TSLA Tesla Monthly Chart; Overbot; Rising Wedge; Negative Divergence Developing; Price Extended

Tesla is a hot stock nowadays. CEO Elon Musk struts around like a peacock proclaiming that the glorified golf carts (EV; electric vehicles) he builds are better than all the others. Most analysts agree although competitors are catching up quickly. As any market expands, the buyers coming aboard are looking for cheaper alternatives. It is comical that the electricity to run the vehicles is generated by coal and other carbon fuels. 

The stock market appears to have a lot of novice investors involved these days buying the FAANG's (FB, AAPL, AMZN, NFLX, GOOGL) and hype stocks such as TSLA, or PTON, or chasing biotechs in a vaccine race, or even chasing bankrupt companies like Hertz where the dolt investors are told they will lose their money and they buy it anyway. That's hilarious. Stuff like this always ends in tears. The FAANG's are such a huge portion of the stock market that they catapult the indexes higher but remember, that gear shift works the same way in reverse. It will likely be quite a sight in the days ahead when all the euphoric bulls start running for the exit at the same time. Anyhoo, back to Tesla.

So TSLA is caught up in the hype and Musk fuels the party proclaiming that his electric golf cart company is the largest auto manufacturer in the world but, it's not true. Musk pulled it from a Reddit post but they did not properly allow for Toyota's size. Nonetheless, the valuation of TSLA is astronomical. Investors believe that everyone will run towards electric vehicles and Tesla will make them all. Perhaps that is overly optimistic since there are few charging stations available in the US but there is a gas station on every corner.

At the same time, Tesla is counting on huge China sales. Musk lays in bed with the communists and is either too naive or unintelligent to know that they will screw him in the end, after they finish building a couple duplicate factories with the same technology (behind Musk's back), or Musk is smart enough to know this will occur and he simply does not care; perhaps Elon plans to exit Tesla over the next year so he will not be around when all the Chinese chit goes down.

Although all that information, or some may say gossip, above is interesting, all that matters is the charts. Tesla is in a significant long-term topping pattern right now and will likely peak out in 2 to 4 months and trend lower for months, and perhaps a few years, going forward. If you enjoyed the Tesla orgy, plan accordingly for your exit during June-August.

The green ascending triangle pattern foretold of a breakout higher, which occurs. Price goes parabolic into 2014. TSLA trends flat from 2014 to 2019 through the key 190, 270 and 370 sideways channel levels. Late last year, the breakout above 370 occurs and the shorts begin running for their lives. The short covering creates more upside fuel that encourages traders to jump in and buy further fueling more short covering rallies. Price, however, moves up into the apex of the red rising wedge a bearish pattern. The collapses from rising wedges can be quite dramatic.

Price is extended above its moving averages requiring a mean reversion lower. The upper band is violated (not shown) so the middle band, the 20 MA, at 424, and rising, is on the table. Yes, 424, may as well call it "420." That was the infamous price level Musk proclaimed in a tweet that got him into trouble with the SEC and resulted in him losing the chairman of the board role (the 420 number and 4:20 on the clock references marijuana).

The higher highs in price come with glaring negative divergence (red lines) over the last 7 years except for the MACD and histogram. The stochastics are in negative divergence and cooked as far as the monthly basis for Tesla goes. The stoch's, RSI and money flow are all overbot agreeable to a pullback. The RSI, on this month-to-month basis is trying to sneak out a higher high. The MACD and histo are at higher highs as price makes new highs so that provides a bit more bull juice. The MACD, however, is in the stratosphere with nowhere to go but down. Price needs 1 or 2 jog moves (down July, up August for the top or down July, up August, down September, up October for the top) to allow time for the MACD and histo to set up with neggie d and that will identify the long-term top and seal the fate for Tesla that will then run into a ditch into the end of the year and beyond.

Price has lots of momentum so it may need the double-jog to allow enough time to burn off the remaining MACD and histo energy, and perhaps a bit more RSI energy. Watch to see if the RSI sneaks out a higher high as compated to the start of the year because if it does not, the top will come faster. if the RSI pokes a wee bit higher than the start of the year, that likely places the double-jog in play and Tesla will top out in the Aug-Oct time frame.

During the fun times in 2013, the ADX pink box shows that the rally higher was a strong trend higher but that petered out in late 2015. Thus began the sideways pattern for a few years. TSLA is now above 1000 but the ADX does not consider the move a strong trend; it is only now trying to poke high enough, above 27, to be declared a strong trend. Isn't that something. Central banker money, inexperienced investors, EV hype believers and short-covering, and, let's be fair, happy production news, from Tesla drives the parabolic move higher this year. The Aroon red line is pegged into the ceiling with nowhere to go but down which is bearish.  Watch for a potential negative red cross in the future.

Summing up all that mumbo-jumbo, TSLA will top out on the monthly basis (long-term) during July-September and these current highs may not be seen for many years. Keystone's 80/20 Rule says 8's lead to 2's so the breach of 800 hints that 1200 will come. The TSLA weekly chart is in negative divergence now with a tiny hair of bull juice remaining so the projection is that Tesla will top out onf the weekly basis anytime over the coming couple weeks. TSLA will then tumble lower for a few weeks, then, miraculously, will catch a bid higher again and in July or August come back up to current highs. If the MACD and histo on the monthly goes neggie d at that time, it is over for Tesla. Keystone is not playing it but TSLA can be shorted now, hold that short for a month or so, see how it goes, then flip it long and ride it back up, then short TSLA strongly once the monthly chart is in full negative divergence. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Saturday, 6/20/20: Musk delays bonuses for employees; so much for the moral. Musk also postpones the annual shareholder meeting on 7/7/20 blaming the coronavirus. He says he is "not sure" when it will be rescheduled perhaps in a month or so. Sounds like he has a great handle on things. TSLA dips -0.3% in the Friday trade. The daily chart is in negative divergence so TSLA price will drop for a few days forward. The weekly chart is in neggie d although it exhibits some additional short-term momo, so down for a few days or week or so, then back up for another matching and higher high for price say 2 or 3 weeks out such as mid-July, then a multi-week slide south, then a recovery say from August into September to come all the way back up to 1000-1200 where it peaks out long-term on the monthly chart. Put a different way, down for a few days ahead, then choppy for a couple weeks wanting to come back up but a roll over occurs for a few weeks, then back up for THE top during July-October after which it is lights-out for Musk and his glorified electric golf carts. After that top, in the weeks ahead, TSLA stock will likely not see the highs again for several years if it ever does. 2020 is Tesla's heyday.