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Tesla, Inc. (NASDAQ:TSLA) Stock Short Sellers Are Once Bitten, Twice Shy!

Tesla, Inc. (NASDAQ:TSLA) Stock Short Sellers Are Once Bitten, Twice Shy!

  • The short interest in Tesla (NASDAQ:TSLA) stock has fallen sharply since October. The sharp rise in the stock price triggered a short squeeze. Bears lost billions of dollars as the stock rose to almost $1,000 earlier this year.
  • Meanwhile, coronavirus fears caught up with Tesla. The stock has fallen 24% in March. Notably, the stock doubled between January and February. Earlier this month, the stock turned negative for the year. Since then, the stock has recouped some of the losses. So far, the stock has risen 20% for the year.

Tesla stock bears

As Tesla’s stock price skyrocketed between October 2019 and February 2020, short sellers accumulated billions of dollars of losses. Many short sellers had to cut their positions to curtail burgeoning losses. According to the most recent filing, TSLA’s short interest was 16,158,160 as of March 13. To put that number in perspective, the same figure was 37,186,793 on October 15, 2019. TSLA’s short interest has fallen in every fortnight since October 15. Currently, the short interest is the lowest in years.

Short sellers

Notably, January and February were a good time to build short positions in Tesla stock. However, the way that the stock rallied then made taking a bet against it a huge risk. By then, Tesla stock short sellers had accumulated losses in the billions. Overall, it looks a case of once bitten, twice shy for TSLA stock bears.

Tesla took advantage of the rise in its stock price by selling shares worth $2.3 billion. The cash will come in handy now amid coronavirus-driven shutdowns. Initially, TSLA CEO Elon Musk was a coronavirus skeptic. He made some controversial statements about the deadly virus. 

Technical Indicators

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 572.50.

The projected upper bound is: 678.90.

The projected lower bound is: 369.64.

The projected closing price is: 524.27.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with TESLA INC). It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) 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 54.1493. This is not an overbought or oversold reading. The last signal was a sell 1 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 45.17. 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 8 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 50. This is not a topping or bottoming area. The last signal was a buy 7 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 3 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed up 21.870 at 524.000. Volume was 100% below average (consolidating) and Bollinger Bands were 66% wider than normal.

Open     High      Low     Close     Volume___
501.250 542.960 497.000 524.000 29,073
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 476.36 654.06 383.17
Volatility: 177 155 93
Volume: 18,666,622 20,966,924 12,204,402

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 36.8% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of TSLA.O (mildly bearish). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 20 periods.

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