Contact Points
Price action has verified the existence of the right-side trend line with at least three contact points (not advice, not a recommendation).
Minor pivots posted at Fibonacci intervals.
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The Danger Point®, trade mark: No. 6,505,279
Right Way … Wrong Way
Potential false upside breakout moves from a down-channel, have happened before.
Once such occurrence, was here.
Let’s see if the trendline was drawn correctly, or not.
The segment is a closer view of where TSLA left-off last Friday.
If it’s in the channel, watch for a lower open and acceleration lower (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Below Resistance, then, Earnings
Tesla’s earnings are coming up later this month, link here.
The last update was here.
Since price action continues to hover below resistance (blue line), the expectation builds for an attempt to close the gap before, or at, earnings (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Watch for The Close
Tesla struggled above resistance, near all-time highs for nine trading days, before reversing lower.
Now, as shown, it’s posted a new daily low … below established support.
Watch price action into the close for a rally attempt; if it happens, risk is narrowed on a short trade, i.e., today’s high (not advice, not a recommendation).
Separately, Uber trade UBER-26-01, was closed out in the pre-market at break-even, before launching higher in the regular session (not advice, not a recommendation)
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The Danger Point®, trade mark: No. 6,505,279
then
Ignored, by ‘Mr. Big’
The latest out from ZeroHedge, says that Michael Burry (a.k.a., The Big Short), while claiming Tesla is overvalued (current P/E, 271), does not have a short position.
Adding to the ‘overvaluation’ theme, is deterioration in sales that’s now entering its second year; here and here. Yet, TSLA just made all-time highs this past December 22nd.
In a nutshell, this is the problem with ‘fundamentals’.
Meaning, as far as assessing price action probability, they’re not useful and never have been (not advice, not a recommendation).
A good example of that premise is CrowdStrike (CRWD); with its current P/E, at minus 428. That’s a negative.
When their P/E, is positive, which is not often, we get numbers like 786; yet, the closing price (yesterday) for CRWD was 468.76, with a market cap of 119.4 billion.
How does that even work?
Possibly more entertaining from the ZeroHedge link, are the comments. All kinds of reasons not to short Tesla.
Tesla TSA, Daily
What do you see?
TSLA printed an all-time high on an attempted breakout that has so far, fallen below resistance.
On the sell side, is of course, to short TSLA directly.
Not wanting to be completely exposed to any untoward action, one can short Consumer Discretionary XLY, and effectively short AMZN as well (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
Rock & Hard Place
If, or when, Tesla penetrates resistance (shown below), it’s likely to be between a rock, and a hard place.
This type of potential set-up, occurs over and again in the markets.
Usually, there’s some kind of ‘reason’ for the move; a likely suspect, link here.
We should also keep in mind, the ‘marriage’ between Tesla and the administration is over, link here.
What could that mean for the future of EV subsidies? (not advice, not a recommendation)
Tesla TSLA, Daily Close
As shown, Thursday, June 5th, was the largest single day down-thrust energy, ever.
When looking at the weekly (not shown), downthrust Force Index for week ending June 6th, was also the largest, ever.
So, we have record level downward thrust on two timeframes.
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The Danger Point®, trade mark: No. 6,505,279
The Jolt, Is Gone
Last week, saw the largest ever, downward thrust energy for Tesla.
Price, whacked over -14%, in one day.
Then, ‘retail’ comes in to buy the dip (emphasis added):
Retail Investors Find A New And Extremely Dangerous Way To Chase TSLA, link here.
Pay no attention to the fact, on the fundamental side, EV sales are falling off a cliff, across the board:
US Electric Vehicle Adoption Plummets, link here.
Goldman Slashes Tesla Delivery Estimates On Weak Monthly Trends, link here.
All of which feeds into the (EV) supporting side of manufacturing:
Chinese-Owned Firm Halts Construction On Battery Plant In America’s EV Heartland, link here.
Then, on the environmental side, yet another EV fire:
New Footage Shows Abandoned Cargo Ship Laden With Chinese Cars Burning In Pacific, link here.
On the political side, it’s hard to gauge:
Musk Hit Bessent ‘Like A Rugby Player’ In White House Fight, Bannon Claims, link here.
‘Very Disrespectful’: Trump ‘Assumes’ Musk Relationship Is Over, link here.
The reason the politics are important, is because of the subsidies, link here.
On the price action side, we have the following:
Tesla TSLA, Daily
Pre-market trading (as of 8:56 a.m., EST) is around 315.15, slightly below the 50% retrace level shown.
Unfortunately (for them), the ‘retail’ investor, is telling us where the probabilities lay (not advice, not a recommendation).
Retail Woes
Before we feel sorry for ‘retail’, we’ve all been there at one point. Robert Prechter Jr., said it best when asked, ‘What advice, do you have for the average investor?’
His response was timeless: ‘Stop being the average investor’
What’s Next?
We’ve just had the largest downward force in the history of TSLA, a rebound fueled by apparent desperation, price action at or near the 50% retrace (from the 5/29, highs); the overall probabilities have become clear.
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The Danger Point®, trade mark: No. 6,505,279
‘Shorting-Out’, at The Top?
It’s likely we’ll know on Monday, whether or not last Friday’s action was a test (and completion) of the up-thrust reversal shown in the chart.
That reversal and potential test, coincides with ‘good news’, ‘bad news’, link here.
Tesla TSLA, Daily Close
Five years of price action.
Moving in closer to nine months of action.
The ‘resistance’ level goes all the way back to November 4th, 2021, with an all-time high close of 409.97.
Note: Friday’s close of 410.44, was only +0.11%, above the prior (closing) all-time high.
Another Carvana?
Similar to Carvana and its relation to CarMax, i.e., bloated market cap, Tesla has the largest market cap of all (major) auto manufacturers, link here.
Going back to this post on Carvana, volatility reaches a minimum; CVNA, is down a stiff -27.4%, since then.
Are we about to see similar action for Tesla?
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The Danger Point®, trade mark: No. 6,505,279
This Time … Maybe
We’ll cut straight to the chase.
All previous updates on Tesla (TSLA) have been technical, indicating some level of curiosity.
This time, is different.
Currently positioned short TSLA, early in this session via inverse fund TSLS (not advice, not a recommendation)
Telsa 1X Inverse Fund, TSLS, Daily
The ‘support’ area shown is actually resistance on the non-inverted chart of TSLA.
As of this post (12:51 p.m., EST), low for inverse fund TSLS is 8.14; if held for the day, it will be the hard stop (not advice, not a recommendation).
Sentiment Warning(s)
Sentiment, Volume, Price; typical model for reversal.
In the case of Tesla, we may have all three (not advice, not a recommendation).
Position(s)
One gets the sense the beginning of this year, has the market sorting itself out.
A brief summary of trade activity for today (not advice, not a recommendation):
DXD-25-01, closed with -1.56%, loss.
TSLS-25-01, opened as detailed above
DUST-25-01, opened … depending on price action, details to follow.
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The Danger Point®, trade mark: No. 6,505,279
Et Tu Tesla?
Everything seems to be happening (or about to happen) all at once.
Those in the know like Buffett, are selling (the market) and continuing to sell, link here.
Boots on the ground, warning of the unexpected things that (may) go bump in the night; the U.S. bond market, link here, time stamp: 12:00.
So, it may be with Tesla as well.
Anyone with two Lithium Ions rubbing together should know by now, the auto market is in ‘transition’.
Tesla TSLA, Weekly
Looking at the chart, it appears Tesla may be in ‘transition’ as well. 🙂
This update is not identifying a specific or potentially long-term reversal; only that TSLA, is at The Danger Point®.
It may be quite easy in a market sense, to initiate a directional change to the downside (not advice, not a recommendation).
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The Danger Point®, trade mark: No. 6,505,279
