- TSLA stock falls further on Tuesday as the sell-off continues.
- Tesla shortens delivery times for Model Y in China.
- TSLA breaks support at $281 so could signal more decline to come.
Tesla (TSLA) stock followed the broader equity market lower on Tuesday but underperformed as it closed 2.5% lower. Equities were slated for a higher open, but the follow-through was uninspiring and eventually the main indices settled for losses. The Nasdaq was the leading loser as it closed -1.13%, but all indices were down in the region of 1%. Tesla, being higher beta, suffered more. This trend looks set to continue as global equity markets revalue based on higher yields.
Tesla stock news
Everything is macro now, and stocks’ ability to individually outperform the macro environment is becoming harder. On Tuesday we got some pretty robust US economic data in the form of job openings and consumer confidence. Both were not as bad as feared, but this led bond yields higher. Bond yields are now higher than they were during the June lows in the US equity indices. Higher yields hit equities, and so it proved on Tuesday with a broad-based sell-off.
The odds of a 75 basis point hike are now looking like a done deal. Given its well known high growth and corresponding high valuation, it will be hard for Tesla to outperform while such a narrative exists. That is the reason for Tuesday’s underperformance. Overnight Reuters reported that Tesla has cut the wait time for some Model Y cars in China, but this will likely have little impact on the TSLA stock price in the current environment. We are all macro traders now!
Tesla stock forecast
The bear case remains the stronger argument right now. Trading is about probabilities, and right now that is the higher probability trade. Tesla has failed at the 200-day and is looking to break its 50-day moving average. It also failed at $314 resistance. We have a series of lower highs and lower lows on a longer-term time horizon going back to late 2021. To keep this trend intact, Tesla needs to have a lower high, which it looks to have done at $314. That should lead to a lower low at $200 or under. We got a bearish divergence from the $314 double top on the Relative Strength Index (RSI) and the Money Flow Index (MFI) that is still playing out. For now, I remain bearish and so remain short the stock. A break of $314 will cause me to reexamine my shorts.
Tesla stock, daily