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Wednesday, September 27, 2023

Tesla’s Stock Volatility: Recent Surge Offers Hope Amidst CEO’s Erratic Behavior

In January 2023, Tesla shares plunged by 75% from their peak to their lowest point due to a bet against Elon Musk

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UNITED STATES: Tesla’s stock has exhibited volatility attributed to the unpredictable behavior of its CEO. Shareholders have faced challenges due to disappointing returns observed last year. Nevertheless, the company’s shares have recently witnessed a surge in value, marking a significant achievement after eight months. Those who retained their shares in 2022 faced substantial losses.

Tesla’s stock experienced substantial growth, reaching a remarkable 1,674% increase between March 2000 and November 2021, primarily influenced by accommodative monetary policies during the global pandemic. 

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Consequently, numerous Elon Musk supporters emerged. However, skepticism arose regarding the sustainability of this surge, with concerns of a potential bubble that would burst once Tesla’s valuation reached its zenith.

In January 2023, Tesla shares plunged by 75% from their peak to their lowest point due to a bet against Elon Musk. While this decline pleased short-sellers, the stock has since exhibited fluctuations, oscillating within a trading range of $152 to $218, lacking a clear direction.

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Tesla’s stock has been engaged in a sideways trading pattern, as bullish and bearish forces contend for dominance. However, with the recent closing above its 200-day moving average (DMA) accompanied by strong volume, the stock may have taken a step closer to claiming victory. Investors have been eagerly anticipating the emergence of a winner.

The surge in daily trading volume since last Wednesday may indicate that some investors are moving away from the sidelines or that individuals who have shorted Tesla shares are closing their positions to mitigate losses. This occurrence is not coincidental, as many individuals utilize the 200-DMA as a decisive factor in their decision-making process and as a gauge of the long-term sentiment.

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While Tesla’s share price currently exceeds its 200-DMA, investors should closely monitor whether it closes above $218. If this threshold is breached, it may imply the potential for larger price objectives. 

Real Money’s Bruce Kamich has identified a price target of $245 for Tesla through daily point-and-figure charts. Furthermore, surpassing the $208 mark in April could pave the way for the long-term point-and-figure chart target of $443.

It is uncommon for stock prices to progress linearly, as short-term consolidation is to be expected. In such a scenario, a test and retention of the 200-DMA could serve as a catalyst towards the $240-$250 range.

Also Read: Tesla EXPLR9: A Reliable Smartphone You Don’t Know about


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