Tesla, Inc. (NASDAQ:TSLA) Will Struggle in China with Tariffs
According to an email sent out to employees by Tesla CEO Elon Musk obtained by Reuters, Musk warned the company may face a serious cash flow problem in less than ten months if it does not begin strictly controlling its expenses.
Musk reportedly wrote:
It is important to bear in mind that we lost $US700 million in the first quarter this year, which is over $US200 million per month. That is why, going forward, all expenses of any kind anywhere in the word, including parts, salary, travel expenses, rent, literally every payment that leaves our bank account must (be) reviewed.
This is hardcore, but it is the only way for Tesla to become financially sustainable and succeed in our goal of helping make the world environmentally sustainable.
The pressure of the cash flow issue of Tesla on the company, which was somewhat alleviated when the firm switched its target for a new capital raise to $2.7 billion, is likely to grow as the tension between the U.S. and China worsens.
In late 2018, prior to the suspension of tariffs on automobiles by China, Tesla was selling its Model S and Model X with a $20,000 premium due to the 25 percent import duties.
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 271.61.
The projected upper bound is: 232.22.
The projected lower bound is: 187.22.
The projected closing price is: 209.72.
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 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.
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 21.5100. This is not an overbought or oversold reading. The last signal was a buy 2 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 27.92. 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 14 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 -184.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 11 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 4 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed down -17.300 at 211.030. Volume was 88% above average (neutral) and Bollinger Bands were 2% narrower than normal.
Open High Low Close Volume___
221.960 222.240 208.920 211.030 17,786,666
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 235.94 262.31 302.59
Volatility: 53 55 75
Volume: 9,151,463 10,201,716 9,660,571
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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
TESLA INC is currently 30.3% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 25 periods. Our momentum oscillator is currently indicating that TSLA.O is currently in an oversold condition.