If you have an appetite for volatility, then feast your eyes on Tesla.

Shares of the electric car marker closed almost 20% higher on Tuesday, their biggest single day gain since February 2020!

This development has brought bulls back into the game, halting a five-day slump that saw shares drop 21.63% before Tuesday’s rally.

Why did shares rally?

• Buying sentiment towards Tesla shares was boosted by a rally in Bitcoin. Remember when Tesla announced that it bought $1.5 billion worth of bitcoin and said it would start accepting the cryptocurrency as a payment method for its product? Well, the company stocks are now strongly linked to the performance on Bitcoin!
• In yesterday’s afternoon report, we discussed how the “great rotation” was taking a breather. This pause in the rotation trade offered a chance for tech stocks to stage a stunning recovery.
• Reports that car sales in China climbed in February while local rivals saw declines. The electric car market sold 18,318 Shanghai-made Model 3s and Model Ys last month, up 18.3% from the 15,484 sold in January.
• A change in overall sentiment towards expensive technology stocks, magnetizing investors back towards Tesla and other EV markets.

Musk laughing all the way to the bank

Imagine making $25 billion in one day?

After Tesla Inc.’s near 20% jump on Tuesday, this became Elon Musk’s reality. Such has pushed the billion founder’s fortune to a whopping $174 billion, narrowing the gap with Jeff Bezos, the world’s richest person.

Will bulls remain in the driving seat?

Tesla continues to reinforce its position as the leading electric car marker globally, even with competition heating up.

After taking a giant step towards blue-chip respectability last year, its market value has swelled to over $640 billion.

Over the past few weeks, there have been some sharp selloffs, especially after higher Treasury yields fuelled a rotation from expensive growth stocks to value companies. This is telling on the company’s shares which are down over 4.5% year-to-date. However, the business outlook remains encouraging with average annual growth in vehicle deliveries set to hit 50% over a multi-year horizon. It just remains a question of whether bulls could weather the great rotation punishing expensive growth stocks. Time will tell.

What about the technicals?

Tuesday’s rally could be a turning point for Tesla shares.

Prices are trading back above the 100 Simple Day Moving Average while the RSI has rebounded from the oversold territory (below 30.00). An intraday breakout above $680 may encourage an incline towards $718.33 and $767.33.

Should prices fail to break out of the daily bearish channel, this could result in a decline back towards $619.10 and $557.98. Overall, lagging indicators are offering a mixed picture. Although the MACD trades to the downside, the RSI signals a possible rebound.

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