Skip to main content

Tesla Shares Slide to 18-Month Low: TSLA Stock Chart Review

Tesla (TSLA) shares are trending lower in 2016. It's only early February, but the stock is already down 26% year-to-date (Bloomberg stats). We'll review the chart and outline what this means for TSLA shareholders.

Having gapped lower and closed in the red on January 4th, the first trading day of the year, TSLA has continued to slide. Today, the stock is trading below $180 for the first time since May 2014, an 18-month low. Note: Tesla is expected to report earnings on February 10th.

Note the annotations on this weekly chart. TSLA failed to make new highs in the summer and fall of 2015 and has faded lower since. The previous lows, from $177-$182, are marked with green arrows. The stock is currently trading at $174, a level last seen exactly 2 years ago in February 2014, when TSLA was trending higher.

Tesla TSLA stock chart price Elon Musk

Having transformed the global car market with a truly sexy lineup of luxury EVs (electric vehicles), Tesla became one of the hottest momentum stocks of 2013 - 2014. The stock went on to reach a high of $291 in late 2014, after Elon Musk announced that Tesla would open source its patents in a drive to kick-start the electric car market and speed the development of an electric charging infrastructure.
Fueled by the excitement of new product launches for the Tesla Powerwall and the new Model X, TSLA made one last run to challenge its old highs. After failing to close above $285, the stock faded lower and began trading below its 200 day moving average in the fall of 2015.  

Here is a good Tesla video post that my friend, Olivier Tischendorf made in December 2015 highlighting key levels in the stock. He outlined some ways Tesla shareholders might manage their risk as the stock reached "a crucial level". TSLA was trading north of $225 when this video was released.


The topping and sideways consolidation of late 2014 - 2015 now seems to be turning into a "stage four" downtrend. While the stock may have a short-term bounce higher in the weeks ahead, or find longer-term support in the $115 area, we must be aware that its strong momentum phase and uptrend are behind us. 

So what does this mean for us, as traders and investors? Well, the risk with a high-profile former leader like TSLA is that its declining share price attracts "bargain hunters" who are hoping to buy a stock "cheap". Unfortunately, these people often buy dips in a trend that has already run its course. You can buy the dips in a strong uptrend and come out all right, but buying dips in a downtrend is a losing strategy. 

Why? Because a downtrend is a series of lower highs and lower lows. Will you have the patience and the capital reserves it takes to sit through these long declines? Yes, some share price rebounds are sharper and faster than others, but some stocks take years to base out and begin a new uptrend. Do you really want to tie your money up with a losing stock, or worse, average down into a loser, when you could preserve your capital and your wits as you wait for better opportunities to appear?

"The small investor is typically moved by ignorance and passion..." - John Train.

Yes, I'm a big fan of Tesla the company and its amazing co-founder, Elon Musk. Do I love the stock here? No

We must learn to separate the two, a company and its stock, or watch our money evaporate in some vain pursuit of "bargain hunting" fanboy-ism. Emotional involvement in companies is best avoided when buying and selling stocks. Falling "in love" with a company and its products means your judgement will be clouded when it is time to make crucial decisions to buy or sell the stock.

Related posts:

1. Paul Tudor Jones on Trading and Risk Management.

2. Marty Schwartz: Market Wizards Interview Highlights.

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.