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Related Article
06.17.14 “My $TSLA Calls”
10.09.14 “$TSLA Warning Signal [Part 1]“
10.27.14 “$TSLA Warning Signal [Part 2]”
12.03.14 “[VIDEO] Mid-Week Update with Kay Kim” –covered $TSLA
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Weekly Bearish Divergence
*Above chart (screened on 10/9/14) featured on the article 10/9/14
*Above chart screened today
Since the article back in October 9th, that MACD bearish divergence really progressed as you can see on the chart above (still sloping down). Indeed it has been very hectic for the buyers since the early October, and this signal was one of the biggest reasons of why we did not touch Tesla since our last trade.
The current problem is that the divergence is still active which means selling pressure is still there, and for this being a weekly chart, it’s going to take more than a several days of bullish run to change or to nullify this signal. As long as we have MACD continuing to slope down, the pressure is coming down from above, and things are going to be continued to be hectic in the intermediate to primary term.
While the overall market has been adamantly bullish, Tesla continued to show weakness last few weeks, this is not a good sign because when the fear steps forward in the overall market (market indices), I wonder how Tesla is going to react (obviously, it hasn’t been acting so well in the bullish environment we’ve been having).
Looking at the weekly price-action, we do have potential H&S formation, and it is not confirmed as of today, but when it does confirm, it’s going really add to the bearish sentiments we already have and it’s going to weigh it down much more.
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Monthly Bearish Divergence
To make things worse, we have bearish divergence starting to confirm in the monthly term. This is probably the worst signal you would want to see if you are a Tesla fan-boy. This signal alone isn’t a huge deal, but when it forms along with weekly-term divergence, let’s just say now we are talking potential major-topping insinuations/signals.
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Daily Price-Action
- Wide scale H&S formation (not confirmed yet)
- Uptrend supports (rising blue-dotted line) have been compromised
- $215 next must-hold level
- $177-$180 is the next level of support (if $215 is broken)
- If $215 is broken, that would be an initial confirmation of that massive H&S reversal pattern
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Let’s Recap
- Weekly Bearish Divergence
- Monthly Bearish Divergence
- Daily & Weekly H&S formation
- Uptrend supports have been compromised
- Continues to struggle in a bullish market
- $215ish is MUST-HOLD level
- If we break well below $215, H&S confirms
- $177-$180 is the next level of support if $215 broken
6 thoughts on “TSLA: Warning Signal – PART 3”
WOW. Support broken.
Where is a good entry point to buy puts/shorts?
Maybe a dead cat bounce day?
Zex_M19 yea I wouldn’t short here as this thing came down since the mid November. We may get some dead cat bounce this week but if bulls want to turn this thing around, its going to take a while..
2kaykim Zex_M19 Agree. Not a good place to buy puts/shorts. Even the mighty Apple fell from end of 2012 to early 2013 after the technicals showed head and shoulders. Even though it was a bullish market at the time and the indexes kept going higher. I see Tesla in the same boat. It has separated from the rest of the market. It may linger here or even try to go higher short term (pause) but I would say it would be due to small buyers and lots of short covering from it’s high only a few months back. Then continues further down in Jan into earnings and maybe past that. It has same issue as Apple, lack of new product line. Once the Model X kicks in later this year, we could see a bounce just like apple did once they started with new product cycle again. The news (fundamentals) and technicals match apple (Tesla and Elon Musk often compared to Apple and Steve Jobs too). I will look for entry to buy puts 3-4 months out. Thank you Kay. Apple looks interesting too. Came down from $120 ceiling. We could revisit it before it’s earnings in Jan.
I think Fed news next week could spook the market too. Market worried about interest rates. We have to see if market continues to the downside. For the overall market, I am waiting to see the direction of the price action.
2kaykim Zex_M19 Maybe retest the 200MA? Previous floor = new ceiling? Just a guess.
Zex_M19 2kaykim yea $221-$220 next resistance, 200SMA then 50EMA are the levels of resistance to watch.