Tesla - TSLA, It's Nail Biting Time
Updated
The next 5 days are all about how the voting will go for Elon Musk's 2018 Compensation Package. In this Daily Chart there is a lot going on and yet not a lot at all as far as movement. In fact the indecision with shareholders is like watching a movie on the edge of your seat because you just can't predict the ending. It's nail biting time. First of all there's an Inverted Head and Shoulder's pattern that can take the price all the way up to $255.33 if it breaks through 3 previous resistance lines and there is also the potential for the price to drop to around $158.26 and $138.80. Most active traders holding around 20% of the shares couldn't be bothered to vote, nor would they send their vote in by proxy. There are 3285 Institutional Share Holders representing nearly 44% of the vote and you can be rest assured every last vote will be cast. then there are also private long term shareholders that make up the difference so roughly 36% and I would dare say that maybe 1/2 will vote. That would be 62% votes will be cast and of that total I believe a slim majority at around 55% will vote in favor of Elon Musk's compensation Package. How though will the stock price be impacted? Well that's the Multi - Billion Dollar Question. On one hand you have an extra ordinary level of new share dilution that could push the stock price lower, and on the other hand to resolve this issue and pay him his Just Due's will regenerate Musk's focus on the company and it's flailing business activity with renewed direction and attention that has taken a back seat these last couple of years as EM delved into other area's of interest such as X, SpaceX, Neuralink, and most recently Xai to name a few. Between you and I I believe Musk will get his compensation and the dilution will for the most part be construed as inconsequential relative to the larger picture and thereby, most likely the price will again rise to my 3rd upward price target of $232.72 before the end of this year. The real conundrum though is; Do you buy shares now and take the risk hoping that the price will go up even though it could drop sharply, or do you wait for the outcome and miss the beginning of the move whether it's up or down before taking your position? I'll leave that up to you to ponder however I always like to err on the side of caution and would rather catch part of a move in the direction of my choice either Bull or Bear as opposed to simply making a large wager in advance because then your odds are only 50/50 whereas if you follow the new trend your potential win rate will likely be 90/10, and personally I'm All About Protecting My Capital.
Note
So what do we now know with Tesla now that the Shareholders meeting is over?
Well the Daily Chart looks more bullish than bearish looking at the indicators but overall appears neutral stuck within a trading channel. On the 2 hour time frame it appears to be more of a neutral stance or consolidation. The 15 minute chart however is looking weaker with a newly formed death cross after hours on Friday although it was on extremely low volume... Last is the weekly chart with multiple Doji candles... Once again I believe it's too early to call while all of the information coming out of Tesla gets fully scrutinized but with additional share dilution a fingertip away , much lower margins, shrinking market share, as well as a somewhat disinterested EV market my gut feeling is that any upward momentum at this point will be short lived and a Bearish trend will continue through this year.
Note
Now that some time has passed since the Shareholders meeting and EM's Compensation Package was approved again by the shareholders and just needs final Judicial approval we can see several things going on.
1) Shareholders are not concerned over the potential of share dilution otherwise the share price would have already begun to drop lower.
2) According to the Money Flow Index, there was a Bullish Break upward on June 12th, breaking the long term downward trend from late February meaning that Investor sentiment favors Accumulation of shares once again.
3) Since the 3rd week of April when the True Strength Index was at minus 28 until now it is at plus 7 and appears to be gaining strength, that to me is another Buy Signal.
4) Now, myself and all of the Wall Street Analysts have amply identified all of the negatives that Tesla has going against it, yet the trend is moving up. This let's us know 2 things.... First is that Investors feel that regardless of the current economic battlefield, the share price is at Fair Market Value - All things considered and that includes the known Quarterly Financials to be released on July 17th. Second is that knowing EM is now Here to Stay and will again become deeply focused on creating shareholder value, there is a keen interest to hold shares LONG TERM especially with the RoboTaxi to be Revealed in early August I don't believe that even the SHORTERS will hang onto those positions till then meaning that Covering could generate some additional bullish momentum.
** My Price Targets are set on the Chart at $197, $205 and $209
Finally....Notice the Moving Average Ribbon where the 7 day has broken above all others except for the 200 Day EMA which is around the $197 level. That to me is a really bullish signal and what I'm looking for is the candles to remain above the Black Line, the 7 day EMA to show that the trend is continuing.
Keep in mind though, the Trading Channel. Tesla still might swing High and Low within this Channel so there can be additional opportunity to Swing Trade Tesla and increase your Profits but for that you would need to monitor the price trends daily on a much shorter time frame.
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