A month ago I wrote an article on Tesla highlighting it as a possible year-end short covering play. Shares did rally to $243 on 12/31; my end of year target was $248. That said, the stock has been weak along with the rest of the market and is now trading below $200.
I’m a long-term Tesla bull, but I’m a short-term trader. Because I’m bearish on the overall market (yes, I do think the Uber Bear has begun), I don’t see any upside to Tesla over the next few months. There is nothing the company can say or do to prevent the stock from stair-stepping down the support ladder, as indicated in the accompanying chart.
I wish it were otherwise, but if AAPL is headed to $75, as I believe it is, then TSLA is probably headed to $122. That level is the line in the sand for the stock… if it breaks below $122 then it could fall to $34. I doubt that will happen as it would suggest massive, market-wide institutional liquidation.
Tesla had a very low statistical correlation with the QQQ during 2015, but that’s not the case in January. The silver lining is that volume is not yet high. But that could change next month. The company reports earnings February 10.
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