US100 Tries to Rebound After Tesla Earnings

US100 rises as Tesla soars 📈

The Nasdaq 100 is showing signs of recovery following Tesla's better-than-expected third-quarter earnings report, which marks a promising start to the crucial earnings season for the Magnificent Seven tech companies. The index is currently trading up 0.2%, as Tesla's robust performance could herald a broader tech sector rebound. Tesla share are 17% higher to $250 per share.

Tesla Beats Key Metrics

Tesla's Q3 results exceeded Wall Street expectations in several crucial areas. While revenue slightly missed targets at $25.18 billion versus the expected $25.43 billion, the company delivered stronger-than-anticipated earnings per share of $0.72, surpassing the projected $0.60. Most notably, free cash flow reached $2.47 billion, significantly outperforming expectations of $1.61 billion.

The electric vehicle maker's shares surged nearly 10% in after-hours trading, reversing earlier losses of 1.98% during the regular session. This dramatic turnaround reflects investors' positive reception of Tesla's operational efficiency and improved profitability metrics.

Diversification Driving Growth

Tesla's growth story extends beyond its core automotive business. While automotive revenue grew modestly at 2% year-over-year, the company's energy and storage segment demonstrated remarkable growth, surging 52% to reach $2.38 billion. Service revenues also showed strong momentum, increasing by approximately 30% annually.

Forward-Looking Optimism

In a market concerned about tech sector growth, Tesla's projection of "slight growth" in vehicle deliveries for 2024 provides welcome relief to investors who had been bracing for potential year-over-year declines. The company's achievement of producing its 7-millionth vehicle and ambitious plans for the Cybertruck and more affordable models suggest continued momentum.

Magnificent Seven Implications

As the first of the Magnificent Seven to report this earnings season, Tesla's performance could set a positive tone for upcoming reports from other tech giants. The company's ability to maintain profitability while navigating challenging market conditions demonstrates the resilience that investors seek in the current economic environment.

Expected EPS for Alphabet Source: Bloomberg

Next week, Alphabet (Google's parent company) is set to report its earnings on October 29th. 

Expected EPS for Microsoft Source: Bloomberg

Following Alphabet, Microsoft and Meta Platforms (Facebook's parent company) will report on October 30th.

Expected EPS for Meta Source: Bloomberg

Expectations for the "Magnificent Seven" companies are high, so Tesla's better-than-expected earnings provided a sign of relief for tech-focused investors.

US100 (D1 interval)

The Nasdaq-100 index, represented by the US100 contract, is currently trading above the 78.6% Fibonacci retracement level after a failed downward breakdown attempt yesterday. To maintain upward momentum, the key resistance at 20,638 needs to be cleared. This level corresponds to the weekly close all-time-high and has acted as strong resistance in the previous week. For bears to gain control, they must first break below the 78.6% Fibonacci retracement level, followed by the mid-August highs at 19,917.81. These levels have provided significant support during the uptrend that began in late July. A break of these support zones could lead to a test of the 100-day and 50-day SMAs.

The RSI is showing signs of bearish divergence, with lower highs and lower lows, while the MACD is also widening, signaling potential bearish momentum. Despite this, the 50-day SMA is widening against the 100-day SMA after a bullish crossover, which still indicates underlying bullish momentum. Source: xStation 5