Amid the recent slide — and perhaps one could say it triggered the decline — is CEO Elon Musk’s recent selling.
That led to a near-5% decline in Monday’s session, followed by a 12% haircut on Tuesday.
Referencing when I said “perhaps” Musk caused the recent selloff, many will say that is indeed the case and there’s no need to leave it to question.
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That may be true in some regards, but the stock shifted into a parabolic state this quarter.
From Oct. 25 to the Nov. 4 high — covering just nine trading sessions — shares gained more than 30%.
From Oct. 1 to those highs, the gain swells to almost 63%, while the run from the Aug. 17 low made less than three months sit at more than 91%.
In other words, yes, the Musk headlines may have triggered the selling. But after such a meteoric run and after garnering a $1.2 trillion valuation near the high, Tesla stock was due for a correction regardless of which headline caused it.
Trading Tesla Stock
Look at how wobbly this name has been, as the volatility and headline risks have ramped up over that past few days.
We’ll likely see some “chest-pounding” by the Tesla bears, but don’t let them fool you — this stock has been explosive on the upside. The stock is up 150% over the past year and up over 1,300% over the past three years.
As one of the few U.S. companies to hit a $1 trillion market cap, it’s perhaps the furthest thing from “TeslaQ” one could imagine.
Despite the run, bulls are trying to buy the dip. Shares bounced hard at the 21-day moving average, but are threatening to lose that measure today.
If it does, this week’s low near $987 is vulnerable. If Tesla breaks below it, the 10-week moving average could be in play. That’s followed by the $910 gap-fill and the 50-day moving average.
On the upside, let’s see if Tesla can reclaim the 10-day moving average. A close over $1,100 repairs a lot of damage and opens up the $1,200 to $1,250 area.