Tesla slumps but bulls still hunt

Tesla stock slumps over 3% on Monday.
TSLA breaks some key support levels but holds $730.
Tesla is ready to buy the dip on Tuesday.

Tesla stock is a high beta one as we have mentioned before. What this means is it moves more than the underlying index of which it is a member. In this case the S&P 500. Tesla proved its point yesterday with a fall of nearly 4% while the S&P 500 Index was down less than 2% by comparison. When the rally comes though, if it comes, Tesla should outperform on the way up. So is it time to wade in and buy this dip? Well, some signs are positive such as the lack of a lower low. Tesla just about held onto a small bullish sentiment by not beaking the most recent low at $708.85, yesterdays low was $718.62. The stock rallied over $10 into the close as some bargain hunters entered the fray. The stock has been outperforming the broad market lately and this despite some headlines about Cathy Wood selling for ARK funds. The amounts are small but it still does not read well that one of the biggest bulls is selling. 

Tesla 15 min

Tesla key statistics

Market Cap
$728 billion

Price/Earnings
394

Price/Sales
23

Price/Book
29

Enterprise Value
$756 billion

Gross Margin
22%

Net Margin

6%

52-week high
$900.40

52-week low
$329.88

Average Wall Street Rating and Price Target
Hold, $704

Tesla (TSLA) stock forecast

Monday’s move is ugly on the chart and puts the recent strength into question. But we can see at least that we set a higher high so the trend remains in place even if it is weak. Stocks trading below the 9 and 21-day moving averages are not ones that we would be bullish on the short term. That does not mean there are no opportunities. We would be tempted to buy a break of $740 as that erases most of the loss from yesterday and gets the stock back above the 9-day moving average. But retracing to $740 only gets the stock back neutral, better to see a break of $760 before the bulls return in our view. Failure to break $760 means a lower low and so the start of a bearish trend. Breaking $708 would then confirm this new trend. 

FXStreet View: Bearish below $708, neutral now unless the stock breaks $740 but not strongly bullish until $760.