Tesla Inc. (TSLA) is back in the news in a big way following word Thursday that the Securities and Exchange Commission was suing CEO Elon Musk for allegedly defrauding investors when he tweeted that he was thinking about taking the company private. Fundamental analysts are reviewing their last published reports and are trying to decide what to write to advise their clients (and to walk back their bullishness).
After 40 years on Wall Street I would bet that compliance departments are also busy this morning with the supervisory analyst who signed off on those TSLA reports. Lots of meetings and lots of coffee. As a technical analyst I do not miss that kind of stress one bit. Let's look at the charts this morning and see what a nearly $40 lower opening will do to the indicators.
In this daily bar chart of TSLA, below, we can see the price action through Thursday's close. We can see that prices rebounded this month to the underside of the flat 200-day moving average line and the downward-sloping 50-day line. The daily On-Balance-Volume (OBV) line was only stable this month, suggesting to me that the September rebound may have been more short-covering than outright aggressive buying. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the upside to a cover-shorts buy signal. That signal could get reversed again as prices sink today.
In this weekly bar chart of TSLA, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line shows a rise from late 2016 and reached a new high this month. If the OBV line says there was strong buying since April it could mean a lot of buyers have losing positions. The weekly MACD oscillator is bearish.
In this Point and Figure chart of TSLA, below, we can see months of rally failures. A very bearish downside price target of $182 is indicated.
Bottom line strategy: TSLA has been difficult to trade and that will continue. A weekly close below $250 will be a clear signal to me at least that a significant top is in place.