Is Tesla Plunging To $100?

When the champion of the trading world speaks, it behoves us to listen to him. A month or so ago, the 2020 trading champion made his views clear on Tesla: avoid it, was the takeaway.

At the time, he humbly commented that his two cents take was that the stock market had been in a 3-4 month rally but Tesla had gone straight down over that period, demonstrating relative weakness.

He went on to comment that Tesla had reported two consecutive quarters of negative earnings growth and three consecutive quarters of decelerating revenue growth.

Overlay those negatives with a 62x P/E, 7 unfulfilled overhead gaps alongside a huge gap just overhead and you had a recipe for failure.

So what happened?

Key Points

• A US Champion trader had a very bearish outlook on Tesla a month ago, before the stock fell by over 10%.
• The outlook now remains highly bearish with $100 price target.

Tesla Is BIDLESS

The conclusion drawn was that Tesla was “literally BIDLESS” meaning that it had no volume. A declining 10-day EMA and 20-day EMA alongside a falling 50 SMA under the key 200-day SMA combined to make the technicals look decidedly bearish.

Then there was the uncertainty factor. What could Elon say when about the markets and his stock in particular to derail it? Or would his focus be on X or SpaceX or any other of his myriad projects from Boring to Neuralink.

The conclusion was that Tesla could literally spend years doing nothing. Above all, in his opinion, Tesla was “dead money” and “possibly a short.”

As expected, the bulls dug in and defended the narrative but what makes champion traders great is how they filter the noise and listen to the facts, or in this case, the charts, which spoke of impending doom.

Credit: Oliver Kell

So, What Happened?

As we fast forward a month or so from the time that bearish outlook was cast, what has happened to Tesla share price?

From $187 per share when the commentary was released, the current price is already much lower in the low $160s per share, and still looking very weak.

Some speculate that the share price now could fall to as low as $100 per share. While the bulls will continue to say it’s not possible because of XYZ fundamental reason, the chartists are paying close attention to the rising volume and falling share price, the two things that Dan Zanger and other top traders declare as crucial to spotting great trading opportunities.

The takeaway if you are bullish on Tesla now is to pay as much, if not more, to the chart as to the fundamental thesis. And even if you are fundamentally inclined, look closely at the income statement, earnings and falling revenues. They suggest the worst is not over for Tesla share price.