Market Insights

The Nasdaq-100 is teetering, but one major index member is fighting the trend as business surges: electric-car giant Tesla.

TSLA rose almost 1 percent yesterday, despite NDX sliding more than 2 percent. It managed to close at its highest price since February, even with the benchmark sinking to a three-month low.

A strong third quarter was the main reason behind the bullish price action: TSLA delivered a record 241,300 vehicles between July and September. That was a 73 percent gain from last year, and about 5 percent more than expected.

The news stands in contrast with traditional automakers, whose sales were forecast to drop more than 20 percent last quarter because of semiconductor shortages.

Analysts at firms like Oppenheimer and Wedbush praised CEO Elon Musk for successfully managing supply-chain issues. They also said demand from China was growing, even as the Asian giant struggles with a real-estate meltdown and energy shortages.

Tesla vs. The Nasdaq

The Nasdaq-100 declined 5.7 percent in September, its worst monthly performance since the coronavirus pandemic slammed markets in March 2020. The pullback came as inflation increased and the Federal Reserve prepares to tighten monetary policy. Investors see that lifting interest rates. That can reduce the appeal of high-valuation growth stocks like Apple (AAPL) and Microsoft (MSFT) that dominate NDX.

The index also struggled yesterday after website outages dragged down Facebook (FB), its sixth-biggest member, almost 5 percent.

By the time the dust settled, only 15 stocks in the NDX were above their 50-day moving averages. That was the lowest reading since the beginning of April, according to TradeStation data.

TSLA stood out on this front because it closed 8 percent above its 50-day moving average. Of the 10 largest companies in the index — including giants like Amazon.com (AMZN) and Alphabet (GOOGL) — TSLA was the only one to close above that line.

Tesla Breakout?

Technical analysts may notice another pattern on the chart: a potential resistance zone around $781. That’s where TSLA gapped lower on February 22 and then failed to break out on April 14. It’s spent the last week consolidating in this zone. Investors hoping for a deeper pullback may start buying if the stock clears this level.

In conclusion, TSLA has mostly paused this year following a massive rally in 2020. But in recent weeks it’s shown significant relative strength against other growth stocks on the Nasdaq. Traders may want to pay attention with full quarterly results expected in about two weeks.