Shares of Tesla (TSLA) - Get Tesla Inc Report were hit extremely hard Thursday following a disappointing earnings report. The stock finished the session with the second-worst performance in the Nasdaq 100 -- a 6.4% loss. This was TSLA's biggest one-day loss since last June and effectively ended a powerful 11-week bull run. The damaged stock will likely drop further in the near term.
Unlike the bulk of the market, TSLA remained heavy after the election. The stock had been drifting lower since the beginning of August and, by early December, appeared headed for a fresh down leg.
Tesla managed to hold support near the November low and by mid December was back in rally mode. A break through a key overhead trendline on December 13 was just the spark needed for a major move. By last week the stock had extended its rally off the December lows to a 60% gain and was retesting major resistance near the all time highs.
Tesla's post earnings breakdown has left behind an ominous top near the 2014, 2015 and now 2017 highs. The high-volume flush Thursday violated initial support near the January peak. More downside is ahead if this key zone is unable to hold on Friday. For patient TSLA bulls a deeper pullback will provide a very low risk entry opportunity. The stock has a very solid support zone in place between $241.00 and $237.00. This area includes the summer highs as well as an upward sloping 50-day moving average. Also nearby is the 1/3 retracement point of the rally from the November/December lows. If TSLA can regain its footing here investors should be very encouraged.