Tesla, Inc. (NASDAQ:TSLA) shareholders have underreacted to the negative information in Q4

Tesla, Inc. (NASDAQ:TSLA) shareholders have underreacted to the negative information in Q4

Tesla, Inc. (NASDAQ:TSLA) shareholders have underreacted to the negative information in Q4

Thanks to a recovering tech sector, Tesla (NASDAQ: TSLA) shares still managed to gain over 7% in the week after a lackluster Q4 earnings announcement (ER). The somewhat counter-intuitive post-ER price moves may be partially due to company’s better-than-expected Q1 guidance, when most other companies lowered their Q1 guidance citing economic uncertainty. Tesla said that it expects to post a very small GAAP net income gain in Q1 after the gap between production and deliveries is expected to create a temporary but predictable dip in revenues and earnings.

Of course, this is a particularly volatile time for the stock market. With ongoing trade war negotiation, the Fed’s changing stance on interest rate policy, and looming global economic slowdown, investors are hungry for any clues that indicate the future outlook. Thus, it is not surprising that shareholders would have tiptoed over every piece of clue in the earnings call. But the question remains how the company could respond positively to its own obviously negative ER. Many have offered justifications to the price reactions as “the market has priced in the worst,” and “Tesla’s Q1 guidance, albeit not impressive, is not as bad as the others.” Long-term Tesla critics would dismiss the question since the shares have always been in a bubble. In this post, I like to offer my take that the company’s shares have been overvalued in response to its downside revenue guidance.

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 342.84.

The projected lower bound is: 270.89.

The projected closing price is: 306.87.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 27 white candles and 23 black candles for a net of 4 white candles.

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 37.7509. This is not an overbought or oversold reading. The last signal was a sell 6 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 46.27. 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 109 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 -31. This is not a topping or bottoming area. The last signal was a buy 15 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 buy 10 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 4.110 at 307.880. Volume was 52% below average (consolidating) and Bollinger Bands were 56% narrower than normal.

Open High Low Close Volume___
304.500 308.000 303.900 307.880 3,904,947

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 310.92 325.79 316.22
Volatility: 33 71 74
Volume: 5,839,290 7,589,633 9,086,691

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 2.6% below its 200-period moving average and is in an upward 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 bullish on TSLA.O and have had this outlook for the last 6 periods.

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