Tesla Stock News and Forecast: TSLA sells off in line with Nasdaq at start of Tuesday session

Tesla falls to the first point of support.
TSLA should bounce on Tuesday as markets recover.
Tesla stock still looking overvalued as the sector rerates.

Ivan Brian FXStreet

UPDATE: TSLA stock opened higher at $287.86 but sold off steadily throughout the first hour on Tuesday. 45 minutes into the session it is trading off half a percentage point at $283.50. This is right in line with the Nasdaq. One would think CEO Elon Musk's second letter to terminate Twitter's lawsuit would be helping the stock a bit more, but macro worries and the general feeling that Musk is on the wrong side of the facts in the court case are not giving Tesla bulls any positives to play with. With Musk likely to be forced to buy Twitter as interest rates rise, there is a popular viewpoint that Musk will need to sell a greater percentage of his stake in order to get better options from his financing coterie.

A more or less normal day for stock markets on Monday took place after the sharp sell-off on Friday. Monday's performance was somewhat better than expected or less bad than many feared. Equity markets held up relatively well with the main indices losing less than 1%. Fears of capitulation were short-lived. This should set up a recovery rally for Tuesday and Wednesday and then probably markets will flatline ahead of Friday's employment report.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Tesla stock news

The good news for bulls was that Monday's price action opened on the lows at $280, retested it in the first half, and then put in place a double bottom on an intraday basis that set Tesla (TSLA) stock higher for the remainder of the session. Overall, it was a pretty boring day. Tesla had a range of about $7 on the day, but there was no follow-through from Friday's sell-off. Is this consolidation just a holding pattern before further falls or a base building for a recovery?

Tesla stock forecast

TSLA stock longer-term view remains bearish with the series of lower tops identified by our trendline below. As we can see, Tesla is stuck in a high-volume area (grey bars on the right). High-volume areas are stabilization zones, and markets tend to move from one to another. Below $281 and above $314, volume thins out, so we would expect Tesla to move quickly through those zones.

The recent Fed hawkish commentary from Powell puts the risk-reward in favor of the downside in my view, so I would be looking for TSLA stock to break $281 and a swift move through light volume until we reach the next high volume zone at $240. However, ahead of Friday, there is likely to be some recovery and then stabilization around $300.

TSLA stock price chart trading below $300

TSLA 1-day chart

The author is short Tesla.

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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