Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Tesla Down On Stellar Earnings: What Is Wrong With This Stock?

By Dr. Arnout ter Schure Stock MarketsJul 23, 2020 02:42PM ET
www.investing.com/analysis/tesla-down-on-stellar-earnings-what-is-wrong-with-this-stock-200531704
Tesla Down On Stellar Earnings: What Is Wrong With This Stock?
By Dr. Arnout ter Schure   |  Jul 23, 2020 02:42PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
TSLA
-1.10%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

To answer the question from the title: Nothing is wrong with Tesla (NASDAQ:TSLA), and I think it can still fly higher. It is simply digesting some of its recent astronomical gains. Allow me to explain using Elliott waves.

Figure 1 below shows the weekly chart of Tesla. I know it is a busy chart, but there are several key takeaways from it. Let me start with the technical indicators.

1) four out of five prior times Tesla was this overbought on the weekly RSI5, Money Flow Index, and Stochastic oscillator it corrected (vertical lines). Tesla is now as overbought and correcting.

2) The Elliott wave count I have for Tesla is that it is now in (red) intermediate-iii of (black) major-3 of (blue) Primary III/C of (purple) Cycle-3/C.

Why do I label the more significant degrees as numbers (five waves up) and letters (three waves up)? I must remain intellectually honest because I cannot know beforehand if Tesla will move higher in five or three larger waves. This unknown is the blessing and the curse of Elliott wave. The blessing, because if price at some point drops below a specific price level, we know it will only do three waves up. If it does not fall below it, and moves higher, then it will be five waves. One can use that certain price level as a stop. The curse, because from a buy-and-hold perspective, you do not know beforehand when the music will stop playing. But that is why one must always use stops anyway.

Figure 1, weekly chart.

That said, Tesla should now be in (red) wave-iv before moving higher for (red) wave-v to complete the anticipated “wave-3?”

The daily chart, with price action over the last six months, in Figure 2 below shows more detail.

The Elliott wave count since the mid-March low took a while to crack, but in the end, it aligned perfectly with the wave count shown on the weekly chart. I, therefore, prefer to see Tesla target ideally between $1,369-$1,320 for wave-iv before moving higher to new All-time Highs (ATH) for wave-v of 3. The rally over the past seven trading days was overlapping and, therefore, counts best as a (green) b-wave. Now, wave-c of wave-iv should be underway. Note Tesla could even drop as low as $1,106-$1,093 for wave-iv without any issues. This drop would fil the early-July gap.

Bottom line: There is nothing wrong with Tesla and its stock. In my humble opinion, based on technical analyses and Elliott wave, it is correcting before moving higher again. The correction should ideally stall around
$1,370+/-50 but could drop as low as $1,100+/-5. A move below that lower level will be a serious warning for the bulls that the odds for more upside are getting very slim. Thus, as usual: know your trading time frame, know your pain level, and never assume anything. Hope is not a profitable strategy.

Figure 2, daily chart

 

Tesla Down On Stellar Earnings: What Is Wrong With This Stock?
 

Related Articles

Jesse Cohen/Investing.com
Expect A Wild October By Jesse Cohen/Investing.com - Sep 30, 2022 15

October is historically the U.S. stock market’s most volatile month Market focus on nonfarm payrolls report, CPI, Q3 earnings Brace for more violent swings in the coming...

Tesla Down On Stellar Earnings: What Is Wrong With This Stock?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (14)
Momentum Tradarn
Momentum Tradarn Jul 26, 2020 9:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
159577161172773.jpg
Under trend line.
Momentum Tradarn
Momentum Tradarn Jul 26, 2020 9:47AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks! Why not iii and iv already at the top and bottom end of June? And the v at ATH?
Momentum Tradarn
Momentum Tradarn Jul 26, 2020 9:47AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks. Why not iii and iv in June/beginning July and the v at ATH?
Jörg Holl
Jörg Holl Jul 24, 2020 2:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Elliott wave theory still exists? In the 90th Bob Prechter always made false prognosis with that.
Jan Skilbrei
Jan Skilbrei Jul 24, 2020 2:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
tesla, all good priced in for future. other brands will catch up, to provide many different designs, solutions, for the custumers. Japanese, European engineers, it, will provide competition, of cource
Kyung Ho Bruletti
Kyung Ho Bruletti Jul 23, 2020 10:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So.. bottom line: it will go down and then it will go up....
Bat Man
Bat Man Jul 23, 2020 10:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Elliot wave your money goodbye. It’s pseudo-TA.
Tom Jones
Tom Jones Jul 23, 2020 9:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tesla is AAPL 20 years ago. Cars, solar, batteries and all its IP are incredibly valuable to society, even if its IP shows how NOT to design an electric vehicle. Let’s face it, no one knows how to price the stock, but it’s fun to watch.
Jan Skilbrei
Jan Skilbrei Jul 23, 2020 9:44PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yes, Tesla was 8 years ago. Its already very expensive, priced in that all good will happen. In Norway, the other brands of ec, is taking marked shares from Tesla, fast. as with normal cars, many different brands, will provide many different designs, solutions. you think eg Toyota will not catch up?
James Wellington
James Wellington Jul 23, 2020 9:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I'm going to join the sentiment here. I don't have a position, but I can't wait to see the smirk wiped off of goofy Elon's fraudulent face, and every Tesla bull that held through this. Tesla is a banana republic mess.
Dr. Arnout ter Schure
Dr. Arnout ter Schure Jul 23, 2020 6:52PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
so far I am only seeing (negative) opinions, and 0 facts on why TSLA stock should be lower. Meanwhile, the stock is higher because it follows and Elliot wave impulse wave. Opinions are for cocktail parties, trading, and investing use cold, hard facts: price data. The Eliott wave is leading the way, never opinion.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email