Tesla stock (TSLA) lost 17% over yesterday’s trading session on February 5, reflecting a correctional decline from a recent 52-week high. The drop was caused when the Public Investment Fund of Saudi Arabia sold 99.5% or nearly 8 million shares of Tesla Inc. It was one of the five largest investors of Tesla, according to Bloomberg. They now have about 39,000 shares.
The other reason for the drop was statements about delays in the supply of Model 3 due to the outbreak of coronavirus in China.
Tesla stock is one of the most controversial stocks for investors. Some cheer it on, while others love to see it be sent to the bottom of the ocean. I am a capitalist and try to put aside my emotions when investing. However, Tesla is an “emotionally charged” stock.
In today’s investing world, it is not enough to know the fundamentals of a company or review the technicals. Investors need to see the sentiment of the stock. The “sentiment” can make the trend of a stock.
Yesterday, the sentiment of Tesla was extremely BEARISH. Today the sentiment could be BULLISH. Short term traders can take advantage of the trends and use it as momentum trade. Longer-term investors need to ignore the “sentiment” and focus on the fundamentals and technicals of stocks like Telsa.
At the same time, the growth of the Tesla stock quotes since the publication on January 29 of a strong quarterly report and forecast for the current year exceeded 26%.
Over the past week, Tesla shares rose by 26.46%. Over the same period, the S&P 500 Index rose 1.87%.
Investors continue to follow the US statistics released yesterday, as well as the decision of the Chinese authorities to reduce tariffs on US imports.
The January ISM Non-manufacturing PMI grew from 54.9 to 55.5 points, which is the best indicator since August. Strong signs of the services sector point to the continued growth of the US economy, in the face of a drop in consumer spending.
The ADP employment data also turned out to be positive. It recorded an increase in January from 199K to 291K. Meanwhile, the PRC authorities announced a halving of duties on US goods imported into China (including soybeans and oil), totaling USD 75 billion. Thus, 10% tariffs will decrease to 5%, and 5% to 2.5%.
According to the Chinese Ministry of Commerce, this step should “advance the healthy and stable development of China-US trade.” Investors have been bounced back and forth like a ping pong ball the last eight months and are now mainly ignoring the US-China trade deal.
The bottom line, global uncertainty remains high, as the risk of a trade war between the United States and China has been replaced by risks associated with the consequences of the spread of Chinese coronavirus, which now has over 28K cases.
Support and Resistance
The Tesla shares stabilized after an aggressive and protracted bull rally. I think we are looking at a price consolidation and possible rebound. #TSLA quotes are consolidating near the round level of 700.00. The level of 850.00 is critical resistance. Soon, a correction of the issuer is not excluded. Indicators signal the strength of buyers: the price has fixed above MA (50) and MA (200); MACD is in the positive zone.
Traders should watch the support levels, as it could trigger a big bear run.
Short positions for Tesla stock could be opened after the price consolidates below the level of 700.00. The closing of the profitable positions is possible at the levels of 600.00, 550.00, and 480.00.
Long positions may be opened after the price consolidates above the level of 750.00 with the targets at 850 for short-term and 970 for long term trades.
Resistance levels: 850.00, 950.00.
Support levels: 700.00, 590.00, 500.00.
Tesla Stock Price Recommendations
Feb-05-20 Downgrade Canaccord Genuity Buy → Hold
Feb-03-20 Reiterated Argus Buy $556 → $808
Jan-23-20 Resumed UBS Sell $160 → $410
Jan-23-20 Downgrade Exane BNP Paribas Outperform → Neutral $555
Jan-22-20 Reiterated Wedbush Neutral $370 → $550
Jan-16-20 Downgrade Morgan Stanley Equal-Weight → Underweight $250 → $360
Jan-14-20 Reiterated Jefferies Buy $400 → $600
Jan-14-20 Reiterated Deutsche Bank Hold $290 → $455
Jan-13-20 Reiterated Oppenheimer Outperform $385 → $612
Jan-10-20 Reiterated Piper Sandler Overweight $423 → $553
Jan-09-20 Downgrade Robert W. Baird Outperform → Neutral $355 → $525
Jan-07-20 Reiterated Credit Suisse Underperform $200 → $340
Jan-02-20 Reiterated Canaccord Genuity Buy $375 → $515
Dec-30-19 Reiterated Cowen Underperform $190 → $210
Dec-26-19 Reiterated Wedbush Neutral $270 → $370
Dec-06-19 Reiterated Morgan Stanley Equal-Weight $440 → $500
Nov-26-19 Downgrade China Renaissance Buy → Hold $346
Nov-11-19 Reiterated Jefferies Buy $300 → $400
Oct-29-19 Downgrade ROTH Capital Neutral → Sell $249
Oct-25-19 Reiterated Barclays Underweight $150 → $200