The Tesla weekly and monthly charts above are a colorful batch of spaghetti that will take a few minutes to digest. If you bring up the daily chart, you see the chart indicators all positively diverged so TSLA is going to begin rallying on the daily basis, for a few days. Next week should be positive for Tesla stock.
However, the weekly chart is not finished bottoming as yet; it still needs a week or three and then it will be good to go with a multi-week rally. The monthly chart will then usher in further weakness in TSLA as 2023 progresses. Remember, trading is 5-dimensional chess balancing the time frames; monthly, weekly, daily, hourly, minute.
The last Tesla charts that were posted called out a VST pop but the weekly chart wanted lower lows before it bottomed. TSLA started to pop a couple weeks ago then whammo, a barrage of negative news hits when you thought it was all priced-in for the near term. Tesla lowers prices on cars and provides incentives never a good thing. Then the miss on production estimates the other day flushes the stock down the toilet. All the rich folks already bought their glorified golf cart; their EV toy.
Demand may be an issue for electric cars since people realize they may be left helpless in natural disasters and power outages. Nothing beats an internal combustion motor and a red gasoline can; you can drive anywhere you want anytime. Who buys an electric golf cart when there is a gas station on every corner?
TSLA shareholders remain unhappy that Elon Musk is spending his time at Twitter as Tesla takes the pipe. The expectation in the prior charts was for price to hold that orange support/resistance (S/R) zone but price collapses through on the stack of negative news.
The interesting aspect of the price action is that it shows you that those bullish folks in late 2020 were not buying TSLA stock because they planned to hold it forever. Quite the contrary. They were weak hands that threw Tesla stock overboard the minute it got back to where they purchased it. No conviction to hold the stock at all. This congestion zone at 125-160 will need revisited to show it respect.
People cheer Elon and call him a genius when the stock price was going up but now that he bought Twitter and TSLA stock has collapsed, everyone calls him a bum. It's funny. In life you can go from hero to zero then zero to hero several times and towards the end you realize it was all part of the fun. To Musk's credit, he has a thick skin and good sense of humor, and a couple days ago he opined in a tweet that 'only a year ago he was man of the year'. Funny stuff.
Let's take a look at the top in TSLA that Keystone called in late 2021. It was nothing fancy; price topped out with universal negative divergence across all indicators so it was cooked, and then it received the neggie d spankdown as predicted. On the weekly chart, note how the Aroon in November 2021 showed that the bulls were 100% bullish on Tesla stock and the bears were at zero percent conviction (100% bullish) and the contrarian indicator proved that a euphoric top was at play (small maroon circles). Everyone was bullish with zero bears.
TSLA forms the blue H&S with neckline at 2 hundo and head at 4 hundo so the downside target if the 2 hundo level fails is zero. The 200 level failed. This behavior appears sometimes for high-flying stocks so the number targets are ignored and simply the weakness of the H&S pattern must be respected (the zero is not expected).
The shame about the collapse in price in recent days is the drop below 120. Keystone's 80/20 Rule says 8's lead to 2's on the way up and 2's to 8's on the way down. The 120 opens the door to 80. Price dropped to 104.64 so the drop through 105.20 opened the door to sub 104.80 numbers. As mentioned above, the monthly chart is terrible, therefore, the 70-80 landing is a solid downside target for TSLA in a few months.
Price is trying to stabilize at the S/R from July/August 2020. TSLA is trading down today at 108 with the broad market weakness. The 112 opened the door to 108. The 102 would open the door to 98.
A bounce is expected, as mentioned above, on the daily basis so a rally to end this week and for much of next week but then TSLA should roll back over to the downside for lower lows on the weekly chart because the RSI and MACD remain weak and bleak.
On the weekly chart, the RSI is oversold agreeable to a pop in price so it will conspire with the other indicators that are possie d, and the indicators on the daily chart, to create the rally for the coming days. However, price will want one more low on the weekly basis due to the MACD so a jog move is likely (TSLA rallies for a few days, maybe late next week starts rolling over again, and then the bottom is in on the weekly basis the week of 1/16/23 when the MACD joins the other indictors displaying positive divergence).
Note the ADX pink boxes that show the big TSLA rally in 2020 and early 2021 was a strong trend higher but this petered out in May 2021 predicting choppy sideways ahead which occurred. TSLA price is falling for a few months but the ADX is only now reaching levels that are considered to indicate a strong trend lower. In other words, despite all the weakness, the weekly basis does not yet consider the downside trend to be strong (so it is more susceptible to rallying). If Tesla stock was going to completely collapse going forward, the ADX would be above 30 maybe 35 ramping strongly higher; it's not.
The Aroon shows the Tesla bears at 100% which means they are bragging that they are short and they expect TSLA stock to go to zero. The green line in October was at zero percent so the bulls have given up all hope that price will ever rally again they are 100% bearish, too. This is a contrarian signal. If everyone is universally bearish on one side of the boat, the opposite will typically occur. Note that price falls over the last 3 weeks but the Aroon green bull line is not at zero. It is down at 20 remaining in oversold territory but the bulls are no longer completely bearish; some are deciding to nibble like Cathie Wood at ARK.
TSLA price has violated the lower standard deviation band so the middle band at 211 and falling sharply is on the table as an upside target for the multi-week rally. The band is falling towards the 200-wk MA at 165 so that confluence may create a magnet for price for it to rebound to the 160-180 range for the multi-week rally.
On the Tesla monthly chart above, the H&S is shown and other areas of price support. The falling green wedge is a bullish chart pattern. The only positive aspect in the chart indicators, however, is that the stochastics are oversold and agreeable to a bounce on the monthly basis so this will conspire with the possie d indications on the weekly chart and the universal possie d on the daily chart to help create the several-day rally ahead.
Look at the weak and bleak indicators on the monthly chart; nasty. It tells you on the monthly basis that TSLA stock is nowhere near finished going lower. This does not mean that it will collapse in a couple months. It hints that sideways choppiness will exist for many months perhaps most of 2023 with a downward bias in play all year long with lower lows ahead this year.
The monthly chart shows the multi-week rally that is setting-up and expected say 1/15/23 through much of February (green circle). Then the monthly chart will reexert its negativity and springtime will bring dead flowers for Tesla going forward this year, as Mick and Keith sing.
So what does all this mumbo-jumbo and windbag commentary mean? That it is time for Keystone to get another cup of coffee. Besides that, TSLA will rally over the coming days into next week, then roll over lower again and probably tap on the one hundo level say late next week or the week after. At this low, the MACD on the weekly should be possie d, so that is the bottom and the multi-week rally will begin and run say mid-January into mid-February.
At that time, price will roll back over to the downside and drop again in late February, March and into April with new lows probably in the 75-ish are during March-August. Keystone is not in TSLA right now long or short but let's take a closer look. We know the puppy is going to rally for a few days so how does the 2-hour look to time an entry for a quick long trade for a day or few?
On the 2-hour chart, price bounced nicely off positive divergence to start the year but is weak again. There is no reason for price to make another lower low on the 2-hour. Keystone is a buyer here at 107 on the long side but will only hold the long trade for a few days and then ditch it.
If you want a safer trade, then simply wait for the weekly chart to set up over the next week or three. You can go long when you see the MACD join the other indicators and all are positively diverged on the weekly chart. She will be all fueled-up at that point ready for the multi-week rally. So day-traders and swing traders can have fun for a few days on the long side then the risk-adverse longer-term traders and investors can play the multi-week rally on the long side when it begins in a week or two. 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 Friday Morning, 1/6/23, at 6:30 AM EST: More bad news from Tesla that cuts the car prices in China. Bloop. TSLA drops -5% in the pre-market from the 110.34 closing price to 104.75. Note that TSLA is teasing the low of the week at 104.64. The quickie long trade will have to be thrown back if the low breaks but for now it is holding. Remember, TSLA is not done going down in the weekly time frame but is ready to rally for a few days. Tesla received an upgrade yesterday. If 104 holds, TSLA should absorb the price-drop news easily and continue with the few-day rally ahead. If price gets smacked lower, it will take a day or two to set up again for the few-day rally. TSLA is at 104.77 and dropped briefly to 103.85. So 103.85 is the support for today and the Jobs Report may introduce more drama.
Note Added Saturday Morning, 1/7/23: Tesla recovers off those pre-market lows. It had that feel to it and the VST charts are possie d. TSLA ends the week at 113 and then adds a bit more in the afterhours to 113.68. If you bring up the 2-hour chart, you can see that the possie d bounce to begin the year was good enough for price to run higher but instead the bad news gave it a lower low in price, and again, all the indicators are possie d, so price launches again. TSLA has legs higher in the 2-hour time frame going forward since the indicators are long and strong with more fuel in their tanks. If you bring up the daily chart, you see beautiful textbook positive divergence (possie d). For those of you more analytically minded (leaning towards fundamental analysis) rather than visual or creative minded folks (leaning towards technical analysis), you may be wondering what is this neggie d and possie d stuff the Keystone speaks of? On the TSLA daily chart, price makes a lower low on the negative news on Friday morning but all the chart indicators are not making lower lows in fact they are sloping higher. This is positive divergence and it means price is on the launch pad loaded up with fuel waiting for ignition. Tesla launches like SpaceX rocket intraday in the hourly and daily timeframes. Thus, the daily chart has legs higher so a multi-day rally begins. Stocks are also higher two-thirds or more of the time moving through the full moon each month which just peaked. So it is happy time for TSLA long shareholders for a few days but as explained above, do not marry the position. Ditch it as soon as, or a little before, the daily chart goes full neggie d. The TSLA weekly chart wants that additional lower low in price before the multi-week rally will be good to go. So up for a few days, then price rolls back over lower and comes down for a lower low in price, and the MACD on the weekly chart will likely be possie d at that point joining the other indicators, and that will begin a multi-week rally for TSLA. But, do not marry that position either, because when the weekly chart goes neggie d, say in late February or March, it will roll back over and die because the monthly long-term chart remains in bad shape with weak and bleak chart indicators. Bag-a-wind permabull Bill Miller proclaims that Tesla is going to continue lower and he is pressing his shorts telling folks to short TSLA with both fists. He will look silly over the coming weeks but it will work out on the short side as the year plays out.
Note Added Tuesday Morning, 1/10/23, at 6:15 AM EST: Keystone takes the 122 on the quickie long trade. You do not want to lose a few-day +14% gain on a new negative soundbite. Keystone will probably wait for the weekly chart to set up. Let's take a look. The 2-hour chart had that nice possie d bounce and the MACD remains long and strong so there is another higher high in price coming in the hourly time frame. It may stall at 125-127. TSLA is sitting at 120. The daily chart is very constructive, price is feeling the positive divergence launch and the indicators are long and strong wanting higher highs in price on the daily basis. TSLA should continue higher in the days ahead but of course the wildcard is negative news coming out of left field. The weekly chart probably wants that one more low price check but the chart may also simply give in and signal that that the multi-week rally has begun. One possible trading path ahead is simply letting the 2-hour top-out, which will likely occur within a couple days with the 125-127 resistance holding, and then she will roll over in the 2-hour time frame. Let TSLA price come back down to fill the gap at 112-118, let the 2-hour set up again with possie d, and then jump on that rocket again for another ride. TSLA wants to rally going forward for many weeks so it does not appear you can do any wrong by buying it, however, Tesla may fall victim to negative news (although all the bad news and more may be priced-in). Technically, TSLA looks good going forward for many weeks but it will die again and collapse probably starting in that late February, Marcy or April time frame. The charts will nail down the timing as they progress.
Note Added Sunday Morning, 1/15/23: TSLA 122.40. The 2-hour hints that price may slump over or stumble sideways for a few hours or day or so. The MACD remains long and strong on the daily chart so another high in price in the daily time frame is expected (in the week ahead). The weekly chart is looking good to start the multi-week rally ahead. The MACD is flat as price tried to squeeze-out a matching low but it is a tough call if it is positive divergence (price should have came down a hair further). In other words, Tesla may or may not check back to the lows (it is more bullish) as it starts the multi-week rally. There remains a juicy gap at 114-ish that needs filled. Keystone is not in TSLA right now but will watch the 2-hour chart for another possie d set-up and entry for another long trade. It would be nice if price came down to 114 to finish the gap business. When she pops, she will likely snag 137 in quick order, so, as always, it is all about the timing. A patient person could likely scale into TSLA now and during the next week or so on the long side and plan to hold it for 3 or 4 weeks and that should work out.
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