Tesla Stock: Sell Signal After Non-Event (Technical Analysis-Downgrade)

Summary:

• Tesla, Inc.’s Robotaxi plans were a non-event, leading to a Sell Signal and a downgrade to a strong Sell, with expectations of retesting $182.
• CEO Elon Musk’s focus on X (formerly known as Twitter) and xAI suggests Tesla is a funding source for his other ventures, impacting stock performance.
• Technical analysis shows a drop in the SID signal and underperformance against the Index, with poor Quant ratings in Growth and Valuation.
• The market’s “buy the rumor, sell the news” play is evident, with TSLA’s price likely returning to pre-rumor levels.

Tesla, Inc.’s (NASDAQ:TSLA) plans for the Robotaxi turned out to be a non-event and still on the drawing boards. As a result, there was a Sell Signal after the event, and we think TSLA retests the recent bottom at $182, retracing the bounce on the good news that was expected but did not materialize.

Of course, CEO Elon Musk could come out with more specifics on the low-priced Tesla or monetizing the good news on robotics. Until something like that happens, we are downgrading TSLA to a strong Sell. Musk’s failure with X (formerly known as Twitter) and now another attempt away from TSLA in xAI leads us to believe that TSLA is a source of funds for his other interests. $56 billion in stock options will provide him with plenty of funds.

Here is our daily chart showing our SID Signal dropping at the top and the technical Sell signals just created below our proprietary Buy/Hold/Sell signal.

At the top of the chart, you can see our proprietary Stocks in Demand, or SID signal improving from a Sell to a Buy signal above the green line. This bounce was based on the market’s belief that TSLA would announce their Robotaxi. That turned out to be a non-event and created the Sell signals we see on the above chart. Since the dream that took it up from $182 is now gone, we expect the price to return to that level or lower.

We expect the dive in our SID signal to continue and break below the red line Sell Signal as it has in the past. Notice that the last time this happened, the price dropped to $182.

Notice the two gaps down in price, with the latest drop confirmed by big volume. In addition, TSLA is now underperforming the Index. Portfolio Managers cannot be in stocks that are going to underperform the Index in 2025.

We do our TA due diligence by going to SA’s analyst and Quant ratings. They all have a Hold rating. However, the latest SA analyst gave TSLA a Sell rating. Except for Profitability, the Quant ratings for Growth, Revisions, Momentum, and Valuation are weak. The combination of poor Valuation and weak Growth is usually deadly.

The old saw on Wall St. is “buy the rumor and sell the news.” That is now playing out with TSLA. The rumor turned out to be a non-event, and that typically means the price goes back to where it was when the rumor started. This is the game traders love and investors hate, unless they were smart enough to be selling into strength. They can still do that to a certain extent.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Short position through short-selling of the stock, or purchase of put options or similar derivatives in TSLA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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