TSLA Technical Analysis

[Antares Nebula]

You figured it out nicely. While trading is about a couple of hours or days and more some sort of gambling (nothing wrong with that), I'm more following a TA and fundamental analysis approach to recognize pivotal changing points for the SP. In contrast to the trading/gambling time horizon, those appear on a multi-week, multi-month or even multi-year frequency. TA on both TSLA and the market level is the fine-tuning instrument for me.

Buy and hold is fine in a bull market for a bull stock but I find it problematic in a changing or bear market. After all, riding the portfolio value down from a SP of 300+ to 180- and holding is for the hardcore believers only. The idea of my strategy is to let not happen this and increase the number of shares over time. And at some point, without major failure or accident, the SP of Tesla will reflect the company's strength.

But it may be a rocky and long ride till then or the market may suddenly recognize the hidden gem, who knows. I intend to keep posting here when I think it's appropriate.

I agree. I primarily use TA for buy points on my long term holding, and it has served me quite well. I also use TA from time to time to trade options and/or hedge my long position. This is more short term TA, and thus not as reliable.

Yes buy and hold is tough. As Buffett said, (long term) investing is simple but not easy. Simple in that just buy good, strong companies (or an index) and hold. Not easy in that buy and hold requires sufficient patience and conviction, something that is not easy for humans.

 

[Stars aligned]

As Buffett said, (long term) investing is simple but not easy. Simple in that just buy good, strong companies (or an index) and hold. Not easy in that buy and hold requires sufficient patience and conviction, something that is not easy for humans.

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That’s the popular mantra and not wrong per se, it’s just that three important points of the equation are missing, thus oversimplified, impacting the result.

 

[Zhelko Dimic]

As Buffett said, (long term) investing is simple but not easy. Simple in that just buy good, strong companies (or an index) and hold. Not easy in that buy and hold requires sufficient patience and conviction, something that is not easy for humans.
That’s the popular mantra and not wrong per se, it’s just that three important points of the equation are missing, thus oversimplified, impacting the result.

I'll bite ...
Could you please clarify what is it you're saying?

 

[Stars aligned]

I'll bite ...
Could you please clarify what is it you're saying?

First, WB made sure that he has a steady inflow of fresh capital from his insurance business to weather storm and average down.Very helpful in case of multiyear bear markets.
Second, her doesn't invest in Tesla like companies but in companies who have positive earnings and mostly pay dividends.
Thirdly, he has a principle, never lose money. Means e.g. he does not do this speculative derivative trades.

 

[Cherry Wine]

After today's close, have enough trading days elapsed to start to infer a new technical setup?

 

[Antares Nebula]

After today's close, have enough trading days elapsed to start to infer a new technical setup?

Maybe this?

 

[Stars aligned]

That was my first thought but now it seems rather that we are in a falling wedge since end of July and in a broader downtrend since January. Also, we are below 20, 50 and 200 MAV and below midline of the BB (not shown in the graph. The broader market shows still the rising wedges, and one of them has been broken. 20 MAV has been crossed upwards today.

The overall picture is still not overwhelming, and before I buy some TSLA back I'd like to see an upwards breakout from the falling wedge and even if this happens it seems to be wise to stay cautious until the upper 8 month trend line is broken and ideally the S&P shows a more constructive pattern. After all, the environment is still fragile, and events such as a tweet storm or a new peak in HK could wreck the stock market overnight. On the positive side, I think it needs some old fashioned good hard figures to lift the stock. Of course a resolution of the trade war could also do the trick, but that isn't in the cards it seems.

 

[Antares Nebula]

@anthonyj I have also been wondering about the potential *weekly* death cross. I think you can see it better on this chart. I think this would be the first time in TSLA history that a weekly death cross would occur. It almost crossed a few years ago, but was averted. Don't mean to crowd your thread @Papafox, but would be curious to hear your thoughts. I will also post this in the TA and trading threads. Thanks!

 

[anthonyj]

View attachment 445999

Tutes might use death cross to bait TA traders/dumb retail into shorting/selling into tutes bids. Might see CNBC scaring people next week. Here’s an example on why death cross doesn’t mean much

Death cross on weekly chart for BITFINEX:BTCUSD by GuillermoPerez

Late March 2019 BTC entered a death cross, few months later it went up almost 5x

 

[Antares Nebula]

Tutes might use death cross to bait TA traders/dumb retail into shorting/selling into tutes bids. Might see CNBC scaring people next week. Here’s an example on why death cross doesn’t mean much

Death cross on weekly chart for BITFINEX:BTCUSD by GuillermoPerez

Late March 2019 BTC entered a death cross, few months later it went up almost 5x

Yes, these indicators can't be used in isolation. Have to also look at other indicators. And it can also sometimes be a lagging indicator. But one more negative data point to worry about. Sigh...

FYI (for those unfamiliar with the notion): What is a Death Cross?

 

[Antares Nebula]

Another point: golden crosses and death crosses can be done with different moving averages: weekly, daily, etc. And even on the weekly and daily, you can have multiple different crosses depending on the moving average you are using: 50, 100, 200 periods.

In the above chart, the 50 WMA is about to cross below the 200 WMA (a death cross). But the 50 WMA already crossed below the 100 WMA back in November.

Also on the daily, the 50 DMA is about to cross over the 100 DMA (a golden cross). But it is far from crossing over the 200 DMA.

I think the technicians put more weight on the the 200 period moving averages than the 100 period.

See, after a while it becomes all spaghetti. And then you're doing nothing more than reading pig entrails.

 

[Cherry Wine]

Honestly seems like more of a lagging indicator to me. The stock got beat to hell this year. I suppose it could portend more pain to come.

 

[Antares Nebula]

The Chart Guys

 

[Stars aligned]

The wedge which started at the very end of July is getting narrower and narrower. In classical fashion, the volume gets thinner and thinner. Interestingly, the lower line is a prolongation of the the upper line of the downtrend channel below.

Some news of last and this week, such as Walmart-Solar City, delivering of Teslas in new markets, Moody's upgrade and successful test of Starhopper where not able to move the price sufficiently to break the wedge, and in this sense, where nothingburgerish. But the wedge lines cross in about 4 weeks, hence an outbreak will occur before October 1 or 2, when hard delivery figures from Tesla will be released. One can only guess what the trigger might be or even if one specific trigger can be identified. It could also be a macroeconomic trigger.

The probability of an upwards outbreak is usually higher in this pattern, but a downwards outbreak is also not uncommon. Given the current fragile situation, it could well play out in either way. Positively, if a easing of political pressure meets the improving fundamentals of Tesla. Negative, if a certain Mr Trump breeds over revenge plans and escalates the current situation. Let's hope the best, but I stay prepared for both outcomes. Should it break down although, the best opportunity of the next decades could develop.

 

[Stars aligned]

Just to add one more observation to my above post, borrow fees have come constantly down from 0.99% to 0.72% over the last weeks, as per Ihor D.'s posts on Twitter. Stable stocks have a low borrowing rate, and this is just another data point that shows the improving fundamentals of Tesla.

 

[Antares Nebula]

If bitcoin is a leading indicator, it just broke below 10k yesterday. Stocks may soon follow. Nothing definite but another data point to keep in mind.

 

[Curt Renz]

Technical analyst Sherman McClellan was the inventor of the McClellan Oscillator. He was my regular guest on our TV show, until he turned his business and our guest slot over to his son Tom in 1994. Below is what Tom had to say today on CNBC shortly after the market close. Afterward I congratulated him on a fine performance, and he thanked me for helping to teach him the right way to handle himself during a five-minute TV interview.

 

[Stars aligned]

Tesla stock broke finally upwards out of the wedge and was gapping higher in two consecutive days with increasing volume. The latter two factors increase the chances that this is not a wrong signal, especially as Friday was more a relatively low volume day in the market. The breakout can also be seen as a successful test that the SP did not re-enter the former downtrend channel.

Thursday shortly before the market closed, after the first gap day, seemed a good opportunity to buy some back. Tuesday might be good as well if it is another strong uptrend day, ideally another gap up. In general, mid-to-late afternoons seem to me the best time to buy or sell, because in most cases a lot of the emotions are out of the market and market makers gambles are over.

More importantly than hindsight analysis is what this means for the future. Still I see a two-edged sword although positive factors have strenghtened again, with more sweetheart deals for Tesla from the Chinese authorities and the Chinese playing the adults in the political game. The sympathies of the world are trending to the Chinese point of view.

But still, there's the big elephant in the porcelain shop which can destroy things within the blink of an eye. The big indices like S&P and Nasdaq and the trillion $ companies mirror this indecisive and risky situation with multiple overlapping, sequential and interlaced rising wedges. For crying it out loud, what will happen when Trump follows his threat and forbids US companies to do business in and with China? It's only a few days since this was mentioned. The counter argument on the macro side is that a rational president will not risk a market breakdown before the 2020 elections.

It's a bi-polar world. Staying cautiously invested in the most promising stock on the planet but also having sufficient cash for an opportunity seems the best strategy to me till the dark clouds on the horizon lighten up or the storm breaks out. Thinking about if it is worth to hedge the stock with index puts but this deal is already overcrowded.

As always this is intended to share some thoughts but no advice.

 

[Antares Nebula]

Needs to break above 230 soon, lest the bullish falling wedge breakout devolves into a bearish downward channel:

(4 hour chart)

 

[Stars aligned]

Needs to break above 230 soon, lest the bullish falling wedge breakout devolves into a bearish downward channel:

(4 hour chart)

View attachment 450385

Interesting, when I draw the lines on my tool on the daily chart I get not parallel lines but a megaphone, both on the linear and log chart.

Today is a very low volume day, maybe because of the Taycan release and some people wait for more Tesla August sales figures. Chanos and friends used this opportunity apparently to drive the price down during lunch hours.

Gapping up on good Tesla news within the next days would be very constructive. Seems to me that most bad expectations (except for an extreme China politics event) are already built in the SP, so there seem to be good chances for a positive surprise.

On another note, the two gaps from last week have not (yet) been closed and below chart shows some cups forming since the gap up last Friday which suggests some longs may be accumulating slowly during the bear attacks.