Tesla registrations in California dropped by 21.1% in the second quarter, according to the California New Car Dealers Association. Despite this decline, Tesla shares rose by $4.50, or 1.32%, on the same day. The company is set to announce its earnings soon. Analysts expect Earnings Per Share (EPS) to be $0.39, down from $0.52 a year ago, which is a 25% decrease. Revenue is projected at $22.28 billion, a decline from $25.5 billion last year, representing a 12.6% drop. Last quarter, Tesla reported an EPS of $0.27 and revenues of $19.34 billion. Tesla shares have performed well this quarter, increasing from about $238 to nearly $332, which is close to a 40% rise. During this time, the stock peaked at $367.71 before pulling back. On the technical side, the stock price is above both the 100-hour and 200-hour moving averages, which are $312.61 and $319.63, respectively. If the price dips below these averages, it could face pressure, especially if it falls below $300. Resistance is found near $345, with potential targets of $351.39 and $356.25 if those levels are exceeded. Elon Musk is reportedly back at Tesla’s headquarters, focusing fully on the company. He has been quieter lately as external conflicts ease. Given the mixed data, we believe traders should prepare for high volatility. The drop in California registrations is a negative sign, but the stock’s strength suggests the market is anticipating more information from tomorrow’s earnings. This creates a situation where a significant market movement could happen. It’s important not to focus solely on one state’s vehicle data. Tesla’s recent report indicated roughly 444,000 global deliveries in Q2 2024, an increase from Q1. This gives a more complete, though mixed, view of demand. The market is weighing this global performance against regional challenges and lower profit forecasts. For traders, a key statistic comes from the options market, which is pricing in a potential 9% move in either direction following the earnings release. This implied volatility suggests that strategies like straddles or strangles could be effective for profiting from a significant price swing, no matter which way it goes. Historically, the stock has moved over 7% after its last eight earnings reports, supporting expectations for a notable market reaction. If the company exceeds the low EPS expectation and provides strong future guidance or news about its cheaper vehicle model, we would consider call options. A break above the $345 resistance would confirm a bullish trend, potentially pushing towards the higher targets near $351 and $356. On the other hand, if earnings fall short or management offers cautious guidance, put options would be the better choice. A significant drop below the support levels between $320 and $312 would indicate a win for sellers, possibly leading to a sharper decline toward the important support level near $300. Musk’s renewed focus adds another element of unpredictability. In the past, his insights and comments during earnings calls have greatly influenced investor sentiment. Traders should pay close attention for any unexpected updates on production efficiency, the Cybertruck rollout, or new technology.

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