TSLA Technical Analysis & Roadmap

[dl003]

I'd like to start a thread to post technical analyses of TSLA where I have all my charts and rationales in one place. My TA consists of moving averages, patterns, momentum indicators, Elliott Wave, and timing exclusive to Tesla events & news. I look at the chart from a bird-eye view first as TSLA for me is not a short term trading strategy. I want to know where the stock is in its mid / long term cycle before deciding on what kind of short term trend it is currently in. Having worked on TSLA everyday for the last 2 years, I can say with confidence that this is one of the most complex structures I've seen. As such, no matter how confidence I am at any given moment, I can always go back and change my fundamental view if better information becomes available to me. I won't be able to keep this updated everyday but I'll try my best. Please feel free to ask questions if you have any.
If you're new to Elliott Wave, please use this resource Elliott Wave Theory: Rules, Guidelines and Basic Structures
It is packed with essential information. Things may not make sense at first but they eventually will.

 

[dl003]

I'd like to begin this thread by looking at where we are in this correction phase. The question everybody would inevitably ask is whether we have bottomed and if not, where the bottom is.
First off, we need to know what kind of cycle degree corrective structure we are in. Corrective structures are very complex as there are multiple types of basic structure: zigzag, flats, double threes, triple threes, etc... whereas impulsive structures are more simple. Different wavers can count TSLA differently. For me, before I give my conclusion on what kind of correction we're looking at, I'd like to go stage-by-stage.
The first stage is of course the portion of the chart that began @ 414 in early November and ended @ 264 in late January.

 

[dl003]

This stage forms the first down leg of a bigger structure, itself being a regular flat ABC structure. A flat is a 3-3-5 structure. A consists of 3 sub-waves, B 3, and C 5. A and B are corrective in nature while C is impulsive.

Sub-waves of ABC as follows:
A in red, B blue, and C green. You can see that B retraced all the way up to 0.9 of A, exactly topping out at 403.
Meanwhile, the 1.236x extension of wave B reached 270 which should have been the target for wave C. Instead, we went a bit lower to 264. Close enough & pretty neat how market works out these numbers.

Here's the literature on regular flat structures.

 

[dl003]

The second major portion began from the end of the first @ 264 in late January and ended @ 383 at the end of March.
What fascinating about this wave sequence is the mini black swan event that occurred on February 24th, as Russia began its invasion of Ukraine. The morning of, TSLA crashed all the way down to 233.33 in the PM as the entire market was thrown into a panic selling frenzy. As soon as the market opened, TSLA shot up from the abyss, barely traded at the opening price. This threw a wrench in an otherwise clean expanded flat structure. It's best to forget this event ever happened and mentally erase the first trading hour from the chart.

In this expanded flat structure, we also have a 3 waves (ABC)

A 264 - 315 (51.5 points)
B 315-252 (63 points)
C 252-383 (132 points)
An expanded flat is different from a regular flat, found in the first stage described above. The 2 main differences being (a) wave B ended (252) beyond the start of wave A (264) and wave C is much longer than A (132 points vs 52)

Fibonacci relationships between the waves are as follows:
B is ~1.236x A (63 / 51.5 = 1.22)
C is ~2.618x C (132 / 51.5 = 2.57)

Notable is the fact that it is rare for C in an expanded flat to be 2.618x A. This instance occurred due to a confluence of unique situations that existed at the end of March:
1. A massive broad market short squeeze following the first 0.25 bps rate hike and March Quad Witch OpEx.
2. Anticipation for record Q1 delivery number
3. Alleged leak of TSLA's 2nd stock split
4. The much higher ceiling put in place by the previous rally all the way to 414.5 in November.

Literature on expanded flats:

 

[dl003]

Daily recap:
Yesterday I predicted that TSLA would bounce around the 217 area which is along the support trendline running from the 2020 presplit peak. During Wednesday trading hours following Powell's Q&A session, TSLA dipped as low as 215, shedding nearly 6% in one day while SPY only gave up 2.5%.
It's only reasonable to expect this relative weakness to spill onto Thursday. In fact, TSLA opened Thursday as low as 210 before shooting up to 220, closing the day roughly unchanged from the closing price the day before. SPY lost around 1%.
What is the lesson here? TSLA is not weak compared to the general tech index. The stock only displayed relative weakness on Wednesday because it had a mission: to get to 217 as quickly as possible. Having studied TSLA for the last 2 years, this is a unique tendency of TSLA. Once an upside/downside target has been identified, TSLA will get there at a breath-taking pace, displaying temporary but extreme resilience / weakness on the way. Once this target has been reached, its behaviors can quickly change, punishing both bulls and bears who jumped on the bandwagon too late. Today is a prime example. Overzealous bears who thought they got TSLA by the balls were trapped within the first hour of trading @ 210. Joke on them, we're not ready to give up this trendline yet.
It looks like we've completed the first down leg of wave B/2. We should get a bounce into next week mid term election, targeting the 224 area before turning sharply down again to complete wave B/2.
I don't know if this is a B or a 2 yet. B is the second wave in a corrective sequence. 2 is the second wave in an impulsive sequence. Impulses are much more bullish/bearish than corrections. Obviously, we'd prefer this to be a wave 2. The most important criteria for a wave 2 is it cannot terminate beyond the starting point of wave A, which is 198.5. Therefore, 198.5 will be the most important level to watch until the chart shows selling pressure of this wave has been exhausted.

 

[dl003]

After the breath-taking rally in late March, we had an equally scary crash from April - June which took the form of a 5 wave impulse with an extended wave 5. Note the double bullish divergence on the 4h timeframe - a very powerful momentum indicator showing selling has been exhausted at the end.

At this point, the most important question was: is 207 THE bottom for TSLA? So far, we have identified 3 mega structures:
Green downward Regular Flat
Blue corrective Expanded Flat
Red downward Impulse
These 3 structures by themselves could have completed the correction in TSLA, forming a gigantic 3-3-5 Regular Flat.

 

[dl003]

By late June, the sky seemed to have open up for TSLA. If this huge 3-3-5 structure was THE correction, then what followed had to be a super bullish 5 wave impulse.
Wave 1 of 5 didn't disappoint, TSLA shot up from 207 all the way to 264. The intensity was matched only by the rally in late February. From there, TSLA pulled back deeply, almost erasing all of the 57 point gain, thanks to SPY making a new yearly low. However, TSLA still managed to eke out a higher low @ 209, keeping the bullish potential alive. That was wave 2.
Following the Q2 ER conference, TSLA made a series of impulsive moves, topping out @ ~ 315 in early August. That was the top of wave 3.

The missing wave 5
From there it got tricky. If TSLA bottomed in early June then it must go on to form a wave 4 & 5 from 315. It had 2 such opportunities but ended up botching both:
On August 9th, TSLA pulled back to 280 before rallying to 315 on August 16th
On September 6th, TSLA pulled back to 265 before rallying to 314 on September 20th.
See, even though TSLA never made a higher high than 315, it could not be totally ruled out that the subsequent 315 and 314 highs were the top of wave 5. Elliott Wave Theory allowed for something called a truncated wave 5, which would occur in an impulse series where the last wave has exhausted all of its momentum and is unable to make a new high. However, the structure would still be considered an impulse series, meaning 207 would remain THE LOW for TSLA.

You all may still remember September as an extraordinary month when TSLA was standing firm in the face of a massive pullback in SPY. The reasons could be many.

Maybe it was the leftover momentum from the split on August 25th
Maybe it was the hype for a record Q3 P&D report, which many predicted to be north of 370k
Maybe it was UNCLEAR whether the entire rally from June to September was an impulse, the start of a new bull market in TSLA, or a 3 wave corrective structure within a larger bear market.

The consequence was huge.

If that was a 5-wave impulse, bears would be decimated shorting TSLA @ 300+
If that was a 3-wave corrective structure, TSLA would have been living on borrowed time as it had not participated in the steep decline in the broader market.

The consequence of this confusion is being felt today as many TSLA bulls are feeling the heat.

 

[Nolimits]

Congrats on 3year anni on the forum. Any further updates appreciated

 

[Jim Holder]

@dl003 Miss your posts!
Hope you’re doing fine.

 

[OrthoSurg]

@dl003 tried to make Tesla fans find reason in the investors thread and was confronted with the most echoic of the echo chambers

 

[dl003]

Sorry for not updating this thread in a while, between catching the flu and trying to mitigate the impact of the crash on my account, I've not had the chance to sit down and look at the wave structure in a while.

However, I'm happy to say I'm not deviating from my previous wave count, which is an impulse leg down from 314.61 in August. The difference is, instead of ending at 177 without any of the fubar year-end delivery issues and EV tax credits, like this...

the chart has morphed into an extended wave 5, like this..

which means, we are at the end of the end of this correction. While we might still make another low, the chance of TSLA shooting up is way higher than crashing down. A good trader won't try to chase wave 5 down on any stock because:

a/ Wave 4 is shallow which means one could overlook it.
b/ The potential strength of wave 5, and thus the reward for catching it, is much smaller than that of wave 3.
It could go like this and put the end target inside the 85-98 range

or it could go like this, which means the bottom is already in at 102

Big picture, TSLA is getting support from the 0.764 all-time retracement at 98 while being capped by the 0.236 retracement from 198 to 102. The magnet seems to be 120, which is the 100 monthly EMA. This is somewhat the last old guard, having marked the infamous June 2019 bottom in TSLA. It is crucial we end January above 120 and I'm betting on we do. The inflection point will be 140. If we can close above 140 on a daily timeframe, it means the bottom is in at 102. That means bears will defend this level at all costs and they may succeed at least once if we have a very negative ER. So, the closer we get to 140, the higher the risk of another crash, which should mark the end of this correction. However, it is very different to go from 140 to 95 than it is to go from 115 to 95. The closer we get to 140, the more crucial it is that we hedge IF in danger of margin calls.

 

[Jim Holder]

@dl003 Looks like time for a fresh look again. Can you share what you’re seeing/thinking re TSLA given the action since 1/13/23 (latest post) and especially this past week’s action.

 

[dl003]

I haven't had time to update the chart yet, but my read is this:

102 is the bottom
TSLA will be strong for the next 2 months relative to the market; this is very important because there are risks of massive drawdown in SPY so TSLA can't fight the tide for long, but it's going to be relatively more resilient.
I called for 180-185 to be the top of wave 1. It could go a bit higher to 200-207 since momentum remains strong even at 180, although a double top scenario @ 180 cannot be ruled out at this point because of wider market risks.

 

[Jim Holder]

I haven't had time to update the chart yet, but my read is this:

102 is the bottom
TSLA will be strong for the next 2 months relative to the market; this is very important because there are risks of massive drawdown in SPY so TSLA can't fight the tide for long, but it's going to be relatively more resilient.
I called for 180-185 to be the top of wave 1. It could go a bit higher to 200-207 since momentum remains strong even at 180, although a double top scenario @ 180 cannot be ruled out at this point because of wider market risks.

Right on the money!

How’s it looking for the next two months?

 

[dl003]

I'm seeing 2 possible scenarios for this correction.
Bullish - an expanded flat since 218, targeting 160
Bearish - we're in the middle of a leading diagonal, targeting 120

 

[Jim Holder]

I'm seeing 2 possible scenarios for this correction.
Bullish - an expanded flat since 218, targeting 160
Bearish - we're in the middle of a leading diagonal, targeting 120
View attachment 915279

Thank you. Can you share how you’re trading these. IIRC you had -P170 on deck for 3/17 and some -C?

(I closed most of my -C today for nice gains—left a runner—since we might bounce here however small, and I can reopen on next confirmed local topping.)

 

[dl003]

at 200 next week if we get it, I'll buy some 180/160/140 butterfly put expiring mid April & sell some FOTM calls to fund it.

 

[Jim Holder]

at 200 next week if we get it, I'll buy some 180/160/140 butterfly put expiring mid April & sell some FOTM calls to fund it.

Why not simply sell covered calls at 200 vs paying for the butterfly. Is it to protect in case we reverse up?

 

[dl003]

Because while I appear calculating and sophisticated, deep down I'm just a degenerate gambler?

 

[Jim Holder]

Because while I appear calculating and sophisticated, deep down I'm just a degenerate gambler?

Aren’t we all, lol