TSLA fundamentals are arguably weak, the EV market is becoming more and more competitive. We're seeing strong entry into this market from the likes of Volvo, BMW and now even Porsche has a nice EV coming. We can also see demand softening for TSLA clearly evidenced by recent price drops on the vehicles. In a period of rising demand, you do not lower prices, therefore you can infer we are seeing weaker demand for TSLA's offerings. TSLA stock has long had a price in moat on the EV market which is arguably being eroded as others develop their technology.
TSLA also has some potential liabilities related to Elon's loud mouth and defiant attitude towards the SEC and that really doesn't have much in terms of upside, but plenty of downside. Another speculative component of this short, the really high turnover in TSLA's financial and accounting departments. Especially after a quarter of posting record revenue and EPS. You have to wonder if there are some greater accounting issues at play when you see senior accounting staff quickly departing the company.
Now, we can tear apart TSLA fundamentals all day. Looking at this from a technical and pattern oriented perspective we have a great short opportunity lining up. An arguably overvalued business with success priced in, facing a lot of uncertainty, is a prime short.
We can see head and shoulders pattern forming on the weekly chart. The neckline has now broken and we are seeing the price fall below the 200 MA line (consistent with the neckline of the head and shoulders pattern). We can also see the 50 MA crossing the 100. I think we will see a reversal of the long-term uptrend, signaled by this neckline break, and TSLA should fall sub 200 as it searches for its next support level. A fib 78% retracement puts us at the 180 price level.
To be fair, I've been trading this short since 280 -- now with the neckline break and this fall under the 200 MA I have increased confidence in this short and am entering a larger position. I'm expecting this to be trading sub 200 by the end of June 2019. I will be keeping an eye out for any price bounces to increase my short position.
This is not investment advice, just my own thoughts and analysis. Trade at your own risk.
H&S Price shouldn't go below neck line. In this case price is well below neck line. 252 could be neck line but then you can't have 2 heads.
Captainsmugglebutt
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@hellreturn, the point is that the neckline has been broken, TSLA needs to find support on a technical level which is less and less likely with all the fundamental issues it is facing. This will take a few weeks to play out and there will certainly be volatility to the upside, but save for being overleveraged - even an entry here at 265+ for a short could be juicy over the next 3-6 months.
Captainsmugglebutt
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@hellreturn, Its ya boiiiiii with that fire TSLA call. Please tell me more about how this wasn't a H&S