As Tesla (NASDAQ: TSLA) stock dazzles the market, the equity might have more upside potential when reviewing its historical performance in the wake of the Federal Reserve’s monetary policy.
Notably, the stock has surged, aligning with the general market reaction to the Fed’s interest rate cuts and the positive momentum stemming from China’s announcement of an economic stimulus.
At the close of the latest trading session, TSLA traded at $260, gaining over 2% for the day. The recent bullish momentum has helped the equity regain positive growth for the year, with the value now at 4.8% in 2024.
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With the EV’s stock looking strong, history indicates that TSLA might be primed for a massive rally similar to past price movements that conceded with a rate cut, according to an analysis shared by TrendSpider on September 29.
This element was evident between 2019 and 2021, when Tesla’s price action demonstrated a shift from modest gains to exponential growth, with a massive surge occurring right after a dip in interest rates. This growth happened after the equity underwent a consolidation phase.
As of late 2024, Tesla finds itself in another consolidation period, leading many to wonder if the stock is about to embark on another explosive move. Technical indicators support this view, with the price trading within a well-defined range, similar to patterns observed before Tesla’s prior rallies.
It’s worth noting that lower interest rates have historically boosted growth stocks like Tesla, which rely heavily on future earnings. When borrowing costs are low, Tesla can invest more in innovation, expansion, and scaling operations, fueling investor confidence. At the moment, after the Fed lowered rates by 50 basis points, there is anticipation that more cuts will follow.
TSLA’s technical outlook
Aside from Tesla’s relationship with low interest rates and price growth, technical indicators observed by analyst Jake Wujastyk in an X post on September 29 hint that TSLA might be gearing up for explosive growth in what he termed the “mother of all volume shelves.”
This volume shelf reflects a concentration of trading activity at a specific price level of around $260, offering solid support for Tesla’s current positioning. Moreover, the Moving Average Convergence Divergence (MACD) indicator has made an upside cross, a bullish signal that often suggests the potential for upward price momentum.
Combined with the volume shelf, these indicators point to a possible explosive price action for Tesla in the coming months.
Tesla stock bullish October outlook
Besides building on the general market momentum, Tesla is also looking bullish heading into October, where the Texas-based EV giant has notable fundamentals likely to support further price growth.
For instance, after being weighed down by a slowdown in EV market demand, Wall Street is projecting that Tesla will likely deliver vehicles in line with market expectations at 460,000 units for Q3 2024, reflecting 6% year-over-year growth. For context, this figure signals growth, considering the company delivered about 831,000 cars in the first half of 2024, down about 7% year over year.
Indeed, analysts are also maintaining a bullish outlook for the stock, with Deutsche Bank’s Edison Yu noting that he expects Tesla’s deliveries to at least match the consensus number. While maintaining a buy sentiment for the equity, the analysis has set a price target of $295.
What’s more, the upcoming Robotaxi event is also boosting investor confidence. The Elon Musk-led firm is expected to offer a roadmap for its self-driving cabs. Interestingly, there is a projection that the success of products like Robotaxi will help Tesla establish itself as a formidable artificial intelligence (AI) stock.
To this end, William Blair analyst Jed Dorsheimer noted that the October 10 event might have a historical impact, as TSLA tends to surge following such events. Although the analyst has not set a price target for Tesla, he expects the equity to outperform the market.
Meanwhile, Emmanuel Rosner from Wolfe Research is sounding a cautious outlook and advising holding Tesla, noting that the company still has a lot to prove, even with the successful launch of the Robotaxi.
“ It will be hard to prove at this event, but if TSLA gives investors a roadmap for AV tech development, timeline for deployment, and color on the business model, it might be enough as a starting point,” he said.
In summary, Tesla’s stock appears well-positioned for potential growth, supported by macroeconomic factors and strong technical indicators. While there is optimism, Tesla still faces challenges in meeting expectations, but its innovative momentum suggests it could outperform in the months ahead.
