Tesla Inc.’s entry into the S&P 500 will make for a wild trading session Friday as money pours into the electric vehicle maker’s stock and out of shares of the index’s other members.
Shares of the Palo Alto, Calif.-based electric vehicle maker will be added to the S&P 500 all at once, which is atypical for a large addition. The company had a market capitalization of $606 billion at Monday’s closing bell, meaning it would be the eighth-largest member upon entry into the benchmark index.
Aside from producing record volume, the rebalancing will have additional implications for the index.
The other 504 members are expected to face “downward pressure” as indexers sell those shares to account for Tesla, Silverblatt said.
Tesla’s inclusion will lower the index’s dividend yield to 1.54% from 1.57% while causing the 2021 forward price-to-earnings ratio for 2021 to increase to 22.3 times from a little under 22 times.
As for Tesla itself, the stock should “remain well bid into the rebalance” although the majority of the gains have likely already occurred, according to a team led by Morgan Stanley strategist Boris Lerner. Tesla shares have rallied 57% since the closing bell on Nov. 16, when S&P Dow Jones Indices announced the electric-vehicle maker’s inclusion in the S&P 500.
Typically large additions like Tesla “underperform on the day immediately following the rebalance,” they added, while also stating it wouldn’t be surprising to see the stock trade lower following its inclusion into the S&P 500 due to the large rally that has taken place.
Tesla, Inc., formerly Tesla Motors, Inc., designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products.
The Company operates through two segments: Automotive, and Energy generation and storage.
The Automotive segment includes the design, development, manufacturing, and sales of electric vehicles.
The Energy generation and storage segment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers.
The Company produces and distributes two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle (SUV). It also offers Model 3, a sedan designed for the mass market.
It develops energy storage products for use in homes, commercial facilities and utility sites.
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 495.26.
The projected upper bound is: 690.59.
The projected lower bound is: 584.21.
The projected closing price is: 637.40.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black 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 69.7317. This is not an overbought or oversold reading. The last signal was a sell 4 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 66.04. 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 sell 4 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 -6.580 at 633.250. Volume was 100% below average (consolidating) and Bollinger Bands were 61% wider than normal.
Open High Low Close Volume 643.280 646.900 623.800 633.250 42,017
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 616.75 483.48 302.60 Volatility: 78 67 107 Volume: 47,723,568 39,347,520 68,748,976
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 109.3% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect moderate flows of volume into TSLA.O (mildly bullish). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 18 periods.