Here’s the update on Tesla ($TSLA) from yesterday’s video – July 27, 2021
TSLA
I want to talk about Tesla ( NASDAQ: TSLA ). Yesterday I posted coverage on the same stock in the Free Chart here and I just want to follow up. What I mentioned yesterday was, this thing, as always happens, the “Teslonian” comes in and says, oh my gosh, it’s earnings and I’m going to buy this stock. It happens literally every time.
Look, the stock has been moving higher for quite a while so I am the last guy to take issue with Tesla ( NASDAQ: TSLA ) bulls. You’re right, no question about it. Somebody who bought the stock, and you are a true believer, you know, you stop going to church because why the heck do you need to, here’s your god right here. Who am I to criticize?
I will say this, typically on earnings reports the stock gaps up because people say, oh Tesla ( NASDAQ: TSLA ), I’m in. But then that is short-lived buying because institutions don’t trade that way. And it’s institutions that are actually going to push your stock up or down. And if they’re not pushing it higher they may not necessarily be distributing the stock. They may not necessarily be pushing the stock down.
Listen to me, I’m giving you pearls here, but if they are not pushing it higher then the stock is just going to fall because it’s heavy. As the saying goes, “the stock will fall of its own weight”. I don’t know what that means. I don’t know why that’s the saying but that is the saying.
All I am saying is, if there are not aggressive buyers for a stock at close to the current price, then because stocks always have to trade, and then do while the market is open, then the stock is going to start falling because of the lack of bids. The offers are going to have to hit the bid and then as that happens and the bids start dropping away more because remember again, institutions aren’t buying for whatever reason.
Maybe they are full up, maybe they just don’t want to buy the stock. Maybe somebody got COVID and they are trading from home and their Internet connection went down, whatever. There is not a concerted move of money into the stock to soak up the supply so the supply is going to start overwhelming the stock price and it is going to fall lower. That’s just the way markets work.
And so here, in my view, you got a bunch of retail buyers yesterday getting all lathered up to buy the stock and now they are underwater. Not a lot, it’s not like the stock fell out of bed, so to speak. It’s holding above the 50-day moving average. The 50-day moving average is finally starting to trend higher because as time goes on, over the last 50-days of prices, this kind of stuff here gets out of the math. And this starts to get out of the math for the 50-days and then you’ve got more of this kind of stuff. And so the 50-days is kind of dragged higher.
So there is nothing wrong with this stock technically. I wouldn’t buy it here, because first of all, it’s come down a fair amount from the top, which is not what you want to see strong stocks do, they’re not strong stocks. Second of all, the 50-day moving average is below the 200-day moving average, that’s not what I want to see. I don’t like the fact that the stock has just continued to bounce along this 200-day moving average without finding much support. And also, the stock is not really yet forming the bottom of what should be a base.
I just think it’s really early to buy this stock here if you are interested in it. Also, if you just want to look at it this way, the stock is still in a basing pattern. This is a pattern that has gone on for over half a year, just kind of been a basing pattern. And so if we look at it on the weekly chart this is the thing, assuming the stock continues to ride on to victory on coal produced electricity, though you feel real good about it, it’s going to probably take a while for the stock to start moving higher and complete this base here.
I think you are early, to be buying this stock right now. If you are a longer-term trader, nothing for you to do, it’s all good. So you have got to pick your own time frame.
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