We continue to look for weaker prices heading into the year-end.
Stocks quotes in this article: TSLA
The ‘Magnificent Seven” – are a collection of seven companies that have become household names during the pandemic, Jim Cramer said, and as long as we’re waiting on a vaccine, these stocks will continue to rise.
There’s Tesla (TSLA) , a perennial cult favorite. Cramer told viewers of Mad Money Monday evening that shareholders of Tesla are convinced the company will grow into its sky-high valuation and quarterly earnings will not dissuade them.
Let’s check out the charts of TSLA ahead of earnings that are expected after the close on Wednesday.
In this daily bar chart of TSLA, below, we can see that prices have been stalled since early September. Prices are pointed down on a short-term basis and could test the rising 50-day moving average line. Trading volume has been declining the past two months.
The On-Balance-Volume (OBV) line has been in an uptrend the past 12 months but now looks like it has made a small high.
The Moving Average Convergence Divergence (MACD) oscillator peaked in early September and has been declining towards the zero line.
In this weekly bar chart of TSLA, below, we can see that prices are up some eight-fold from their base pattern around $60. Prices are above the rising 40-week moving average line. Actually, prices are extended above the 40-week line.
The weekly OBV line has been rising this year but may be stalled in the past two months or so.
The MACD oscillator has narrowed significantly in recent weeks and is now close to a downside crossover and take profits sell signal.
In this daily Point and Figure chart of TSLA, below, we can see that the software is projecting a possible upside price target in the $580 area but we can also see that a decline to the $404-$400 area could weaken the chart.
Bottom line strategy: TSLA has been stalled in chart traffic the past two months. The major trend is up but our indicators have been weakening and that tells us that some traders and investors are subtly changing their positions. We continue to look for weaker prices heading into the year-end.
Author: Bruce Kamich
Source: Real Money: Tesla’s Indicators Continue to Show Signs of Weakness