This past Monday, July 15, right after the opening bell, Mike Paulenoff cautioned our members about the technical setup in TSLA (Tesla), writing:
"TSLA is in the grasp of a corrective period off of last Thurs (7/11) high at 271.00 that hit an initial low at 231.52 last Friday (7/12). The big rebound off of 231.52 to 262.72 during this AM's pre-market trading has the right look of an "intervening bounce" between two distinct corrective declines (the first being 271 to 231.52). From in and around 262-265, my pattern work anticipates another loop down to revisit 231.50-235.00 in the hours/days ahead, and if violated, then lower into the 220 area where my corrective work indicates TSLA will enter an "Opportunity Window" ... Last is 255.22..."
On Thursday, July 18, following a question by an MPTrader member asking for guidance after shorting TSLA, Mike wrote:
"At the time of my prior update (255.22) this past Monday, TSLA was in the grasp of what at the time looked like a traditional down-up-down corrective process off of its 7/11/24 high at 271.00. The first down was 231.52 (see my attached chart), the up was 265.60 (7/15), and since then 'the down' has stalled in the 245..80-246.50 area, which leads me to question if all of the corrective price action from the 271.00 is morphing into a high-level digestion pattern (Bull Flag) instead of a down-up-down that revisits and breaks 231.52? This dilemma is problematic for anyone short, and if I am short, I would protect myself just above 258.50/60 because a climb above that level introduces more price trajectories on the upside even if TSLA tests and fails in and around 271.30, and then rolls over into serious downleg at that time. It is just too risky to be short above 258.60. Unless and until 258.60 is taken out, however, TSLA remains vulnerable to another decline into the 245.80 area, which if violated, will put the down-up-down scenario back in play... Last is 252.08..."
TSLA nosedived during the following two trading sessions into Friday's (July 19) low at 236.83 -- a full 6% beneath Mike's follow-up analysis for MPTrader members, and a full 7% beneath Mike's original post on July 15, with TSLA resuming its "down-up-down" corrective form in the aftermath of the 62% vertical June-July advance from 161.41 to 271.00.
What's next for TSLA, especially considering TSLA earnings are scheduled for this Tuesday after the close? Does the developing setup argue for more weakness ahead or a powerful upside pivot reversal? Perhaps both!
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