Tesla, Inc. (NASDAQ:TSLA) Outlook Has Dramatically Improved
Tesla (NASDAQ:TSLA) stock has not enjoyed a smooth ride in 2018. The electric vehicle giant’s stock retreated amid management turmoil, it missed production quotas, and its CEO, Elon Musk, exhibited unsettling behavior. After Tesla reported a profit for the third quarter and its production reached record levels during the period, Tesla stock rebounded and again began to close in on record highs.
This turning point leaves many investors wondering whether TSLA stock will surge to new records or drop again. However, given the lingering concerns over Musk’s behavior, I would stay away from Tesla stock at these levels.
The Outlook of Tesla Stock Has Dramatically Improved
Under Musk’s leadership, Tesla’s financial results have improved dramatically. The company ‘s Q3 profit sent Tesla stock surging to record highs when other high-flying tech equities such as Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) were sinking meaningfully.
TSLA maintains what I called in earlier articles a “vision premium,” meaning that the valuation of Tesla stock is elevated by the euphoria surrounding its cutting-edge technology. Its market cap of about $65 billion exceeds GM’s (NYSE:GM) market cap of just under $50 billion.
Analysts expect the company’s top line to increase at an average annual rate of 35% over the next five years. Moreover, thanks to its profits, TSLA trades at a forward price-earnings ratio of 64. While Tesla stock is not cheap, other tech firms currently trade at higher forward multiples.
Overall, the bias in prices is: Upwards
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 331.33.
The projected upper bound is: 380.99.
The projected lower bound is: 318.51.
The projected closing price is: 349.75.
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 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 47.9380. This is not an overbought or oversold reading. The last signal was a sell 8 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 49.62. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 68 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 -42. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed down -17.290 at 348.420. Volume was 19% below average (neutral) and Bollinger Bands were 41% narrower than normal.
Open High Low Close Volume___
362.000 365.700 343.880 348.420 7,674,008
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 362.86 324.59 312.90
Volatility: 44 66 72
Volume: 7,544,883 8,869,966 9,226,299
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.
TESLA INC is currently 11.4% above 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 moderate flows of volume into TSLA.O (mildly bullish). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 0 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.