Chart Spotlight on Tesla (TSLA) - Decisive Breakdown

Erin Swenlin | 

I noticed on the homepage "symbol cloud" that readers were downloading this chart more than Amazon and the SPX (based on size of the font). I decided to take a look. Wow! TSLA dropped more than 6.4% today! There are some real problems with this chart in the short term.

Today's decline broke a steep rising trend that had been intact since December. The breakdown is considered "decisive", meaning it was a more than 3% break down below the rising trendline. Decisive moves are typically initiations and not exhaustions. Note the gap that occurred with today's decline. I am inclined to believe we are looking at a breakaway gap which is considered an initiation to price moves in the same direction--down in this case. The Price Momentum Oscillator (PMO) is overbought and triggered a crossover SELL signal today. The On-Balance-Volume (OBV) tops are showing a bearish confirmation with price tops; both OBV and price tops are declining. The SCTR dropped out of the "hot zone" above 75 which also suggests lower prices.

The weekly PMO is rising on a BUY signal, but the price chart doesn't look bullish. Price nearly reached all-time highs before correcting this week. There will likely be move to test support. The strongest support lies at $180, but I think $240 could also provide support (3rd quarter 2016 high).

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Technical Analysis is a windsock, not a crystal ball.

Happy Charting!
- Erin

Erin Swenlin
About the author: helped create and manage the website alongside her father, Carl Swenlin. Together, Erin and Carl launched the DecisionPoint daily blog in 2009. She hosts the MarketWatchers LIVE web show at, and is also a Member of the CMT Association.
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