Tesla can't catch a break (light?)! My thoughts on Week of 2/6Just when we thought TSLA was headed for a rebound, we were caught in a series of news that wasn't too hot for our favorite automaker: Everything from brake light recalls to billion dollar compensations rejected. In this Idea, I will detail my thoughts of the week, news that affected the stock, and my analysis for next week.
1/29 LAST WEEK:
The graph shows we've been on a downward channel for TSLA price action. Our purple line within the channel was our expectation from prior to last week (From Idea: ).
What I was not expecting was a continuous downtrend after Wednesday. Affecting news for this downtrend were:
Fed rate decision (priced in), and ruled out March rate cut.
Musk and $55 billion pay package
Possible relocation to another state because of above
Tesla dropped from "Magnificent Seven"
At a point on Friday, TSLA completely decoupled from SPY price action: While SPY was up 1% hitting another record high, TSLA was punished at -3%, until making a quick recovery to the top of the channel at the 0.5 fib mark at $187.90.
2/6 and on:
News, fed meetings, and price action/options flow lead me to believe we will have another choppy week.
2.2 Million vehicle recall on warning lights that are too small. (Doesn't seem like a big deal, but the word "recall" scares investors. )
Over 2400 Steering Complaints Escalated to investigation. (Yahoo Finance)
Tesla settles $1.5 million CA hazardous waste lawsuit (Yahoo Finance)
I also think that the Tesla relocation to Texas would be bearish due to the amount of work and opportunity cost associated to relocating.
With the laundry list of bad news, I don't think we will break for lower lows this week. I think we may have a sharp dip early in the week to the 0.236 fib line of $184. Throughout the week, we have several traditionally hawkish fed members speaking. Investors on the other hand seem poised with a bullish sentiment:
Options expiring 2/6 (per Barchart)
Put/Call Volume Ratio: 0.79
Put/Call Open Interest Ratio: 0.69
With the average call strike price sitting around $192, average put price sitting around $181.
The orange line shows my prediction to the price action based off all the above: An early dip (potential retest to $180), followed by breaking the channel sometime middle of the week, chopping through the rest of the week and ending on a higher note.
I will update with any news that I think may be relevant to TSLA.
