Buy Tesla stock? + US market analysis

The Tesla share in the technical analysis taking into account an overall market assessment. Buy Tesla shares now?

At some point you have to face reality. The stock exchange is not a one-way street and every trend has an end. At the moment, stocks and bonds have historically the highest rating since the 18th century. At the same time, the interest rate level is extremely low. As soon as key interest rates continue to rise, and the Fed is planning to do so, there will be a time when the liquidity reduction will be felt. Then stocks could crash.

A global economy moves in recurring cycles. The current business cycle could be fully exhausted. The effects of the rate hikes will be all the more opaque. The Fed is firmly committed to this. Nevertheless, the US Treasury Secretary continues to expect future growth. There should not be a year without growth in the next five years.

Overheating is emerging in China

The Chinese stock market has fallen by more than 20% in the past few months. The reason is the extremely high debt of China. The market participants reacted to this and at least withdrew partial positions from the market. This reduced the risk. In addition, debt in China is not as obvious as in western countries. The Chinese government is said to be quite creative in hiding its debts.

Perhaps Trump will achieve more than is generally believed

There is still too much investment capital looking for interest. Thus, the USA is once again the focus of investors. Sometimes the US president appears to be an obstacle to the US economy. But you have to wait and see what the bottom line is. His "freakiness" around the trade tariffs with Europe seems to have an effect. After a lot of threats, the EU could now give in. In the best case scenario, tariffs will be eliminated on both the EU and the US side. Free trade is the best driver of economic growth. In this case, even the USA and the EU would be winners.

At the same time, there is a great incentive for shareholders to invest money in the USA because the US tax rates are reduced. This creates greater competitive strength compared to EU companies. EU companies have already lost competitiveness. The pressure on EU politicians is high. You would normally have to cut taxes as well. Higher corporate profits will also benefit the share prices in the US.

A look at the structure of the US stock market

With the Advance Decline Line (ADL) the difference will be of the rising and falling shares. Basically, every movement of the index should be confirmed by the indicator. If there is no confirmation, this means that the majority of the shares are behaving differently.

Image: Daily chart of the Nasdaq100 index with the Advance Decline Line (100 shares)

The upward trend is strong in America

In the Nasdaq100 chart, a simple wave count can be made. We can assume five waves in total. Three of them are upward. That means the Nasdaq100 index is currently in the fifth wave. The acceptance is supported by the ADL. The overall market indicator is pointing upwards.

A moving average of 100 periods is inserted in both the ADL indicator and the price trend. It is useful to look at the slope of the GDLs. The steepness says something about the dynamics of the market. In comparison, the GDL of the ADL is somewhat steeper than that in the price chart. It is a sign of the majority increase in shares.

As long as the majority of the shares increases, a share crash would be unthinkable. Specifically, there has never been a stock crash with an increasing ADL!

Buy Tesla shares?

In the asset managers' scene, there is increasing debate as to whether Tesla would ever be profitable. Fund manager Lee Munson recently described the automaker as a "money-eating monster". Wall Street has celebrated the ideas of Elon Musk (founder of Tesla) for many years. It was overlooked that profitability is not a matter of course, and there is fierce competition in the automotive industry. Asserting yourself there requires more than an idea. Tesla promises growth and profit and has yet to achieve any of its goals. The Tesla cars are good, but in the end all that matters is whether the company can make a profit.

Tesla does not deliver enough vehicles.

The problem is technical. The production numbers cannot be increased without neglecting the product quality. The financial data for the first quarter showed strong sales growth accompanied by a record loss. The analysts suspect something similar for the second quarter. Tesla has never had an annual profit since it was founded in 2003.

How big is the shortage of money?

There is a rumor that Tesla urgently needs to be provided with fresh capital. If this is true, then a capital increase is obvious. Tesla is still refusing capital increases.

A few days ago, it was announced that Tesla is asking its suppliers for support. The suppliers should reimburse part of the Tesla payments made. Tesla sells the request as an investment in the future...

Tesla is an object for shortsellers

The opinions on Tesla differ widely. Compared to the established car manufacturers, Tesla still lacks a lot of manufacturing experience. At the same time, Tesla's corporate valuation is extremely high.

For comparison:

Tesla: EUR 50 billionDaimler: EUR 63 billion BMW: EUR 52 billion General Motors: EUR 47 billion. Euro

Because of the high valuation, shortsellers repeatedly come up with the idea of ​​selling Tesla shares short and speculating on falling prices.

Overview of Tesla financial data

Years201420152016201720182019Revenues319840467000117582017028090Result before St.-318-934-746-2209-1083230KGV00000130

Figures: in million U.S. dollars The years 2018 and 2019 are estimated Tesla were devastating. At least that's what they thought... Because the stock price skyrocketed after the financial release, it turned out that the bad news was largely incorporated into the stock price. After the release, Tesla boss Elon Musk went on a conference call with analysts. He showed his excellent sales talent again. With enthusiastic persuasion, he again pulled the analysts on his side. Elon Musk now assumes that there will be positive numbers every quarter in the future. The company could only be persuaded by a severe recession.

The outcome of the conference was not long in coming. The next day the share gained 16%. It was a disaster for shortseller.

Initial technical situation for the Tesla share

Image: weekly chart of the Tesla share

The massive resistance stops the price swing

The last weekly candlestick appears very bullish. What you don't see is that there was a daily price gap after the publication of the latest financial data.

The OBV indicator is shown in the lower chart area. He reveals the technical misalignment in favor of the bears. The last move of the OBV (marked in gray) points steeply downwards and points to higher sales positions.

Given the high valuation of Tesla, the stock contains little imagination for higher prices. Thus, breaking the resistance at $ 360 seems rather unlikely.

The stock lacks a dormancy. That would be a phase where buyers could draw strength. The resistance at $ 360 is strong. Therefore, the energy is not sufficient if the price hovers below the resistance.

A calm with low volatility and low trading volume is necessary. Only when these two criteria are met can we assume that the current high price level will be accepted by market participants and that an attack on the resistance will be promising.

Tesla share: WKN A1CX3T or US symbol TSLA

Short signal:

Price target: US $ 250

Interim target: without

stop -Loss: $ 390

Trading conversion:

If you want to benefit from the short-term stock recommendation, you can buy the stock directly or work with derivatives. Note that derivatives include leverage and therefore increase the profit and loss potential. In extreme cases, a total loss is even possible.

Trading information:

Stop loss: The stop loss is initially set as an initial stop and has the function of a maximum Loss limitation.

Price target: The price target is the exit point for the forecast market movement.

Interim target: When the intermediate target is reached, the position is in profit. At this point we take a partial profit and we sell 50% of our position. At the same time, the stop loss is adjusted to the personal entry price. This enables us to close our position without loss, even if the market later turns against us.

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