Tesla bulls look like they're back after the July sell-off

Tesla sold off aggressively in July following a disappointing earnings report, in which second-quarter profit missed estimates as capital spending jumped. The stock broke below the 335 support level, extending the correction from the December highs. However, we still believe this decline can be counted as wave C within a larger corrective structure.

The fundamental picture has improved since then. Tesla delivered 486,532 vehicles in the third quarter, about 2% fewer than a year earlier but above analyst expectations and up from the second quarter. Third-quarter results, released on October 21, showed revenue of $28.05 billion, roughly flat year over year, while the GAAP gross margin recovered to 19.6% from 16.8% in the prior quarter. Adjusted earnings of 48 cents per share beat estimates, and free cash flow came in positive at $1.53 billion, although GAAP net income fell to $787 million as spending on AI and robotics stayed high. The company also cut its 2026 capital spending forecast to about $20 billion from more than $25 billion, and the stock dipped about 3% the next day as investors weighed the capex cut against the earnings beat.

TSLA Daily Chart, October 29 2026

Charts by TradingView

The price has reversed higher from the lower boundary of the declining channel, filled the earnings gap, and reached the bullish confirmation level, suggesting that bulls may be back in control with wave 1 of a new five-wave bullish cycle. Following the most recent pullback in wave 2, Tesla is now breaking above the channel resistance line, which could extend the rally into wave 3. This bullish outlook would strengthen further if the price breaks above the upper boundary of the base channel near 430.

Recent catalysts are adding to the bullish narrative. Tesla started Robotaxi rides with its Cybercab in Austin on September 3, reported FSD (Supervised) attach rates of over 75% on new North American deliveries, and said energy storage demand reached its highest ever order rate and backlog as Megafactory Texas began production. Elon Musk also confirmed that Tesla and SpaceX have formed special committees to explore a possible combination, although no terms have been agreed, and Barclays upgraded the stock to Overweight on October 26, citing the merger potential and the Robotaxi outlook. On the macro side, the Federal Reserve held rates at 3.75%-4% on October 28 but noted that inflation remains elevated, so rates are still a risk for high-valuation growth names. These fundamentals support the bullish backdrop, but the wave structure remains our guide, and a break above the base channel near 430 would add further confirmation.

Trade well,

WaveTraders team