TSLA Weekend Update 03/04/2023

 In Tuesday's Update, my analysis was that TSLA had completed 5 waves of a 5 wave sequence from 101.81, and set a target between 212-234. I gave 191.78 as a point at which that analysis would be invalidated. Wednesday saw TSLA move lower from the opening, falling to a low of 198.52. During the afternoon TSLA moved mostly sideways, with a slight upward bias, rising to 203.42, before closing at 202.75. Technically TSLA hit oversold at the open on the 15 minute chart, and the sideways move into the close worked off that oversold condition, and worked into overbought territory, setting up a lower low, lower high situation going into Thursday.

Given that set-up, TSLA gapped down on Thursday, dropping to 186.01, and moving below the critical 191.78 level necessitating a revision to my analysis. Once again TSLA moved mostly sideways the remainder of the day, rallying slightly off the low, and then falling again into the afternoon. This action created a short term buy signal at 3:45 on my technical charts, with TSLA at 191.07. 

TSLA gapped up on Friday, opening at 194.61, and continuing to rise through most of the day. My short term technical signals gave a cover at 199.13. TSLA topped at 200.48, before giving back a little ground into the close.

With TSLA moving below the 191.78 level, we will need to review our analysis. I will begin where I left off on Tuesday. 

Here is my count from Tuesday. As you can see, I had TSLA in Wave 3 of Wave 5 from 101.81, with a target of 212-234. Obviously this was wrong. One thing I had noticed on Tuesday, but had discounted, was the initial move off the Wave 4(Green) low on the 22nd. If that initial move were Waves 1,2, and 3, instead of Wave 1, the wave from Wave 2, the move following the low marked Wave 2(Red) on the 28th to the upper Bollinger Band would complete a 5 wave sequence from that Wave 4 low. This would look like 191.78 - 201.99 - 196.82 - 205.14 - 203.75 - 209.41. Taking those as points, and applying a linear regression, we get (191.78, 201.99), (196.82, 205.14), (203.75, 209.41), with an R^2 value of .99998. The move from Wave 4 would now look like this:

As you can now see, TSLA completed a 5 wave sequence from the 191.78 Wave 4 low. I had originally discounted this for two reasons. The first being that it would require a wave 5 failure, as it would not complete at the high, which is rare, and the second being that it did not meet the requirements for Wave 5. So now we must re-evaluate the count from the 101.81 low.

This had been my count going into Wednesday. For the sake of clarity I removed the smaller waves from Wave 4, and marked the end of the 5 wave sequence from that point with "X". The initial move is notated by Wave 1. Following the green A-B-C-D-E, will lead you through what I had counted a an inverted corrective Wave 2. This took the form (123.52. 115.60), (136.68, 124.31), (214.00, 187.61), with an R^2 value of .9943. Normally the first instance of sequence exceeding the R^2>.99 threshold denotes the end of a sequence. However, that is not always the case. If one looks at the sequence B-C-D-E-3-4, one would notice that this also forms a sequence with an R^2 value over .99. Namely (136.68, 124.31), (214.00, 187.61), (217.65, 191.78), with an R^2 value of .99978. Changing A and C to 2 and 3 respectively, and following that with an inverted corrective Wave 4, results in this chart:

Now we can evaluate the sequence 1-2-3-4-X from 101.81. With Wave X terminating at 209.41, we have (101.81, 123.52), (115.60, 136.68), (191.78, 209.41) with an R^2 value of 1. Thus we have a 5 wave sequence from 101.81 completing at 209.41.

The decline from the 209.41 high formed a 5 wave sequence down to the subsequent 186.01 low as is seen here:

One method of creating a target range for a corrective wave is to look at a relationship between the origin of the previous wave, the subsequent corrective low, and two highs from the previous wave, normally the last two highs, as depicted here:

Using this method gives a range between 178-188 for the correction from the 209.41 high. Thursday's 186.01 low falls right into that range. While still too early to call that a low, it is quite possible.

Technically, TSLA is close to giving a buy signal on the 15 minute chart, but has not as of yet. On the 60 minute chart the stock has reached overbought, and on the Daily chart it is oversold, and close to giving a buy signal. The action over the next few days should give us some insight into short and longer term direction. 

Weekend Market Update

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TSLA Tuesday Update 02/28/2023

 If you read Monday's Update, you had a pretty good roadmap for today's session. In that update I said I was expecting a move higher at the open, followed by a 6-8 point pullback. TSLA did open higher, gapping up and hitting a high of 211.23. It is notable that it stopped just shy of the 212 lower bound that would end the sequence from the 101.81 low. It is nice when a forecast comes to fruition, but obviously they will not all be that good. But the accuracy does speak to the forecasting power of my model. Some set-ups lend themselves to highly accurate forecasts, while others are more difficult. I thought I would walk through what I saw yesterday in the set-up, and how I was able to arrive at those forecasts.

 

Going into today's session, this was the set-up. On the lower left side of the chart you will see a 4 on the 22nd. I will start there. My count has Wave 1 completing on the open of the 23rd. The next labels you will see are for Waves A, B, and C. These are the first 3 waves of a 5 wave sequence. From Wave C, there are labels for the first three waves of a lower level sequence, Waves 1, 2, and 3. After that another sequence with Waves A, B, C, and D labeled. From Wave D, you will notice a slight pullback into the close. My model is based on a simple premise: Namely that when waves are taken as points, with coordinates (Startpoint, Endpoint), and a linear regression is applied to those waves, a wave completes when the first, third, and fifth waves of a sequence have an R^2 value above .99.

I will start with the final A-B-C-D sequence on the chart. The previous Wave 3 is our start point, so we have 197.67-194.00-208.22-204.22-209.42. Taken as points, that gives, (197.67, 194.00), (208.22, 204.22), (209.42, X), where X would be the Wave E completion point. The pullback at the end of yesterday's session had a low point of 206.35. Using that as X, the resulting linear regression gives an R^2 value of .9952, above the .99 threshold. This allowed me to consider that as the endpoint of the sequence.

The A-B-C-D-E sequence was then the end of Wave 4 of the 1-2-3 sequence started on the 24th. So we have (192.80, 195.67), (193.58, 197.67), (206.35, X). The minimum value for X that gives an R^2 value above .99 for that regression is 208.02. This gave a me a minimum value for today's opening move up. The high of that move, 211.23 gives an R^2 value of .9955.

That opening move to 211.23 thus completed the 5 wave sequence from Wave C on the 24th, or Wave D. Given the four completed waves, the sequence is (205.14, 196.33), (203.28, 192.80), (211.23. X). Being able to infer today's opening move allowed be to extrapolate that into the 6-8 point pullback, since it would be completing the inverted corrective wave starting with Wave 1 on the 23rd. The pullback to 203.75 was just under 8 points, and gave the sequence an R^2 value of .99086.

The final count after that is shown here:

Looking at today's action, we had the opening rise to 211.23, followed by a pullback to 203.75. That sequence looked like, (211.23,206.43), (208.43, 204.71), (206.19, 203.75), with an R^2 value of .99038. From there the market moved higher again, tracing out a five wave sequence as (203.75, 206.33), (204.86, 207.88), (206.31, 209.41), with an R^2 value of .99357. After that TSLA moved lower, dipping to 204.91, before trying to rally into the close.

In my current count from the 101.81 low, TSLA has now completed four waves of a five wave sequence, with Wave 4 completing at 191.78. Today's low would be the completion of Wave 2 from that Wave 4 low. With four waves completed, we can project Wave 5 to complete between 212, and 234. That remains my current target. Some of my work shows a convergence around 229, but any move between 212, and 234 would be sufficient to complete the sequence. The 191.78 Wave 4 low would be a critical point. A move below that would require a revision to the current count.

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TSLA Update 02/27/2023

 Friday saw a gap down for TSLA, falling to 192.80 shortly after the open. TSLA then traded in a narrow range, with a slight upward bias, throughout the day. The fact that Thursday's 191.78 low held was important, as that is my Wave 4 low, and a break below 187.61 would invalidate the count, and likely mean a top was in. After holding those levels, TSLA moved markedly higher at the open, gapping up to 208.22 before a slight pullback. Another move higher brought the stock to 209.42, which proved to be the high of the day. From there TSLA fell slightly into the close, ending the session at 207.60.

A very short term count would call for a move higher from the close, followed by a pullback of 6 to 8 points. This move higher has a lower limit just below today's high, but the upper limit gives it a large range to work with. That would set up a final move into the 212-234 target area mentioned Thursday. On a cautionary note, another move higher at the open could put TSLA in that target range, so close monitoring will be needed from this point. One possibility would be for the initial move higher to carry to a point where the 6-8 point pullback keeps it above the 212 target. 

On the downside, I am watching the 191.78 and 187.61 levels. A break of those would seem to be near term bearish. Should be an interesting couple of days.

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