Shares of electric vehicle (EV) manufacturer Tesla (NASDAQ:TSLA) have been in a downward spiral for the past several months as the bull thesis surrounding the stock has lost all momentum. Demand has stalled out. Growth has flattened out. Profits have gone away. Management turnover hasn’t stopped. Economic conditions have deteriorated. Trade tensions have escalated.

In other words, early 2019 has created the perfect storm for TSLA stock. Net result? The shares have sunk more than 40% this year. It now trades at its lowest levels in nearly three years.

But, there’s reason to believe that a turnaround may be coming soon. What are the signs?

• Tesla stock has fallen really far, really fast, and is now so technically beaten up with such dour sentiment that it’s due for a reflex “rubber band” bounce.
• The Shanghai factory is going to start pumping out vehicles soon, and that should provide a nice tailwind for the company’s China business.
• The Model Y is likewise coming soon, and this new vehicle launch could re-stoke U.S. demand.
• The Model S is being refreshed.
• Rates are plunging and the U.S. consumer is healthy, so the American auto market — and similarly, Tesla — could see a pick-up in the back half of the year.

Overall, then, it may be time to get bullish on TSLA stock. To be sure, trade tensions need to cool and financial markets need to stabilize before Tesla stock stages a big turnaround. But, if those two things happen, you could get a nice bounce in TSLA stock here into the end of 2019.

Fundamental Catalysts on the Horizon

Although Tesla stock in the first half of 2019 has been defined by a series of downward catalysts, the back half of the year could be defined by a series of upward boosts.

The first catalyst is simply that TSLA stock is way oversold here. Specifically, the stock has fallen so far, so fast, that the relative strength index — a gauge of price momentum — on the stock is not just well into oversold territory (22), but also right near five-year lows. Whenever the RSI — as below 30 is considered oversold — has been this low before (February 2016 and April 2018), the stock proceeded to stage a big rebound over the subsequent several weeks and months.

Second, Tesla is expected to start production at its Shanghai factory later this year. When that happens, Tesla cars made in China will be simultaneously exempt from import tariffs and qualify for government subsidies. The China EV market is still booming. Tesla’s increasing its competitive position in that booming market could show up in a big way in the numbers in the second half of 2019.

Third, Tesla is refreshing its production line at its Fremont factory to both produce the new Model Y later this year and refresh the Model S. Both of those things are a big deal. With respect to the Model Y, this is a new car launch in the right market (crossover SUV) that could ultimately re-ignite the Tesla market share expansion narrative in the U.S. Meanwhile, on the Model S front, a refreshed Model S could breathe life back into what has become a flat growth narrative for that model.

Last, rates are plunging in the U.S. But, the consumer remains very healthy. That’s an attractive combo which supports healthy big ticket demand for things like autos for the foreseeable future.

Broadly, then, Tesla stock is staring at a series of tailwinds in the back half of 2019 which could propel the stock meaningfully higher.

Markets Need To Stabilize First

Although the bull thesis on TSLA stock looks good here, two things need to happen before that bull thesis plays out.

First, economic conditions need to improve. Right now, the global economy is slowing. So long as that is happening, global auto demand will weaken. Against the backdrop of sagging auto demand, it’s tough to see Tesla getting the numbers boost it needs to shoot the stock higher.

So, the current global economic slowdown needs to stop. It will, if trade tensions between the U.S. and China improve. That should happen. Both countries are so connected to and dependent on each other that neither want this trade war to drag on. Instead, both want a deal to get done, and soon. If that does happen, global economic conditions will improve.

Second, financial markets need to stabilize. This will happen if the global economy stops slowing. But, if the economy keeps slowing and equities keep falling, TSLA stock won’t rebound.

Overall, Tesla stock basically needs trade tensions to cool and economic and financial market conditions to improve before staging a big turnaround. If those macro factors do move in the right direction, TSLA stock could soar from here.

Bottom Line on TSLA Stock

Tesla stock has had a rough 2019. But, things should get better. The first half of the year was defined by several downward catalysts. The back half of the year will be defined by several upward catalysts. Against the backdrop of severely depressed investor sentiment, those upward catalysts could spark a big rally.

But, certain macro factors have to improve before Tesla stock stages this big turnaround. Thus, the big TSLA turnaround won’t happen now. Instead, this is a “coming soon” situation.

As of this writing, Luke Lango was long TSLA.