QuantumScape Plunges but Is the Damage Over?

Time for another look at the shares as we start 2021.

When we looked at QuantumScape (QS)  on Dec. 23 we wrote that, "In this intraday chart of QS, below, we are looking at just the past 10 days of price action. A decline below $105 and then $100 is likely to precipitate further declines." Prices broke below $105 and $100 last week and Monday they have plunged over $30 to near $50.

Let's check the charts again of this electric vehicle battery stock. 

In the daily Japanese candlestick chart of QS, below, we can see the rapid plunge in just a few sessions. QS gapped below the cresting 20-day moving average line and is not all that far above the rising 50-day moving average line. (We often use shorter moving averages when dealing with stocks that have limited price history.)

The On-Balance-Volume (OBV) line has been moving lower telling us that sellers of QS are being more aggressive. The trend-following Moving Average Convergence Divergence (MACD) has crossed to the downside for a take profits sell signal. 

 

In this daily Point and Figure chart of QS, below, we can see that prices have overshot a downside price target in the $66 area but there is not much in the way of chart support looking at the volume by price bars on the left scale.  

 

 

 

Bottom-line strategy: Both QS and the broader market are weak Monday -- not a good combination. Potential support areas are $40 and then $20.

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