Tesla stock is down hard on Monday, causing traders to wonder whether new lows are on tap. Here’s how to trade it from here.
Tesla (TSLA) – Get Free Report stock has not had an easy time this quarter and Monday is no exception, with the electric-vehicle leader’s shares down 5% at last check.
The automaker has simply not been able to find its groove.
Disappointing quarterly delivery results and underwhelming earnings set a bearish tone this quarter. Combined with Elon Musk’s takeover of Twitter and worries about the economy in China, a key market for Tesla, it’s simply too much for investors.
On Monday the shares are sliding on reports that the company will cut its production in China.
Other Chinese EV stocks, like Nio (NIO) – Get Free Report and Li Auto (LI) – Get Free Report, got their own bad news this morning as the Canadian Pension Plan lowered its stakes in the companies.
Tesla stock recently hit 52-week lows on Nov. 22, and after a bounce, the shares are again under pressure. Are new lows in store? Let’s look at the chart.
Trading Tesla Stock
Daily chart of Tesla stock.
Chart courtesy of TrendSpider.com
A few weeks ago, I mapped out the $150 and $167.50 levels. As we focus on the latter — with a little help from hindsight — traders can see just how critical that level was.
Not only was it a key breakout level, but it’s also where the 61.8% retracement comes into play.
With today’s move lower, Tesla stock is trading back below the 10-day and 21-day moving averages, as well as all its notable daily moving averages. If the shares break below $180, the odds that it will retest the $167.50 level greatly increase.
A break of the 2022 low opens the door down to the 50-month and 200-week moving averages, as well as the monthly VWAP measure. Below all these marks is the key $150 level, which was also a major breakout level.
On the upside, Tesla bulls need the stock to regain the 10-day and 21-day moving averages.
If it can do that, last week’s high at $198.92 and the key $200 pivot is in play. For what it’s worth, the 50% retracement of the current range comes into play just under $202.
In that case, a move over $202 — and thus all the levels listed above — opens the door to the $210 to $213 area.
The bottom line? Use caution with Tesla stock unless we see lower prices or a move back above the short-term moving averages.
Anything in between is a lower risk/reward setup.
