Today U.S. equities squeaked out nominal gains on the major indices, led mostly by tech and a strong rally by Tesla. With the unemployment rate being announced on Friday, this week could be setting up the next sharp move to the downside, as it is suspected that the unemployment rate is going to increase substantially from the the 4.4% reported in April. To dampen matters for the bulls, the Fed announced further cuts to its QE bond purchasing...hmmm. Today, we go over Tesla and why I believe bulls should be concerned.
Tesla Bulls Punk'd!
The stock that stood out today was Tesla, Inc. which posted an 8.54% gain as it attempts to break overhead resistance. This resistance level is not joke and may actually take a few attempts to break through. Why the "big" rally? Technicals. Tesla, was oversold on lower time frames and if more downside is to come sometimes price must return to a median. On the chart below you see the Tesla 4-hour chart and I highlight two key points on why I believe the Tesla rally will be short lived.
During the Tesla parabolic run-up, notice how the volume differs to the current volume on a similar rally. The volume is currently descending. This should provide pause to the bulls. Although eh true direction of the Tesla stock is to be determined for the long term, there are clues that this rally is part of a larger consolidation. Furthermore, proof that the short term rally could be short lived is Chaikin Money Flow (in green). Currently in the negative, the last time it remained at neutral, a -45% ensued. I would be careful building any bullish positions at these levels. Levels I am watching for buying begin at $450. Bias: Bearish.
Going Forward
Going forward I will be selecting one chart to review and it'll be a bear or bull call. It'll be one post a day until I can can figure out my schedule. I am also experimenting with the kind of content that people will enjoy. Thank you if you have been following me the past few weeks. I will be providing more content one my website goes live! If you have any suggestions pleas feel free to post in the comments.
Tesla Bulls Punk'd!
The stock that stood out today was Tesla, Inc. which posted an 8.54% gain as it attempts to break overhead resistance. This resistance level is not joke and may actually take a few attempts to break through. Why the "big" rally? Technicals. Tesla, was oversold on lower time frames and if more downside is to come sometimes price must return to a median. On the chart below you see the Tesla 4-hour chart and I highlight two key points on why I believe the Tesla rally will be short lived.
During the Tesla parabolic run-up, notice how the volume differs to the current volume on a similar rally. The volume is currently descending. This should provide pause to the bulls. Although eh true direction of the Tesla stock is to be determined for the long term, there are clues that this rally is part of a larger consolidation. Furthermore, proof that the short term rally could be short lived is Chaikin Money Flow (in green). Currently in the negative, the last time it remained at neutral, a -45% ensued. I would be careful building any bullish positions at these levels. Levels I am watching for buying begin at $450. Bias: Bearish.
Going Forward
Going forward I will be selecting one chart to review and it'll be a bear or bull call. It'll be one post a day until I can can figure out my schedule. I am also experimenting with the kind of content that people will enjoy. Thank you if you have been following me the past few weeks. I will be providing more content one my website goes live! If you have any suggestions pleas feel free to post in the comments.
