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Technical view: Tesla (TSLA)

Technical view

TSLA is in stage #4 of the trend. It broke lower again although it bounced, and it is now attempting to go higher. However, even with this bounce, there is no trend changer at all. The stock is clearly in a full bearish trend. The weekly chart shows it in a better and straight pattern. The stock is clearly getting to its weekly 200-day MA, and let’s hope that it will work as a support. If it doesn’t hold, we may see the stock decline lower. We have potential targets at $150, $110, and $62 if we break below the 200-day MA.

Technical view

However, the recent news about Elon Musk and his escapades with Twitter worries me. It is pure nonsense, in my opinion. He bought a company for $44 billion that is not worth that much. According to some reports, just interest on the loan Musk had to take to buy Twitter is somewhere near $1.5 billion a year. Twitter doesn’t generate enough income or cash flow to pay the loan. Twitter’s cash flow has been declining and negative since 2019, and with Musk’s current changes on the platform, advertisers seem to be fleeing away. And here is the problem. Musk is known to manipulate Tesla stock, and I am afraid that to pay his obligations to Twitter, he will tap into Tesla, ultimately sending the stock lower (as we have seen a few times in the past already).

TSLA is still extremely overvalued, but this company may be trading at a premium for many years until it matures. A head and shoulders pattern is still in play, and since the price broke below the neckline, we will most likely see a $160 – $150 decline. That level also corresponds with a 200-day moving average and is a significant support. Both levels may act as a magnet, so unless the market is optimistic and bears finally give up, the chances of further declines are better than an uptrend. But this may change quickly.

Given my worries about Musk, Twitter, and Tesla, I no longer think it is a good time to buy this stock. I want to wait for all my concerns to resolve before committing more funds to this company. The trend is down, the risk of Musk using Tesla as a piggy bank is high, and I do not see any stronghold anymore.

Technical view

The stock is now SELL

This post was published in our newsletter to our subscribers on Saturday, November 26th, 2022. If you want to learn more about our stock technical analysis subscribe to our weekly newsletter.

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