- TSLA stock recovers as market u-turns after hot CPI.
- Tesla CEO Elon Musk still set on Twitter takeover.
- TSLA bounces perfectly off support.
Tesla (TSLA) followed markets in making a sharp u-turn and reversing higher on Thursday following another hot CPI report from the US. Tesla shares closed up 2% at $221.72. Action in the premarket after the CPI report was looking ugly, but a massive short squeeze completely turned the entire equity market around.
Tesla stock news
Tesla stock has been suffering from rising rates, and that trend looks set to continue. Despite the equity market recovery, bond yields did not especially retreat on Thursday. Yes, the 10-year spiked above 4% and came back below the key level but only just barely. What appears to have happened was a combination of poor liquidity and overly negative sentiment in positioning. We had alluded to this in our weekly and daily notes but were surprised at just how powerful the reversal was.
We may see a period of stabilization now ahead of earnings season. So far the early trends appear to show companies at the lower end of discretionary spending are faring well. Pepsi (PEP) and Domino's Pizza (DPZ) have so far shown that customers will still spend on the lower end of the scale. It remains to be seen how higher-end discretionary companies fare. In this regard Apple (AAPL) is key. Are consumers willing to spend on an expensive new iPhone or will they just opt for a few more pizzas and Pepsis instead?
We then of course have the whole Twitter (TWTR) saga still weighing over the Tesla stock price. Speculation continues daily on if the deal will proceed and how Elon Musk will fund it. Will he have to sell more Tesla stock?
We already had a decent sell-off in Tesla on the back of its delivery numbers at the start of this month. Now we do not have long to wait to see how the bottom line was affected. Tesla earnings are out on October 19. I believe the market will already have priced earnings down, so the risk-reward may be skewed higher.
Tesla stock
Technically, Thursday saw a perfect bounce from support at $207. That is the key level as a break will likely see a test of $160 at the bottom trend line and also the 200-week moving average. Holding $207 is key and should then see a move to $254.
Tesla (TSLA) daily chart
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