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A Tesla Roadster is electrically charged at Tesla Motors Inc in San Carlos, California July 22, 2009. (ROBERT GALBRAITH/REUTERS)
A Tesla Roadster is electrically charged at Tesla Motors Inc in San Carlos, California July 22, 2009. (ROBERT GALBRAITH/REUTERS)

Schizas’ Mailbag

Tesla shares look poised for a comeback Add to ...

Hi Lou,

Please share your opinion of Tesla Motors Inc.

Thanks,

George

Hey George,

This will be the second time that I investigate the case for Tesla Motors Inc.

The first was on Aug. 9, 2013 when the shares were trading for $153.48. The research conducted for Chris indicated that there was an established uptrend line that had been tested but not beached. The momentum indicators were not generating sell signals and the stock continued to climb to a 52-week high of $194.50 by late September. But that was as good as it got as a series of fires in battery modules related to contact with road debris poured water on investor enthusiasm.

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Another examination of the charts will update my opinion on TSLA.

The three-year chart tells the tale of a big swoon as the shares pulled back from the highs in October. The MACD and the RSI both generated sell signals as the stock began its decline. The lesson in this chart is capital preservation. The shares have given up close to $70.00 in two months. That is a lot of Christmas cheer to miss out on.

The next test for TSLA is whether it will catch a bounce off the 200-day moving average.

The six-month chart illustrates the support that has come in at $120.00. The MACD and the RSI seem to be signalling that buyers are beginning to overcome the selling pressure that has made the last couple of months a bit gloomy. The company is dealing with the design issues related to protecting the battery modules from contact with road debris. The drop in November as third-quarter sales missed the Street is another factor that has contributed to the decline in the price of the stock. Fourth-quarter results are scheduled to be released in February of 2014.

TSLA is a high multiple stock so when it misses street expectations you can expect aggressive selling to follow.

At this point it looks like a trade to the upside is setting up but watch for resistance at $140.00.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

 
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