I think it's fair to say that most investors look at whether their stock is going up or down in determining whether a stock is being cumulatively bought or sold. That was a big, big mistake back in March as fear-mongering headlines created panic at the opening bell, sending many folks to the exits at exactly the wrong time, while institutions gladly bought their shares. We know what happened in the 6 months that followed. Hindsight (and the accumulation/distribution line, or "AD line") told us that accumulation took place then and institutions were rewarded quite handsomely for their purchases. We alerted our members way back in April to this phenomenon and even created a Strong AD ChartList to identify those stocks that we believed were being accumulated throughout the pandemic. Many of those stocks continued higher, soaring 100%, 200%, or higher from those panicked lows to recent highs.
I believe the same principle can be applied to Tesla (TSLA) right now. At the stock market high on September 2nd, TSLA closed at 447.37. Yesterday's close was 380.36. That's a drop of 67.01, or nearly 15%. But you might be surprised to know that opening gaps lower account for 63 dollars of that decline. Since September 2nd, TSLA has dropped a net 3 points during the trading day. It appears that the only sellers are those reacting to news and weakness at the opening bell. I wouldn't follow that crowd. I know it's still early, but TSLA gapped down 17 bucks at the opening bell today and, at last check, had gained back more than 10 bucks. It looks so familiar to what we saw in March. Look at the AD line and OBV (on balance volume). Both continue to rise despite the weakness in TSLA's price in September:
I could be totally wrong, and it's just my opinion, but I believe TSLA is being HEAVILY accumulated during September.
In my Friday EB Digest newsletter (which is free), I'll be providing another stock, similar to TSLA, that's moving lower but appears to be under serious accumulation. CLICK HERE to enter your name and email address to start your free subscription. There's no credit card required and you can unsubscribe at any time.
Happy trading!
Tom
