In my update on Sept. 11, my expectation for Tesla (NASDAQ:TSLA) was:
“... to complete a larger wave-a in the orange target zone (~$275-325), rally back to resistance (~$450) for wave-b and then a final wave-c back down to $280-340 to complete wave-4. See blue arrows. Shorter-term Tesla can take a little detour first, by rallying to around $410, and then drop to the red wave-a target zone. See green arrows. It is at this stage unknown which exact path will be taken. When things are uncertain, I recommend staying out. But that’s just me.”
Two weeks later, the stock did do a combination of both paths: it had bottomed at $330 on Sept.8 (orange target zone), then rallied to as high as $462 on Sept. 14, and has since started to decline. Thus, since $462 is well-above the green path to $410, but close to the blue path target to $450, I must conclude Tesla is most likely already completed (red) wave-b. Indeed, as said in my previous update, “Corrections are always the trickiest to forecast as they can take on many forms.”
Figure 1:
What should we now expect for Tesla?
With the instrument below its 10-day and 20-day Simple Moving Average (SMA) but above its 50-day and 200-day SMA, the RSI5 pointing down and below 50, the MACD pointing down and on a sell, and the Mony Flow pointing down, the technicals support the preferred bearish Elliott Wave Principle (EWP) wave-count. Thus, the weight of the evidence is bearish for Tesla. I, therefore, prefer for Tesla to try once again to reach the orange/black target zone for wave-4 ($275-325) before wave-5 to new all-time highs kicks in.
A move and close back above the 20-day SMA from current levels will have me start to question this thesis, and I will then have to entertain the possibility the low is in, or wave-4 will become a flat correction. See here for a basic explanation of the EWP and a flat correction.