TESLA Stock - Is TSLA Bearish Now?

Summary

In this Tesla stock update video, the host discusses the recent drop in Tesla's stock price, highlighting a nearly 7% decline due to factors like Elon Musk's political involvement and the passing of a new bill affecting the company. The video dives into technical analysis, examining trends such as moving averages, support levels, and the potential for further bearish momentum. The host also contrasts the current situation with previous market reactions and offers both bearish and bullish scenarios. The video concludes with a cautious outlook for the stock, recommending a focus on cash-secured puts in the current market conditions.

Takeaways

• 😀 Tesla stock is down nearly 7% due to recent news, including Elon Musk's political involvement and issues related to ZEV credits.
• 😀 The stock has been showing bearish momentum, with a drop below its key price channel on elevated volume, signaling potential further declines.
• 😀 There are concerns about a 'dead cat bounce,' with some suggesting the stock could retest key levels like $270 or even $230 if the bearish trend continues.
• 😀 If Tesla stock drops below $270, it could signal further downside, with a potential gap fill target around $240-$230.
• 😀 The exponential moving averages are showing signs of bearish crossover, which would add to the bearish outlook for Tesla stock.
• 😀 While short-term bearishness is clear, a large gap up or a significant bounce could reverse the downward momentum, potentially creating a bullish pattern (abandoned baby candle).
• 😀 A retest of Tesla's green trend line could occur if the stock drops below $270, which is common for the stock every couple of years.
• 😀 The 270 level is a key support point, and losing it could lead to a drop to the 240-230 range, creating a potential buy opportunity based on Fibonacci retracement levels.
• 😀 Tesla's recent price action shows extended downside, but any further declines this week may be limited due to the distance from key exponential moving averages.
• 😀 The speaker expects that unless a major bounce occurs, Tesla will likely retest $270 and possibly break it, leading to further declines in the stock price.
• 😀 Overall, the speaker is bearish on Tesla's short-term prospects, with limited confidence in significant upward momentum above $320 for the time being.

Q & A

What happened to Tesla's stock in the recent market update?

Tesla's stock dropped by almost 7% in a single day, which is a larger decrease compared to the overall market. This decline followed news over the weekend of Elon Musk confirming plans to dive deeper into politics and create his own American party.

Why was there a bearish sentiment surrounding Tesla's stock recently?

The bearish sentiment is primarily due to Tesla dropping below a key price channel again, which has happened multiple times before. The stock is also facing issues with the EV credits and ongoing market uncertainties, including a bearish crossover in its MACD and a lack of bullish momentum.

What is the 'abandoned baby candle pattern,' and how could it affect Tesla's stock?

The 'abandoned baby candle pattern' is a potential bullish signal that occurs when there's a massive gap down followed by a doji-like candle, and then a significant gap up. If Tesla experiences a large gap up above $300, it could trigger this pattern, which might signal a potential reversal in its bearish trend.

What technical indicators are suggesting bearishness for Tesla stock?

Indicators like the MACD (which is bearishly crossed), lack of stochastic momentum, and exponential moving averages (with the 9 EMA crossing below the 50 EMA) all signal bearish momentum. Additionally, the stock has lost key support levels and hasn't shown any strong bullish signals recently.

What does the term 'dead cat bounce' mean, and how does it relate to Tesla's performance?

A 'dead cat bounce' refers to a temporary rebound in a stock after a significant decline, often misleading investors into thinking the stock has turned bullish when it actually may continue to drop. The speaker suggests that Tesla might be experiencing such a bounce after a period of significant decline.

What are the key levels of support and resistance for Tesla stock?

Key support levels for Tesla include the $270 range, which is a critical pivot point. If Tesla falls below this level, it may drop further to test gaps around $230 to $240. Resistance is seen in the $300 to $315 range, and a strong break above this would indicate a more bullish outlook.

What would happen if Tesla's stock drops below $270?

If Tesla's stock drops below $270, it could trigger a further decline to the $230-$240 range, potentially filling a gap and leading to a bearish trend. This drop could also increase the likelihood of Tesla testing its long-term trendline, a significant technical indicator.

What is the importance of the Fibonacci retracement levels in predicting Tesla's stock movements?

Fibonacci retracement levels help identify potential price levels for support or resistance during a retracement. In Tesla's case, if the stock drops below $270, the next key Fibonacci level around $240 could be an important area to watch, as it may serve as support during a potential downward correction.

What are the expectations for Tesla stock in the short-term (this week)?

In the short term, it’s expected that Tesla's stock might experience limited downside, as it's extended to the downside and due for a potential bounce or sideways movement. A retest of $270 or a small bounce into the low $300s is possible, but further significant declines below $270 are unlikely this week.

Why is the speaker cautious about trading Tesla stock right now?

The speaker is cautious because the stock's technicals are damaged, and there’s little bullish momentum. The market sentiment is more bearish, and the speaker believes there are better trading opportunities in other stocks. As a result, they are focused on strategies like cash-secured puts rather than expecting significant upward movement in Tesla's stock.