Tesla Stock Price Down 21%! What Next After Worst Single Day Loss?

by birtanpublished on October 2, 2020

this week the share price of tesla
had its worst day ever dropping by more
than
21 so does this mean that investors
have put the brakes on tesla or is it
just
charging up for its next move out to
fresh all-time highs
they're seldom a dull moment when it
comes to uh the tesla share price here
here we've got tesla going back
to the beginning of the year all
adjusted because of the recent share
split
which i'll talk about as we get into
this
but uh started off uh the year around 80
a share after the adjustment uh pushed
as high
recently trading up above uh 500 a share
and we've seen this sharp reversal uh
since then you know we had seen
fantastic growth in the tesla share
price it's still up
uh about four-fold for the year today
but
clearly a big turnaround let's just take
this down to a short-term chart
so here's the size of the slide just
this month so
so started off in september moving out
to fresh all-time highs
and then since then you can see just
just the enormity
of this slide sliding down what almost
40 percent
uh from those all-time highs and as
usual the question is down here
um is it a buy is this just a great
buying opportunity
and the normal acceleration will return
for the tesla share price
we did actually have a trade on tesla we
got stopped out on the way down let's
take a quick look at that
so got stopped out on that that big
sell-off uh
in pre-market trading actually so got
stopped out for our
a couple of hundred pound loss on tesla
let's look at what else we've got going
on
so the usual uh mix of trades natural
gas
are still doing well i think we've got a
video on that coming soon
the euro trades have given up um some
profit we've seen dollar strength last
couple of days
and the crude oil short down here us
crude oil
still did okay but back to tesla i think
it's really interesting down here and i
do want to get a trade on we need to
give it a bit of room because the
volatility
but we'll come back and look at things
uh in more detail but uh for now i'll
talk a bit more
about what's been driving it then we'll
come back and see what our trade looks
like
hello i'm david jones from capital.com
and i thought we'd
we do an update on tesla uh given the
enormous volatility
we've seen uh over the last week you saw
you saw on the chart that sort of moves
uh that was saying so i thought well
let's let's take a look at it with a
fresh pair of eyes
now it's come crashing down uh from
these all-time highs
so as usual in this video i'll talk
about what's driving it what to look out
for then we'll go back onto the platform
and see if we can get a trade on if
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push out in about four
interesting videos uh a week on the
various different markets that we cover
but let's get into tesla um let's talk
about what's been happening and what to
look out for so
um up until we saw that all-time high
hit
uh last week the share price had risen
by
six-fold so far this year incredible
performance
very popular i think with lots of uh
retail private
investors around the world and although
some people were saying well look surely
this is a bubble
we saw the price continue to rise until
recently
then on the 31st of august we had a
share split five for one
share split apple have done a share
split as well companies do this
um the argument behind it is to try and
um
get get better liquidity for their
shares if a share is trading at
two and a half thousand dollars a share
you do a five for one share split
and then it's 500 dollars a share it
makes it more attractive is the argument
to a wider group of investments so we
saw
that share split for tesla at the end of
august
and then coming into september the 8th
of september so this week
we've seen the worst day ever for the
tesla share price
in terms of performance it slid on
tuesday by
21 so a fifth of the value tesla
was wiped off if you go back to 2012 i
think its worst performance
before this was minus 19 uh in a day and
if we know from just watching tesla
day to day this is not a share for the
faint-hearted you know it's a
particularly
volatile share big swings and clearly
this week has been no different so
weighing on sentiment for tesla
um a couple of things um first of all
it's not going to be added to the s
p 500 index this time round the s p 500
index is a broad index of u.s
uh stocks inclusion in the index can
mean
that um it widens your appeal to fund
managers
institutional investors it was hoped by
tesla shareholders that following
four consecutive quarters of uh profits
it would go
into the index uh but the the committee
who decide
uh what goes in and what doesn't go in
uh have said no
to tesla this time around so that may be
disappointed some investors
we also need to view this at the wider
backdrop
of what's going on in markets now just
in the last three days if we look at
the nasdaq 100 so a tech biased
stock market index that's fallen 11
over over the last three days you know
we've seen tech stocks
really lead uh markets higher since the
march lows the nasdaq had been setting
fresh all-time highs
since june we've seen a really sharp
reversal of fortune
uh in september so far so we do need to
view the falls of tesla although they're
more than the index
you know in the context of this shift in
sentiment but is it just a temporary
blip this is what's always interesting
when we see uh you know sudden sharp
moves against the trend is this just a
buying opportunity
we also heard earlier this week gm
general motors so the old traditional
uh car company is taking an 11
stake in an electric vehicle vehicle
company it's not tesla
it's nikola uh we talked about those
when we looked at uh evs uh a couple of
weeks ago
but so they're taking an 11 stake uh to
help develop
uh nicolas electric uh truck
that's going to rival potentially
tesla's uh cyber truck so perhaps
there's again
a bit of investor nerves around that but
but however we look at
plenty of these electric vehicle
companies at the moment and tesla in
particular
the share price i think continues to be
a future bet
on how you see uh the performance and
growth and
domination of tesla continued domination
of the electric vehicle sector so it's a
really interesting one we'll see what
the trade is in a second but
let's talk about the levels so the
obvious big level right on the upside
502 dollars a share uh all-time highs
it's a long way away
in percentage terms but it's only a week
or so that the share price is up there
then we've got some
shorter term levels set on the way down
i think if we're looking at
the next potential support i think 300
is an obvious one something of a
psychological level if it did trade that
high
it would mean it's 40 off the high so
let's see if we can use these levels
to set a trade up i think we need to
take maybe a slightly different approach
to tesla when compared to trading other
things but i definitely want to set
something up
let's get back on the charts i think
what's interesting here
let's take a longer term look at tesla
looking on on the daily charts um
we've got this trend that's been in
place since the march lows so uh on the
adjusted price
from uh where were we around about
eighty dollars again eighty eighty five
dollars a share
around about that this great trend since
then and of course the price
accelerated from mid august uh from
these levels of around what 270
a share blasting up through 500 and and
we're back you know we've traded
as low as 307 recently so to me
it is almost an obvious one that the
trend is
uh still up what we're seeing at the
moment
it's been particularly vicious but it is
just a correction within that overall
trend
we do have an awful lot of support
coming in
off these early july lows around
260 a share through to 280 so for me
this is an obvious area
to think about putting my stop-loss in i
think if we start pushing below 260
that trend line's gone and we've broken
the major support and i think the risk
is perhaps we have
a much less exciting time for the the
tesla
uh share price if we take a look at the
rsi uh
down here so we've pushed back not quite
too oversold but we got we got
reasonably close the closest it's been
we've got to go back to march
to see the rsi down at these levels this
is a 10 day rsi
so i am tempted to be a buyer i think
there's a couple of things we could do
here though let's just flip this over to
an hourly chart first of all i think
what's interesting if we look on the
hourlies
clearly we are from a technical point of
view we're still in this corrective
phase you know we've still got lower
highs lower lows
so i think the more cautious approach
here would be
to wait for this um this trend to come
to an end you know to keep an eye on
this trend line
uh currently coming in around what 380 a
share so about 10
higher than where we are now so if i was
watching this day today
that's what i would probably do i'd wait
for this trend line uh
to break make sure it's a valid breakout
perhaps give it i don't know a day or
two if we're looking on the hourly chart
then look to buy in so i suppose if we
were watching this
for the rest of the week and we saw it
move through 380
we can have a much closer stop then good
place to stop uh the other side
of the most recent low that most recent
low is around about 307 so i think
there's that's maybe
one alternative here rather than just
jumping in and buying it now
and having the wider stop you know out
the other side of 260.
so i think that's going to be the trade
i'm going to set up and i'm going to
review this
on a day by day basis based on that
trend line so what i'm going
to do i am going to put an order to buy
if we see the price push up to 400
a share now 400 it's 50 away from where
the market's trading now
we're in pre-market trade at the moment
but it is only
um just above the highs from yesterday
so at the time of recording the video
you know we saw that big sell-off
so for me i'm going to be a buyer if it
gets to 400.
if it gets to 400 to make it easy i'll
put a stopper at 300
the other side of the low from yesterday
these are wide stops
but you know with the volatility with it
moving 20 a day
i need to give it a bit of room if it
doesn't get filled at 400 today
and that downtrend continues i'll look
to revise it
based on where the latest trend uh is so
pull that order down and adjust the
stock but for me
that's the trade that makes sense at the
moment i think if it can regain 400 it
looks like maybe this this shock
reaction
is over and we return to more normal
trading
so let me just set that up so i'm i'm
ready to go i'm going to buy 3.3
if the price gets to 400 so i want to
see some strength i want to buy into
strength
if it carries on falling this order
won't get filled uh if that order gets
filled put a stop at 300
and it's the normal risk of 255 uh well
250 pounds is what we do at the moment
isn't it
from a risk point of view and you can
see i can buy fractional shares here
so i'm ready to go let's uh place the
start place the order
to buy if it gets to 400.
that's it the order's in so we're going
to buy 3.3 of tesla at 400.
looking at the market sentiment here you
can see not surprising most people
still pretty bullish uh on tesla 89 of
our clients who've got a trade
on tesla are long at the moment 11
are short so um they could well be happy
depending on where they got short
and i think it is really interesting up
at these levels
i think it's always difficult when we
have a correction like this to have the
faith in the trend but you know if you
follow these videos for a long time
i'm a big fan of following these major
trends so i am expecting
some stability to come back in for tesla
ahead of this 280
sort of 320 area over the next few days
i'll monitor this order
day by day and if the downtrend
continues i'll continue to drag it down
just above that downtrend line but it's
going to be really interesting to see if
we do see the buyers
come back in i think we will but maybe
it takes
a bit more than one day to turn things
around and i think it's only if we start
to lose this old
260 280 support do we have to worry
about
a deeper sell-off so it may be some time
before we see 500
again but a really interesting one to
watch over the next few days
that's it for this update we'll see what
the next few days bring we will be back
again of course
to take a look at tesla but for now from
me david jones and
capital.com good luck with your trading
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