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Some views on current price action

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IMO this is perhaps the best current evidence for "Down Then Up" that Julian is advocating and I am 75% on board with. If Elon was just trying to play it straight then now IS a good time do do a raise. Why not? The stock price is pretty close to its historic highs, and doing the raise now allows more time with those dollars to gear up for the 3. The only obvious reason why not is that they think the price will be higher in the future. Then it follows that it will come after some blockbuster announcement they have in their pocket. Could be Q1 ER, Q2 ER, GF party or "X". On that list Q2 ER seems like the strongest candidate. Q3 ER would probably be even easier but getting really late.

TL;DR: Elon thinks the stock will be higher later.
I was thinking that by mid June is sooner.

This is me standing by what I said.
Doesn't the confirmation of under-$190 all-in pack cost now make it easier to consider $250? That's 24% (or better) margin of course...
Yes but up to 54 Powerpacks the price stays the same on their site. If you try to place an order bigger than that you need to send an email.
 
I rarely believe the "priced in" stuff. I mean everyone in their right mind absolutely knew that Apple was going to have poor sales for their Q1 and it should have been obvious Q2 wasn't going to be all that great because no new products are coming out. With that in mind you would have thought the ER was already priced in... well it wasn't. At least not in after hour trading. We shall see what it does tomorrow.

SO is Tesla's miss on Model X (again) priced in. I really want to say yes but bears will start growling their, "if they can't make a super luxury SUV then how will they ever make Model ≡"!. Weak longs will sell and we may see 220-240. I will start making a stash to buy more.
 
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I rarely believe the "priced in" stuff. I mean everyone in their right mind absolutely knew that Apple was going to have poor sales for their Q1 and it should have been obvious Q2 wasn't going to be all that great because no new products are coming out. With that in mind you would have thought the ER was already priced in... well it wasn't. At least not in after hour trading. We shall see what it does tomorrow.

SO is Tesla's miss on Model X (again) priced in. I really want to say yes but bears will start growling their, "if they can't make a super luxury SUV then how will they ever make Model ≡"!. Weak longs will sell and we may see 220-240. I will start making a stash to buy more.
Speaking for myself, I really didn't think Apple's Q1 result would be this bad. I mean, every product they make declined in sales over 10%.
 
Firstly, for those that stuck with the Down then Up setup, you guys were dead on. I think I really outsmarted myself in the OP by interpreting false setups when especially one in particular was a great great true?setup:

False setup 2

A common technique in TA is something called an analog. This is not some specific chart pattern, but rather when a period of current price action closely resembles some past price action. The idea is that price action is caused/affected by the psyche of buyers and sellers - so similar price action represents a similar state of mind. And since on a broad enough scale human behavior follows certain patterns, this has predictive value. Analogs can occur not just within one stock, but across equities or even cross asset classes. Let's say the price of corn is behaving now identically to how INTC traded in Feb of 1983. That may sound ridiculous. But, consider that the price of both assets are driven by humans looking to make a profit and experiencing gain and loss in real time. If indeed the price action was identical, perhaps the state of the psyche for the buyers/sellers in these two different time periods and assets was similar as well. If so, then there is predictive value in seeing what INTC did in Mar 1983 to gauge what the price of corn will do next. (just a made up example, pls don't trade corn based on this)

So with that said, TSLA is currently in an analog of its own prior price action. Consider these two charts, particularly the shape of the last 4 candles in each chart:

View attachment 173220 View attachment 173221

These are not cut and paste, but rather TSLA during two completely separate time periods. They are both weekly charts, the first one from 7/21/14 to 9/8/14 and the second one from 2/15/16 to last week. And this following chart is a full view of the price action after the week of 9/8/14, which yes was the all time high:

View attachment 173222

Well, that certainly seems ominous.

And since it has yet to play out, it very well might still turn out to be. We will find out very soon. However, I have a theory about how this may be a major false setup, and some possible proof to back it up.

When it comes to TA, it is not black and white when it comes to right or wrong. In fact, what is most important is the logic used in the interpretation. So while there is no argument that the price action in these two periods are damn near identical, my view is that the circumstances and thus the psyche behind the buyers/sellers in these two periods are completely different.

So this analog was actually a great predictor of things to come as opposed to a false setup, and the following weeks we pulled back just like after 9/8/14. Sometimes it is better to just follow the charts than to over complicate things with our own interpretations.

So the reason I am bumping this is there is a similar, maybe even better looking analog setup right now on the monthly chart. This time, I offer no interpretations, just the charts.

breakout1.PNG
breakout2.PNG


First chart starts in Nov 2011 and runs to March 2013. Second chart is current.

Area A is self explanatory, identical. The pullback for 7 months and breakout on the 8th month also. Area B may look different, but there is a technique in candlesticks where you can merge candles to form new ones. In the 2011 chart, if you merge the two candles in Area B, what is actually happening? An open at around 34 in the first candle, going up to as high as 40, then a close back down to slightly below 34 in the second candle. If you merge these two candles, the price action is actually identical to what is going on in Area B of the current chart, a shooting star pattern: open 245, goes to high of 270 then close back down slightly below open at 241. Let me know if this needs further elaboration.

Even if we play out exactly the same going forward, there can be pullbacks like in Feb 2013. But does anyone remember what happened after that?
 
Firstly, for those that stuck with the Down then Up setup, you guys were dead on. I think I really outsmarted myself in the OP by interpreting false setups when especially one in particular was a great great true?setup:



So this analog was actually a great predictor of things to come as opposed to a false setup, and the following weeks we pulled back just like after 9/8/14. Sometimes it is better to just follow the charts than to over complicate things with our own interpretations.

So the reason I am bumping this is there is a similar, maybe even better looking analog setup right now on the monthly chart. This time, I offer no interpretations, just the charts.

View attachment 211900View attachment 211901

First chart starts in Nov 2011 and runs to March 2013. Second chart is current.

Area A is self explanatory, identical. The pullback for 7 months and breakout on the 8th month also. Area B may look different, but there is a technique in candlesticks where you can merge candles to form new ones. In the 2011 chart, if you merge the two candles in Area B, what is actually happening? An open at around 34 in the first candle, going up to as high as 40, then a close back down to slightly below 34 in the second candle. If you merge these two candles, the price action is actually identical to what is going on in Area B of the current chart, a shooting star pattern: open 245, goes to high of 270 then close back down slightly below open at 241. Let me know if this needs further elaboration.

Even if we play out exactly the same going forward, there can be pullbacks like in Feb 2013. But does anyone remember what happened after that?

Last time RSI was this high is early '13.
It concurrently scares me, and gives me hope that this year may be a repeat.
 
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Firstly, for those that stuck with the Down then Up setup, you guys were dead on. I think I really outsmarted myself in the OP by interpreting false setups when especially one in particular was a great great true?setup:



So this analog was actually a great predictor of things to come as opposed to a false setup, and the following weeks we pulled back just like after 9/8/14. Sometimes it is better to just follow the charts than to over complicate things with our own interpretations.

So the reason I am bumping this is there is a similar, maybe even better looking analog setup right now on the monthly chart. This time, I offer no interpretations, just the charts.

View attachment 211900View attachment 211901

First chart starts in Nov 2011 and runs to March 2013. Second chart is current.

Area A is self explanatory, identical. The pullback for 7 months and breakout on the 8th month also. Area B may look different, but there is a technique in candlesticks where you can merge candles to form new ones. In the 2011 chart, if you merge the two candles in Area B, what is actually happening? An open at around 34 in the first candle, going up to as high as 40, then a close back down to slightly below 34 in the second candle. If you merge these two candles, the price action is actually identical to what is going on in Area B of the current chart, a shooting star pattern: open 245, goes to high of 270 then close back down slightly below open at 241. Let me know if this needs further elaboration.

Even if we play out exactly the same going forward, there can be pullbacks like in Feb 2013. But does anyone remember what happened after that?
I'm not fully convinced by this analog mainly due to the fact that in early 2013 the stock was at ATH (same level as March 2012). Current level is $40 short of ATH. But if we argue from a market cap point of view, then it is validated. However I personally weigh market cap inferred ATH much less than the actual stock price - people paid $240 or whatever for a share after all.
 
Last time RSI was this high is early '13.
It concurrently scares me, and gives me hope that this year may be a repeat.

So this analog spans 13 months to set up, I can't remember seeing one with this long of a duration ever. What that tells us is it took a lot of underlying capital, a lot of tussle from bulls and bears to set up. What lit the rally in 2013 was that positive earnings report along with Model S smash success. The analog does not tell the future, but does tell us that if we get similar catalysts, share price may play out similarly. We are set up to rally, just need to light the match.

Model 3 nearing launch is the obvious catalyst. In 2013 share price only reacted months after Model S started delivering. For Model 3 I do not believe that will be the case. The market had no history to base the Model S launch on, so had to wait to see how it goes. With the Model 3 I think the market will anticipate months in advance as long as it is on time(give or take a couple of months is okay). Much like AAPL rallying a ton already going into Iphone 1 launch.

TE ramping is another catalyst. If Musk believes TE will one day rival its automotive revenue, signs of this S curve would light the stock. We do not need TE revenues to equal cars in 2017, but going from 1% to 10% or 20% would be significant. I don't think it is a coincidence that this latest leg of the rally over the 200 SMA was set off by the Gigafactory going online - start of mass production of TE 2.0. Given that TE 1.0 was uneconomical in many cases, especially for the powerwall, the start of TE 2.0 in essence signals the beginning of TE period.

If one of these catalysts pan out I believe SP will be over ATH. If both then over 450. If none(delayed) then back to low 200s.
 
I'm not fully convinced by this analog mainly due to the fact that in early 2013 the stock was at ATH (same level as March 2012). Current level is $40 short of ATH. But if we argue from a market cap point of view, then it is validated. However I personally weigh market cap inferred ATH much less than the actual stock price - people paid $240 or whatever for a share after all.

Early 2013(Feb-Mar) when the stock was at ATH it was 3-4 months after the 8th month breakout on the analog. We are currently only 1 month after the breakout. Which means we still have 2-3 months to make up that $40. This analog is not yet complete, but currently 13 months long. It wasn't until the 17th month in 2013 when SP started its rise from 40 to 200.
 
Firstly, for those that stuck with the Down then Up setup, you guys were dead on.
The U part sure took longer than I planned, but I did recently take gains on some of my trading shares based on the 3 year lower highs trend line being around 255. By doing so I'm sort of betting on either a downturn after earnings or schedule "slip" beyond July 1 causing the bad analysts to label it a delay and drive price down.

Took some convincing with this much short interest in the red currently though.

What are your thoughts on being 255 and more importantly, if broken what price would signal a continued uptrend and basically require me to buy my shares back?
 
So this analog spans 13 months to set up, I can't remember seeing one with this long of a duration ever. What that tells us is it took a lot of underlying capital, a lot of tussle from bulls and bears to set up. What lit the rally in 2013 was that positive earnings report along with Model S smash success. The analog does not tell the future, but does tell us that if we get similar catalysts, share price may play out similarly. We are set up to rally, just need to light the match.

Model 3 nearing launch is the obvious catalyst. In 2013 share price only reacted months after Model S started delivering. For Model 3 I do not believe that will be the case. The market had no history to base the Model S launch on, so had to wait to see how it goes. With the Model 3 I think the market will anticipate months in advance as long as it is on time(give or take a couple of months is okay). Much like AAPL rallying a ton already going into Iphone 1 launch.

TE ramping is another catalyst. If Musk believes TE will one day rival its automotive revenue, signs of this S curve would light the stock. We do not need TE revenues to equal cars in 2017, but going from 1% to 10% or 20% would be significant. I don't think it is a coincidence that this latest leg of the rally over the 200 SMA was set off by the Gigafactory going online - start of mass production of TE 2.0. Given that TE 1.0 was uneconomical in many cases, especially for the powerwall, the start of TE 2.0 in essence signals the beginning of TE period.

If one of these catalysts pan out I believe SP will be over ATH. If both then over 450. If none(delayed) then back to low 200s.

thanks again for the analysis. if you have time over the weekend, I'm with maong and am interested if you think maybe we have paused and will pull back. I cashed out a small profitable option position and short term trading today, but kept core holdings.
I worry Trump could give Elon a Chris Christy trophy, and short term Q1 results seem challenging. After that I see TE starting to kick in, and if M3 is close to on time, it seems like we should finally burst through resistance.
At a run rate of 25,000 cars per quarter, it seems like there will be pressure if Tesla approaches Ford and GM market cap. I understand current stock is based on future profit - risk and think Tesla is worth more than GM and Ford, but the until TE shows up and S\X numbers either go up a lot, or M3 has a date, we should stay around the current valuation. (due to bipolar market view of Tesla, it seems to like to be 20-30% under or over valued), so wherever TSLA is today, it is not likely to stay there for long.
 
@jesselivenomore Thanks for the insight! Didn't realize you could convert the pipes to a single candle! Nice. Will have to read some more!

The reason why people look at candlestick to begin with is to read price action. If you blend two candles and the end result looks the same as another candlestick pattern, it just means they had the same price action, but just took a longer duration to form.
 
I am glad we held up the last couple days, because my posts were still a bit premature at the time since the monthly candle was not closed yet. Now it has.

hns.PNG


The prior 3 peaks all had clear reversal candles before topping out. As you can see, after today's close, we are in the midst of a long bodied green candle currently, which tells me this move is not quite over yet. We could still make a similar topping candle in the next bar(Feb), if we go up to 270 then close back below 250 for instance, then I would have to rethink my bullish stance, especially if there is follow through to the downside the month after(March). But until that happens, I have to remain very bullish. And there are reasons to be. As I mentioned in earlier posts, this is the first time we are up here on increasing momentum. This is the case because our current bar(Jan) is larger than the prior(Dec). In the prior rallies momentum has always waned as we reached these levels. In 2015 this was clearest as each monthly candle of the rally got progressively smaller(losing steam). In 2016 price action reversed and we formed a shooting star at these levels. The increasing momentum this time is important because resistance is well established over the past 3 years, so buying momentum is required to break through. Another reason why I don't think this rally will fail like the others is the gigantic reverse head and shoulders formation on the monthly. The breakout point for this is 270(neck line). The combination between this formation and the increased momentum makes me believe this rally is "the one", especially if 270 is breached. That is a spot that I will definitely add to my position, I know that might be difficult for some longs, but just imagine how the shorts feel.

EDIT: Plus the analog, I forgot to mention the main reason I am bullish to begin with. So 1. the 13 month analog 2. giant reverse head and shoulder 3. increasing momentum
 
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