Tesla’s stock price fell almost 13 pct last week. The one-day loss was impressive, but what does it mean in the bigger scheme of things? Is Tesla’s stock a buy or sell in 2019? Can we use any insight from our 15 leading indicators suggesting the dominant trend?
Tesla’s stock specifically has lost 13 pct on Friday January 19th, 2019. This might lead to a very bearish situation, and might imply a sell in 2019 for Tesla’s stock.
However, it might also fire a buy signal for Tesla’s stock in 2019, as it might be near a major bottom.
How to determine whether any stock, and for the purpose of this article Tesla’s stock, is a buy or sell?
We look at 3 angles in order to determine a buy or sell for Tesla’s stock in 2019. First, fundamentals of the company. Second, the broad stock markets which influence conditions for any single stock out there, including Tesla. Third, a classic top down chart analysis approach.
Tesla stock buy or sell in 2019: Fundamentals
The big news about Tesla that drove the recent sell-off was the 7 pct workforce lay-off combined with lower Q4 profit guidance. This is the summary are CNBC sees it:
- Elon Musk says that “Tesla will need to make cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements.”
- The company discontinued the cheapest versions of its Model S sedans and Model X SUVs this week.
- Musk says: “Tesla faces an extremely difficult challenge in making its products a competitive alternative to traditional vehicles and energy products.”
We would say this indeed might spell further bad news ahead, but certainly is not a given. Tesla does what it has to do: take a pivot as a company as it wants to scale its innovative products. Nothing wrong with this, on the contrary!
Lower profits is not the big issue for a fast growing company, on the contrary. The big issue is that it would not be able to scale. So Tesla is doing the right thing, and it comes with economic consequences of course.
What we are saying is that Tesla’s fundamentals are not necessarily worse after this week’s news. It may even appear that they are setting up with this decision for a raging breakout. We just don’t know at this point in time.
Tesla stock buy or sell in 2019: Broad market trend
Tesla is like any stock subject to the dominant trend in markets. At this point in time it seems that volatility in stock markets is about to decrease. Last week we showed the critical price points which determine when markets will become bullish and when they would morph in something very nasty. So far, based on this week’s price action, it seems we are moving further away from the bearish scenario.
Forecast: global markets stopped falling at major support. No harm done yet, no signs of a 2008 scenario. Not bullish yet, can go both directions, bulls have the benefit of the doubt. Line in the sand: 2.50 for 10 year rates, 110 in the Euro, 1300 in the Russell 2000.
For now it seems that broad markets are likely going to help Tesla’s stock, and they are likely going to provide tailwinds.
Tesla stock buy or sell in 2019: The daily chart
Tesla’s daily chart looks pretty blurry with ups and downs in a range between $250 and $380. There really is nothing we can conclude from this chart when it comes to a buy or sell for Tesla’s stock in 2019.
We can only turn our attention to the higher timeframes to identify any buy or sell signal.
Tesla stock buy or sell in 2019: The weekly chart
The weekly chart of Tesla shows this distinct horizontal pattern. In 2017 the stock went ‘one level higher’, and is now in a sideways pattern for +18 months.
This consolidation might result in a breakout or breakdown, depending on the results of the company as well as broad market conditions.
We must look into the dominant trend on the monthly chart before we can come to any conclusion.
As far as critical price points is concerned:
- Tesla’s stock is bullish above $385.
- Tesla’s stock is bearish below $260.
- Right now it is trendless so there is no indication whatsoever on exit points.
Tesla stock buy or sell in 2019: The monthly chart
The recent sell-off in Tesla was maybe impressive in terms of a one-day loss but it certainly did not create any damage on its chart.
The longest timeframe (monthly chart) shows that support is being tested now. If and once Tesla breaks above $370 it will start a major run. Investors are likely waiting till the fundamental outlook is right before pushing Tesla into a new bull market.
The weekly confirms the monthly, so that’s great. We stick to the price points identified above, and only add that Tesla’s stock becomes a hard sell in 2019 once it dives below $245 and registers a monthly close below this level.