, the risk/reward appears favorable and this setup presents a compelling opportunity.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
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February 05, 2026 13:21 ET (18:21 GMT)
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