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Tesla Inc (TSLA) - January 26, 2024


SIACharts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming relative to their peers and/or their benchmarks and should potentially be avoided. Staying away from stocks that are not attracting or even losing capital support can help investors to avoid areas at higher risk of absolute declines and relative underperformance and to reduce negative event risk.

Despite being one of the so-called “Magnificent Seven” stocks (although it could get kicked out, the way it has been going), Tesla, Inc. (TSLA) shares are in dead last position at the bottom of the Red Unfavored Zone in the SIA S&P 100 Index Report.

Yesterday in the wake of a disappointing earnings report and guidance, the shares plunged 12.1%. The relative strength warning signs had been out for Tesla long before that. The shares dropped into the Red Unfavored Zone three months ago on October 25th and since that time, TSLA is down 14.02%, while the S&P 100 Index is up 17.27%. Even year-to-date prior to the January 24, 2024 earnings announcement TSLA was down 16.3% while the S&P 100 Index was up 3.25%.

Candlestick Chart Accelerates Downward:

Even before yesterday, Tesla (TSLA) shares had been under distribution for a while. Since the shares peaked near $300.00 back in July, distribution has become increasingly apparent with a downtrend of lower highs emerging and the shares dropping under their 10-week moving average.

As a result of yesterday’s selloff, TSLA broke down below $200.00 and completed a bearish Descending Triangle pattern, signaling the start of a new downtrend. Next potential support appears at the spring 2023 low near $150.00 with the $200.00 breakdown point reversing polarity to become new resistance.

Point and Figure Chart Stages a Major Breakdown:

Tesla (TSLA) shares have been quite volatile over the last several years staging a number of major upswings and downswings. A big upswing in the first half of 2023 got the shares included in the “Magnificent Seven” and contributed to a strong return for the year, but the chart shows that the shares peaked back in July and have been under distribution, establishing a downtrend of lower highs, since then.

The first sign of trouble came in October when TSLA staged a Double Bottom breakdown and sold off. A late year market bounce helped the shares to rebound into the end of the year and even generate a bullish low pole warning, it has become clear that was a bear market bounce, however as the shares topped out at a lower high earlier this month and had already been retreating prior to the earnings report. Yesterday’s selloff took out the November low, completing another bearish Double Bottom pattern and signaling the start of a new downleg.

Next potential support appears in the $150.00 to $157.25 range, an area where a round number, several vertical and horizontal counts and previous column highs and lows cluster. Initial resistance on a bounce appears near $199.40, just below the $200.00 round number, based on a 3-box reversal and a retest of a recent breakdown point.

With a worst possible bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 0 out of 10, TSLA is exhibiting short-term weakness across against the asset classes.

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