TSLA: Neutral to Slightly Bullish Next Two Weeks

1월 3일

Happy New Year everyone! This short video explains the technical view for TSLA as we start 2024. From a technical standpoint alone, its difficult to be wildly bullish or bearish right now. There may be other fundamental or macro reasons to take a more bullish or bearish view in the intermediate to long term. In short, neutral to slightly bullish makes sense over the next couple weeks for this stock.

Best of luck!

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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.

Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.

DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.

1월 4일

노트

GammaLabs posted on Twitter today about CTAs being max long equity markets and won't be able to chase much higher. This positioning information is helpful at times. While markets may be helped by seasonality for the next couple of weeks, the upside may be limited to SPX 4750 to SPX 4800 given positioning having been so stretched to the long side into YE 2023.

In any case, to get some updates on gamma and positioning, I believe GammaLabs free market newsletter (the Market Wrap provided after most trading sessions) can help. This account is one of my favorite follows. One can sign up for Gamma Labs' free evening email newsletter—often on positioning and major global news affecting financial markets. There are lots of interesting market updates even available in the free newsletter.

Again, if CTAs were max long at the start of this year (yesterday) and if SPX 4700 does not hold, then markets could be under pressure soon. This environment may make it harder to justify the upside case for TSLA beyond the very short term.

For now, 4700 SPX held firm on January 3 though it has looked weak last 3 days. Let's see how the week closes.

1월 13일

노트

Within one trading session after this video, price broke below the risk level identified in the video, i.e., the VWAP from the July 2023 high.

Peter Brandt, an wise and expert trader and one of Jack Schwager's Market Wizards, wrote a while back that "95% of the edge for technical analysis is in the area of risk and trade management." I wholeheartedly agree.

Further, just because the risk level was broken does not mean that TSLA won't run a bunch of stops to the downside and then push higher later—it still could easily do so.

As a side note, it helps to have a risk level that is close to where price is. That is what this video attempted by explaining that the near term (2 week) upside thesis is "wrong" below VWAP from July 2023 (which was at $243 at the time and very close to where TSLA traded). Although the risk level will be broken more often when the invalidation level is very close to the current price (or entry), it fosters patience to wait for the price to become as extended as possible in a retracement within a trend (to the upside or downside) to get as close as possible to a given invalidation level. Here, it would have helped to have an invalidation or risk level that was a bit lower than where I suggested. But even that could fail as well. This is the nature of trading and risk management.

Finally, why keep a risk level or invalidation level close to where the price is? This keeps risk small and gets you out quickly. True, it also means a higher percentage of ideas will be invalidated than if more distance was permitted between the current price (or entry) and the risk level, i.e., if more room is given to price to move against the thesis. If you want to give volatile ticker a lot of room, this means the position size has to be extremely small. Stated differently, the distance between the entry and the invalidation level is small (e.g., only $1.00), the then position size can be quite large while still managing risk well. If the distance between the entry and the invalidation level is large (e.g., $50), then the position size must be smaller to manage the same level of risk.

In short, the upside thesis I presented has become more tenuous, but it has not quite yet been invalidated. The upward trendline from January 2023 lows held as support last week. But it could break.