Elon Musk has a ‘super bad feeling’ about the economy. Should investors feel that way about Tesla stock?
Similar to how Microsoft (MSFT) – Get Microsoft Corporation Report tripped up the market on Thursday, Tesla’s (TSLA) – Get Tesla Inc Report Elon Musk is playing a role in Friday’s action.
Just as Tesla stock was starting to trade better on the long side, today’s news has it spiraling lower, currently down about 8%.
The fall follows comments from Musk, who said he has a “super bad feeling” about the economy. As a result, he wanted to pause hiring and trim around 10% of Tesla’s 100,000 headcount.
He has reportedly clarified that stance, implying that the 10% reduction applies to salaried employees, as the company has “overstaffed in many areas.” Tesla reportedly plans to keep hiring hourly employees.
The news also comes on the back of a better-than-expected jobs report for the month of May, which was released earlier this month.
It also comes a day after Ford (F) – Get Ford Motor Company Report announced plans to create more jobs related to its EV business.
Now bulls wonder, can Tesla stock shake off Friday’s dip?
Trading Tesla Stock
Daily chart of Tesla stock.
Chart courtesy of TrendSpider.com
Tesla stock was caught in a nasty downtrend, stemming from its early April highs down to its late-May low. The thesis that it could buck the overall selling pressure in the market proved false.
Shares did not fall in seven straight weeks like the overall market, but they did fall in six out of seven weeks while losing more than 45% of its value.
However, as of Thursday’s close Tesla stock was doing an excellent job of consolidating its recent gains while holding above the 10-day and 21-day moving averages. Additionally, the $725 to $735 area was proving to be meaningful short-term support.
Then Friday’s news hit. Buyers tried to gobble up the opening dip, but the rally was short-lived and the stock took out its session low, then lost all of the levels outlined above.
Now it sits just above $700, which was the prior 2022 low before the late-May breakdown.
If this level — which is also the 50% retracement of the recent rally — does not hold, then it opens the stock up to more selling pressure. Specifically, a move below $685 could put the low back in play down near $620.
Should $700 hold, bulls will want Tesla stock to reclaim the 10-day and 21-day moving averages, which would potentially put $770 in play, then this week’s high near $792.
Above that level and we could see a larger push, possibly up to the 10-week moving average and the 38.2% retracement.
