Tesla’s recent declines are bringing the stock into dangerous territory, a trader warns.
Shares of the electric vehicle maker fell nearly 3% to $ 665.71 on Tuesday after the National Highway Traffic Safety Administration launched a safety investigation into its autopilot program.
That puts the stock near a “critical” level on the charts, MKM Partners chief market technician JC O’Hara told CNBC’s “Trading Nation” on Tuesday.
“We are seeing bullish signs slowly starting to emerge,” including Tesla breaking a short-term bearish trendline in mid-July, ”O’Hara said.
“On the other hand, we really have to be really careful with $ 610,” he said. “This is critical chart tech support. A break below will show the bulls are no longer in charge.”
On the upside, O’Hara was looking at $ 730 per share. If the stock trades above that level, it would indicate “that it is ready to see its bullish momentum renewed” and provide an opportunity to buy the stock, he said.
Basically, even Wall Street is struggling to find a consensus on how to value Tesla, Joule Financial’s Quint Tatro said in the same interview.
Goldman Sachs on Tuesday reiterated its buy rating and its $ 875 price target for Tesla stock ahead of the company’s AI Day, touting its leadership position in its array of industries. Bernstein raised his price target from $ 180 to $ 300 per share, still a long way off, citing faster-than-expected adoption of electric vehicles.
“You could drive a Tesla because of those numbers,” said Tatro, founder and chief investment officer of his company. “I’m a long-term Tesla Bull, but I also think you need to trade it.”
History has shown that peaks of concern around Tesla’s business were the best times to buy, Tatro said.
“It’s probably going to break those levels down,” he said of O’Hara’s predictions. “That’s actually when I’ll be a buyer. I’ll be looking to go to the other side.”