- Wednesday, October 16, 2024
Tesla stock is experiencing a downward trend due to disappointing quarterly earnings and an underwhelming earnings conference call. Investors are now seeking guidance on the future trajectory of the stock. While fundamentals may not offer much insight, stock charts provide a valuable tool for market technicians and traders.
Chart patterns serve as indicators of a stock's potential movement in the short and medium term. By analyzing these patterns, investors can gain valuable insights and overcome their own biases, regardless of whether they are bullish or bearish.
The current outlook appears grim for Tesla. Pre-market trading on Thursday saw the stock plummet by 8.6% to below $190 per share. This drop came after the company reported fourth-quarter earnings of 71 cents per share, falling short of Wall Street's expectation of 73 cents per share. On the other hand, S&P 500 and Nasdaq Composite futures showed slight gains of 0.4% and 0.5%, respectively.
Founder of Fairlead Strategies, Katie Stockton, predicts that Tesla's key support level around $208 will be breached soon. However, she cautions against prematurely judging the extent of this breakdown and advises observing the next few days of trading for a clearer indication. According to Stockton, if Tesla stock closes below $208 for two consecutive Fridays, it is likely to decline further towards $177.
In this uncertain period for Tesla, monitoring stock charts becomes crucial for investors seeking to make informed decisions amidst the fluctuations.
Stockton's Advice for Tesla Owners
Stockton's Advice for Tesla Owners
Stockton provides some heartening advice for Tesla owners. Instead of selling into weakness, he suggests waiting for an opportunity for a better exit by observing if the stock can rebound and get back into the gap.
In Wall Street terminology, a significant drop or rise all at once is referred to as "gapping down" or "gapping up." When stocks gap down, they tend to recover some of the initial drop. This applies to Tesla as well, but it's important to note that Stockton's advice is related to trading, not investing.
John Roque, the senior managing director at 22V Research, adds that the key level for Tesla is $200. As long as the stock remains below this level, both price action and technical indicators will face challenges and be biased towards lower prices. Roque has a slightly more bearish outlook than Stockton and suggests that Tesla's stock could potentially retest levels near $100, as seen in early 2023.
Although this may not be what shareholders want to hear, it's essential to pay attention to the charts. However, it's worth noting that things don't necessarily have to unfold in this manner. Demand, interest rates, and investor sentiment are all dynamic factors. Nevertheless, investors should prepare for the possibility of Tesla's stock gradually decreasing in the upcoming weeks.
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