- Tesla rally begins to run out of charge.
- Equity markets roll over, and TSLA is a high beta stock.
- TSLA is on target to trade below $300 by the end of the week.
Tesla (TSLA) stock lost ground on Monday as the recent rally in equities began to lose power, and as a result, most tech and mega-cap names lost ground. Tesla was not left behind, and it finished the week losing 1.1% but already doubled that on the first day of the new week.
Worries over what the Fed may say at the upcoming Jackson Hole symposium have led to risk assets being parked for now as yields have risen slightly. Fed funds futures have also moved to price in a slightly greater chance of another 75 basis point hike in September.
Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries
Tesla stock news
For now, Tesla is being driven by the broader macroeconomic environment. Yes, there were some conflicting news reports about price hikes for FSD being a potential headwind, but reduced delivery times for the Model Y are positive. Overall though most of that is just noise in the current environment. It is momentum and the technical picture that are the current focus.
Tesla stock forecast
Tesla has now drawn a neat double top in the chart from August 4 and August 16. Both sessions saw TSLA stock failing at the $945 resistance level. Double tops are technically negative. The target is the valley to peak ($840 to $945) and is triggered on a break of the valley. This gives a technical target of $735.
For now, this fits with the fundamental picture of a fading equity rally and risk-off sentiment. Technically, the move will not trigger until $840 (the valley) is broken. $840 to $735 is also where we can see a volume gap, which means less price acceptance allows the stock to move through this zone easily. Adding to the bearish view is the bearish divergence on those double tops. The Relative Strength Index (RSI) trended lower from the top of August 4 to 16.
Do no forget the 3-for-1 Tesla stock split on August 25 either means that Tesla will trade somewhere below $300.
Tesla (TSLA) daily chart
The author is short Tesla.
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