After President Trump’s decision to withdraw from the Paris climate accord, I have received many questions about investing in Tesla.
Will Tesla TSLA, suffer a reprisal from Trump after CEO Elon Musk resigned from a pair of the president’s advisory councils? That is the most pressing question for investors. After all, Trump is known for threatening retaliation. Let us explore the answer by first looking at the chart of Tesla’s stock.
Please click here for the annotated chart of Tesla. The following observations are in order from the chart:
• Price action has been extraordinarily strong to the upside.
• The strong price action is not accompanied by strong volume on this leg up. This indicates that buying does not have a lot of conviction. This is a negative if price action were to reverse. Quite simply, the stock could fall very quickly.
• There are divergences between the price action and the relative strength index (RSI), as shown on the chart. This means momentum is slowing as the stock rises. This is a potential negative.
The sum total of the foregoing is that, from a technical perspective, the stock is vulnerable if there is a fundamental trigger on the bearish side.
Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.
Tesla is primarily engaged in three businesses that are related to climate control. Electric cars (Tesla) and solar (SolarCity) are well-understood. Not so well understood is the huge potential of batteries for storage of energy produced from renewable sources. After all, the sun does not shine at night. Electricity produced from solar during the day can be stored in batteries for use at night…Read more at MarketWatch
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