Two weeks ago, I pointed out that Tesla shares had formed a head and shoulders. After a weak earnings report and news of another Model S fire, the stock fell through the $160 level, which formed the "neckline" of that pattern. The stock is now more than 25 percent off of its high.
(Read more: How to trade Tesla at a key level: Pro)
Scrolling through some other charts of high flyers, a similar pattern caught my eye in shares of Facebook, which have enjoyed a similarly parabolic run over the past few months. The chart now reminds me of what Tesla looked like before that bad fundamental news came out. Consolidating below recent highs, Facebook appears to have made a similar head-and-shoulders pattern, and is now sitting just at the neckline.
Now, you may think that there are few similarities between the stocks, and in some ways, that's correct. After all, Facebook is a social network, and Tesla makes electric cars. Tesla has a market cap below $20 billion, and Facebook's is above $110 billion.
But both stocks rely on momentum. And that's why the charts of each are so important.
From the long side, I would be more inclined to take a shot at Tesla. In fact, I am currently long Tesla shares as a trade, as I believe it will bounce off of what I perceive to be a near-term bottom. I am using a stop at $138 on the downside.
Meanwhile, I would look to press the recent weakness in Facebook. I would not be surprised to see it gap to the downside on some fundamental news, just as Tesla did last week.