Trade of the Day: Tesla Motors Inc (TSLA) Still Trending Down

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Tesla Motors Inc (NASDAQ:TSLA) — This designer, manufacturer and developer of electric vehicles has had a rough time bringing in a profit from its highly engineered line of products.

On Wednesday, the company is expected to report third-quarter earnings, with gains for the first time in nearly two years. Analysts reporting to FactSet anticipate adjusted earnings of 1 cent. That would be viewed as progress by management, considering that it reported a loss of $1.78 in Q3 ’15. But according to Bloomberg’s Edward Niedermeyer, “ … Tesla is a hype machine.” He cites Tesla’s bad press over their “Autopilot 2.0 hardware that was to mark ‘the highest levels of autonomy.’” However, Tesla has yet to test the system on the open road.

On Oct. 10, Standard & Poor’s Capital IQ reiterated their “two-star” sell opinion on the stock, noting that Tesla’s recent proposed purchase of SolarCity Corp (NASDAQ:SCTY) will require additional cash to make the deal work. They are of the opinion that the proposed purchase is a negative and will cause a “cash drain.”

Technically, since recovering from an early sell-off this year that ended at about $150, TSLA stock rallied in one month to a high of the year at over $260. However it has struggled to maintain a positive pattern since May, with current support at a triple bottom at $192.

The stock executed a “Death Cross”, a negative signal generated by the 50-day moving average crossing through the 200-day moving average. This long-term negative event occurred on Oct. 5 at $208.

This is, in my opinion, a short-sale candidate. However, wait for the quarterly earnings on Wednesday before selling. Management has decided to move the date of the report forward by almost a month, thus Tesla earnings may be better than expected, and that could result in a higher short-sale number, perhaps even $212- $213.

Whatever the announcement, the trend is down, and a test of the February low is a real possibility.

TSLA SS 200 T 145 - 150
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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/tesla-motors-inc-tsla-stock-trade-ipmedia/.

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