Tesla Round Trip: Our Sell To Buy To Sell Signals (Technical Analysis Update)

Summary:

• Tesla’s Sell Signal reversed to a Hold Signal and then a Buy Signal, but is now reversing back to a Sell Signal.
• Portfolio managers rely on their trading desk technicians to optimize their timing for buying and selling, while small investors use charts.
• Seeking Alpha’s Quantitative Ratings show strong grades for Growth, Profitability, and Momentum, but weak grades for Valuation and Revisions.

Right after our last article, Tesla (NASDAQ:TSLA) popped on some surprising good news and reversed our Sell Signal. You can see this reversal of our SID Sell signal at the top of the chart below, as published daily to our subscribers. Our Sell Signal, below the red line, went from a Sell to a Hold signal and clicked off a Buy Signal at the green line. Now the MEME move is over, and it is reversing back to a Sell signal for a round trip. Investors have a longer term view and for that we have to look at our weekly chart with its long term uptrend in price. Is it about to breakdown or will the uptrend survive? Will TSLA retest the bottom?

Portfolio managers make their decisions based on fundamentals. When they want to buy or sell, they check with the technicians on their trading desk to optimize the timing of their Buy or Sell. Naturally, they want to buy on weakness and sell into strength. That is their discipline. Small investors don’t have a trading desk with technicians, so they need to consult a chart when they buy or sell, if they want to optimize.

We like to check in with Seeking Alpha’s Quantitative Ratings to find out the fundamentals that portfolio managers are using to make their decisions. They use fundamental analysts to help them do their due diligence. We use SA articles and fundamental Quant Ratings to do the same.

SA has good ratings for Growth, Profitability and Momentum, but weak grades for Valuation and Revisions. It is not unusual for growth stocks to be overvalued, as long as revisions are good. Growth stocks get hit hard when weak revisions indicate slow growth. SA ratings explain why price is dropping.

We, of course, are disappointed that our previous SID grade went from a Sell to a Buy Signal. However, being technicians enables us to trade the signals. We can take advantage of the market making a mistake, by using technical signals.

You can see what these technical signals were telling us on this round trip price action in TSLA. At the top of the chart is our SID score, and because it is a lagging indicator, changes in direction are very important. Changes in direction in SID are a leading indicator of changes in the SID signal.

On the above chart, you can see where our SID signal changed direction and started falling from a Buy Signal to a Sell Signal. We use technical indicators which lead our SID signal. You can see the red, vertical line, technical Sell Signal that we have drawn on the chart. It was triggered by the Full STO signal at the bottom of the chart. We use these two signals to sell.

Because of these Sell Signals, we expect price to break below the red arrow uptrend on the price part of the chart. This is what we expected last time. Could it change with some other unexpected good news? Of course, and our signals will reverse as they did last time. We reverse with the signals.

As of today we have Sell Signals, and we are going with those signals until TSLA proves itself. Naturally, this move down in the overall market is taking TSLA down. Index selling takes the good stocks down with the bad. Bottom fishing bargain hunters buy the good stocks when they are down and let the overvalued stocks fall until they are fairly valued.

We will wait to see where the portfolio managers think TSLA is a bargain and where they come in to start buying. Last time that was at $152, so we will wait for that price or a blue, vertical line, Buy Signal whenever that happens.

Naturally we look for confirming Buy Signals in the CMF, MACD and ADX shown at the bottom of the chart. We look for a change in direction in the CMF. We look for a crossover on the MACD. Lastly, we look for a change in direction in Demand and Supply on the ADX shown at the very bottom of the chart.

This time we will post the change in signals to this article. Sorry that we did not do it last time. You can always message me if you think the signals are reversing, and I will confirm and post.

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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.

Disclaimer: We are not investment advisers and we never recommend stocks or securities. Nothing on this website, in our reports and emails or in our meetings is a recommendation to buy or sell any security. Options are especially risky and most options expire worthless. You need to do your own due diligence and consult with a professional financial advisor before acting on any information provided on this website or at our meetings. Our meetings and website are for educational purposes only. Any content sent to you is sent out as any newspaper or newsletter, is for educational purposes and never should be taken as a recommendation to buy or sell any security. The use of terms buy, sell or hold are not recommendations to buy sell or hold any security. They are used here strictly for educational purposes. Analysts price targets are educated guesses and can be wrong. Computer systems like ours, using analyst targets therefore can be wrong. Chart buy and sell signals can be wrong and are used by our system which can then be wrong. Therefore you must always do your own due diligence before buying or selling any stock discussed here. Past results may never be repeated again and are no indication of how well our SID score Buy signal will do in the future. We assume no liability for erroneous data or opinions you hear at our meetings and see on this website or its emails and reports. You use this website and our meetings at your own risk.

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