Tesla Motors Inc (NASDAQ:TSLA) stock has not been doing well since the U.S. Elections. And based on the charts, The Street expects that the stock still has a rough ride ahead of it. Year to date, the stock is down over 24%.
Signs of weakness
The Street compared the performance of Tesla’s stock to the SPDR S&P 500 ETF since the beginning of November. Tesla’s lack of participation could be indicative of much bigger problems to come even though the post-election rally may be losing its importance. On Friday, the major indices have been scaling new heights, but Tesla Motors Inc (NASDAQ:TSLA) finished the day at just $0.30 above its lowest closing price since February.
Based on the charts, The Street says the automaker is threatening to break down from a descending triangle pattern. A close below $180 will break the lower boundary of the pattern, and will place the stock at an eight-month low. The bearish pattern projects the stock to the $150 area, quite close to Tesla’s year-to-date closing low of $143.
Second sign of weakness in the stock is the amount of difficulty that the automaker is having with its key moving averages. The stock fell in early October after colliding with both – its 200-day and 50-day moving averages. Both the moving averages were in the process of forming a death cross, notes The Street.
Look out for these indicators
Later in October, the electric car-making giant managed to break through its 50-day moving average in late October, only to drop sharply after crashing into its 200-day moving average. The stock plunged again last week after hitting its 50-day moving average. In such a scenario, traders may want to consider a strategy of betting against the stock when it rises to one of these moving averages, or both of these MAs.
Tesla’s MACD (moving average convergence divergence) indicator is disclosing a bearish pattern as well, in the form of a series of LH (lower highs). The indicator is also suggesting that the stock will move lower, which could break the descending triangle pattern. As per The Street, Tesla’s MACD is on the verge of flashing a sell signal as well.
What might worry Tesla?
The most recent controversy surrounding the Tesla Motors Inc (NASDAQ:TSLA) stock involves its accounting methods. The electric carmaker attracted the attention of the Securities and Exchange Commission (SEC) for using the “individually tailored” accounting practices, as per the WSJ.
So far, the electric carmaker has not been charged for doing anything wrong, but the SEC will be keeping a close eye on Tesla’s future earnings reports. This may make it even harder for the EV firm to engineer a strong report, just like it did last quarter.
In pre-market trading today, Tesla shares were in the green.
This article is not intended as individual or reader-specific investment advice. Do your own research and consult a financial professional, if necessary, before investing in anything.