Tesla took another fall this week.
The stock has fallen 4% since Monday, prolonging a sell-off that pushed stocks down nearly 40% from a high in January. The recent sell-off is linked to the sharp decline Bitcoin – Tesla CEO Elon Musk last week the company said it would Reverse a decision to allow purchases made with the cryptocurrencybut once that is cleared, it will continue to hold its investment in the coin.
Tesla could see more pain, warned a map watcher.
“It fell short of trend, and we need to remember that stocks like Tesla are prone to overreacting when analyzed – both overreacting on the upside and overreacting on the downside,” said JC O’Hara, chief market technician at MKM partner.
“When Tesla was on an uptrend that was above its 200-day moving average, those overreactions were indeed positive, and we just look back to January to see how strong it can get. Now we have the trends have shifted, breaking below the 200-day moving average. I think the overreaction will be on the downside, “O’Hara told CNBC.Trading nation” On Wednesday.
Stocks are down 20% this year, the worst performing in the S&P 100. They also fell below their 50-day and 200-day moving averages.
“We’re at $ 550 right now, a good place to take a quick dip, but I would like the overreaction to go down to $ 450. I think that’s the right level to get back to Tesla.” , he said.
A move to $ 450 means another downward trend of 20%. It was last traded at this level last November. It closed just over $ 563 on Wednesday.
Delano Saporu, founder of New Street Advisors, says the tide has turned on all growth stocks – and Tesla is particularly vulnerable as a household name in the group.
“The backdrop is really against Tesla right now, for a lot of growth names. So we’re seeing the sellers take effect. And I think the only thing buyers, especially myself, would get out of would be looking at the rating,” said Saporu in the same interview.
Tesla trades at 109 times the future profit, well over 21 times the future profit for the S&P 500.
“We’ve had strong profits from Tesla and that still hasn’t gotten the stock up. Everything else in the background is just against some of those growth names right now,” said Saporu.
Tesla reported record result and 74% sales growth in the March quarter.