TBI's Thoughts [6]: Tesla (NASDAQ: TSLA)... Is The Fear Overblown?
Hi everyone. Today I’ll be covering one of the Magnificent 7:
Tesla, Inc. (NASDAQ: TSLA)
On the monthly chart, we can see that TSLA is clearly in a long-term bullish uptrend, continuously forming a series of higher highs and higher lows. Since its IPO, it has experienced several trend markups (purple → blue → green).
Since 2020, TSLA has been consolidating and compressing within a bullish pennant pattern. Despite all the bearish headlines and the massive selloff the stock endured in 2023, it has remained resilient and continued to form higher lows. That in itself is a result of continued institutional accumulation.
Recently, TSLA attempted to break out of this pattern and push above the resistance trendline (in red). It succeeded briefly but was sold down into its short term support trendline (light blue). Following the robotaxi event, we’re now trading above the strong 214.71 level, which has seen significant bids in the past. The oscillators are resetting back towards oversold levels on both the Stochastic and RSI.
Over the next few months, I am expecting TSLA to push above the red trendline to fill the gap between 280.93-289.52. Interestingly enough, that is the only remaining bearish gap down on TSLA. In the long-term, I am expecting TSLA to head above 350s. The bullish setup only invalidates if we break and close below 214.71 again. In an extreme scenario, we could go back to retest the 157.54 bullish island gap support, and that would be a major, major dip buy level. But this scenario is unlikely given the setup we have been presented with.
Given the high volatility in TSLA options, I favour long shares more so than calls, unless the calls have expiries several months out. If your risk appetite is a little stronger, then TSLL (2x Bull Leveraged ETF) is another way to capture upside for cheaper.
The last time I covered TSLA was earlier this year in Feb. Back then, I was also bullish on TSLA. I continue to be bullish on TSLA.
Because I am not a fund manager or analyst, but just a retail player who happens to know technical analysis, I have decided to go back to my old system for rating chart setups.
Sentiment: BULLISH
Invalidation: Close below 214.71
Summary (with Price Targets - NFA):
Bullish pennant configuration with a short-term price target of 289.52 (closing the last remaining bearish gap down) and a long-term price target above 350s
A close below 214.71 most likely sees a structural breakdown and a move back towards the 157.54 bullish island gap support, although this scenario is unlikely given recent price action
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