My last analysis(Ref #1) on Tesla , and what has changed so far?
1. As the Christmas rally unfolds, it has been a blessing to Tesla. From my last chart, obviously Tesla broke to new highs and my chart undershot with my conservative target of 344-365. To be fair, very few, if any, were expecting new all time highs from Tesla by the end of 2019. In addition to the progress on the trade talks, secured financing and the progress on the Chinese factory, have been really adding fuel to Teslas' bull run. Log charting in combination with seems to work better for Tesla as a highly volatile, growth stock. This time I excluded the elections noise and made the Tesla trading tree much simpler.
Updated Tesla Tree, combining fundamentals and technicals
2. And then there's the short covering(https://twitter.com/ihors3/status/120950...). Overall, short interest dropped from around their peak at ~30%, to less than 20%- continuing their downward spiral. Of course, this shows confidence in the stocks performance. As mentioned on the chart, now that these news are priced in, the question is, what are some of the anticipated news and events and how they'll affect the stock price?
3. The answer to this question has three parts: Tesla's Q4 , trade negotiations progress and FED policy. Next are important, mostly for the reason of consistency. Two years in a row, Tesla seems to have breakout Q3 , and then has proceeded to under-perform. In terms of trade negotiations, almost certainly that they are here to stay. Depending on their outcome, which will be highly correlated to all the macro factors, it might curb Tesla's demand slightly. Nevertheless, Tesla's expansion in China and Europe, decreases their operating risk by improving their production margin and operating cycle. I'm not going to discuss FED's policy in this post, but for anyone interested, they can visit my previous post on treasuries and QE-4(Ref #2).
I will sum up the analysis by breaking down some of the technicals. At the top of the channel, Wave (3) target of 445 might be the next profit taking point in the current momentum strategy. I am expecting a slow January as the season unfolds, simultaneously with the trade negotiations outcome. Currently, it's practically impossible to have a sense of the EW variation and extensions that Tesla will take. As it stands the best case scenario would be in the range of 620-640$. Teslas' Q4 call in February, will give the path for the price action and the sense for the potential summer of 2020 targets.
Current wave count on the weekly:
This is it for Tesla , I tried to keep it short and failed. Any comments with your charts and feedback are very welcome!
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References and Disclosure:
1. Analysis on Q3 earnings: 2. Treasuries and QE-4:
Disclosure: This is just an opinion, you decide what to do with your own money. For any further references or use of my content- contact me through any of my social media channels.
Feliz navidad everybody!
Just hit the 1.618 extension ¬520, and it doesn't seem that it will stop any time soon.
Let's see how far wave 3 extends.
Let's see where it goes from here.