Tesla Can’t Hit A Higher High On A Good Earnings Report?

The hottest stock in the universe can’t make a higher high after reporting good earnings? Has the world can crazy? Have basement Robinhood traders fallen asleep at the buy button? These are the questions to be answered after the action this week in Elon Musk’s favorite SEC-registered equity.

“Tesla
TSLA
posts 5th straight profitable quarter” was the headline and the stock jumped — initially. The carmaker beat the expectations of analysts and showed better earnings on increased revenues. It’s the sort of news that used to create a certain intensity of buying.

What’s odd is how sellers took over quickly. Previously, such bullish news would have ensured another new high for Wall Street’s favorite innovation idea. Not this time around though. It’s almost as if those who had been waiting to unload began to do so on the report.

You can easily make out the divergence on the Tesla hourly chart:

The red-circled candlestick shows the action on the day of the good earnings announcement. It’s a nice quick pop up followed by enough selling that it closed lower within the same hour. Note Tesla’s inability to close higher than the hourly peak on October 14th. Maybe “better earnings” doesn’t have the punch it used to have.

It’s the same kind of picture on the Tesla daily chart:

The day of the earnings announcement is shown within the red circle. Analysts may have expected a much better blast upward considering the enormous investor interest in the stock. You can see how much lower Tesla remains below the peak price from late August — up near 500 back then.

Nonetheless, the stock remains above the Ichimoku cloud — a continued bullish look from the standpoint of price chart analysis.

For a different type of context, here’s the Tesla point-and-figure chart:

The long term uptrend remains in place as you can see by the blue trend line pointing upward near the bottom of the chart. The stock is testing the 408 support level — that’s where buyers showed up on the last sell-off. A close below that level might take Tesla down to the previous support all the way down there at 352.

This price action is similar to that of Apple
AAPL
. In that case — mentioned in this Forbes.com blog post — a CEO-hosted event failed to take the stock to a higher high. This time, with another of the big tech names, it’s a good earnings report that fails to move Tesla higher.

This type of price action is different than that we saw from the March lows into August and September. It’s as if a caution flag is flying for investors in this sector and, since these are leaders, for stocks in general. That said, markets can go where they want sometimes with little respect to charts or reason.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you’re an investor, you’d want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.