Tesla, Inc. (NASDAQ:TSLA) investor doubt about whether there are enough buyers left who want and can afford Tesla vehicles

Tesla, Inc. (NASDAQ:TSLA) investor doubt about whether there are enough buyers left who want and can afford Tesla vehicles

Tesla, Inc. (NASDAQ:TSLA) investor doubt about whether there are enough buyers left who want and can afford Tesla vehicles

A downhill snowball of bad news eclipsed anything good Tesla did, and raised investor doubt about whether there are enough buyers left who want and can afford Tesla vehicles. Throw in a little bit of erratic behavior from Musk as well.

Just before Tesla stock hit a late-year peak on Dec. 13, Musk did a weekend interview with “60 Minutes” on CBS that escalated a spat with securities regulators over his tweeting out company information. This time, he said it was unrealistic to think Tesla’s new chairwoman could control his behavior because he’s the largest shareholder. It came after Musk and Tesla each paid $20 million in fines in an October settlement with the U.S. Securities and Exchange Commission over ill-advised tweets.

Just after the new year began, Tesla announced record fourth quarter sales that fell short of Wall Street expectations. The company also cut prices by $2,000 per vehicle to offset the phase-out of a $7,500 federal tax credit for Tesla. That increased doubts about future sales. Then Tesla eked out a small fourth-quarter profit that also disappointed investors.

The snowball picked up momentum in February when Musk announced he would close most company stores and fill orders online. He also walked back his prediction of sustained quarterly profits, predicting a first quarter loss. When January-through-March sales figures came out, investors were disappointed again. The company had only 63,000 deliveries, down 31% from the fourth quarter.

Musk later introduced the Model Y midsize SUV, but gave few details. Investors were nonplussed. Then came a conference call to announce fully self-driving cars by sometime next year, an announcement widely criticized by experts as unrealistic. The stock slump continued. With sales down, Tesla posted a larger-than-expected $702 million first-quarter loss in April, and Musk warned it wouldn’t be profitable in the second quarter either.

In May, Tesla sold stock and notes that yielded $2.3 billion, increasing debt. Along the way, the SEC asked a judge to find Musk in contempt for tweets about vehicle production, a spat that was later settled. Also throw in reports of a leaked email last week from Musk to employees saying at the current cash burn rate, Tesla would go broke in 10 months.

What’s next?

It all depends on whether Tesla can produce enough cars at its Fremont, Calif., factory and whether people keep buying them.

Musk’s memo from Wednesday said the company has 50,000 net new orders this quarter and it could pass record deliveries of more than 90,000 in the fourth quarter of last year. That could generate enough cash to reverse the company’s fortunes. But many analysts are skeptical. Morgan Stanley’s Jonas didn’t think sales would be that strong. Garrett Nelson of CFRA cut his one-year stock price target $50 to $150.

“We see shares continuing to trade lower on a lack of near-term catalysts and likely cut to vehicle sales guidance,” Nelson wrote in a note to investors Thursday.

Senior analyst Jessica Caldwell of Edmunds, which provides content to The Associated Press, said Tesla has an uphill climb.

“There doesn’t appear to be anything in the (product) pipeline that is going to save them,” she said. “Now Tesla seems to be losing the confidence of its biggest cheerleader, Wall Street.”

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 252.20.

The projected upper bound is: 210.79.

The projected lower bound is: 166.50.

The projected closing price is: 188.64.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with TESLA INC), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 15.1732. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 23.42. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 19 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -105.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 16 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 9 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed down -4.860 at 190.630. Volume was 38% above average (neutral) and Bollinger Bands were 54% wider than normal.

Open High Low Close Volume___
199.830 199.980 188.751 190.630 14,136,572

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 211.99 253.35 298.94
Volatility: 61 56 71
Volume: 14,855,212 11,406,412 9,717,861

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

TESLA INC is currently 36.2% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 30 periods. Our momentum oscillator is currently indicating that TSLA.O is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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