I wrote on Tesla over at See It Market when the Solar City deal was first floated around.  What stuck out was the amazing negative sentiment around the company as it approached major support.

6 weeks later and the amazing negative sentiment in Tesla continues.  It’s just hated in the investment community.  The #1 related tag on stocktwits is #Fraud.

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That sentiment is just ridiculous.

Tesla bears should keep in mind a couple of things:

  • Green energy, just like any other technology, will become more economic over time thus making Tesla’s model much more viable.
  • There is a lack of yield around the globe.  Every shit company with a hint of a future has been able to restructure debt time and again.

We could make points and counter points all day so let’s take a look at the chart.

The daily chart shows the strong demand for shares under 200.  Since the 140-270 rally ended, shares have formed and popped out of a falling channel/wedge.  This structure is bullish, but resistance looms at the 235-240 area.

tsla 1

Let’s zoom out to the long term weekly chart.

We see a potential rounding top forming over the last two years.  This reinforces the resistance level around 240 or so.  What makes this pattern incredibly difficult for shorts is the fact that the major support around 180 has been breached, re-tested and very aggressive buyers have shown up.

The 180 area is also supported by the rising 200 week moving average.

tsla 2

To summarize:

  • Shares are stuck right now and the upcoming compression break is going to be massive.
  • The combination of aggressive negative sentiment and the underlying technical structure leads me to think the eventual break comes higher.
  • If shares breaks over the recent high of ~270, the stock can explode much higher.

Thanks for reading!

(Full Disclosure: I’m long Tesla shares)