Hope everyone enjoyed a wonderful holiday season and New Year’s! I’d like to personally extend my greetings to all for continued good health, happiness, and prosperity in 2023. While my Annual Outlook won’t be published for another couple weeks, I’m already anticipating a much better year for 2023, and just want to express my gratitude for your continued support and interest in my work.
See my CNBC interview from 11/8/2023, discussing TSLA (2:30 mark)
Santa’s sleigh experienced a bit more turbulence than many expected might be possible during the final week of 2022, and the early intra-day reversal to kick off the new year is suggesting that this recent trading range started back in mid-December remains very much intact. Tuesday’s (1/3) reversal caused prices to close back below 12/27’s SPX close of 3829.26, making it important to concentrate on 3764 on the downside, and 3900 on the upside as important levels. Yet, the downward tug of large-cap Technology along with bearish cycle projections for January still argue that the path of least resistance might be lower over the next couple weeks before any low is in place. However, this doesn’t imply that October lows have to be tested or broken right away. Moreover, keeping a close eye on correlation between SPX and Treasuries will be important this year, as last year’s positive correlation might not continue to work this year. Overall, near-term trends are neutral at present, not bullish nor bearish. Breaks of either side of this consolidation should provide for more meaningful follow-through.
Tesla breakdown to new lows likely leads to <100
TSLA 3.60% remains strongly bearish near-term, and despite being oversold, has not shown evidence of having bottomed out. Based on a combination of daily and weekly cycles along with DeMark tools and Elliott wave projections, I believe TSLA still has the potential to weaken to under 100 into its January 2023 earnings before any stabilization and bounce. A few key points:
- TSLA has lost more than 60% in just the last three months alone after making a peak near the Fall Equinox on 9/20/22 near $313. Since mid-Sept 2022, TSLA Has lost nearly 200 points in value, breaking down to the lowest levels since Fall 2020. Technical structure and momentum remain quite negative.
- Daily RSI (relative strength index) readings ARE now oversold on daily charts and lie near levels which coincided with historical bottoms on weekly charts. (Feb 2016 and May 2019) However, these don’t guarantee any meaningful low.
- Equal-wave” extensions show 100% price confluence at last week’s lows-Nov 2021-May 2022 decline equal to Sept 2022-Dec 2022 in points. (Often important in Elliott-wave) However, this is now being undercut this week, which suggests targets either at $99-100, or $82-89 on weakness.
- DeMark tools, such as TD Sequential and/or TD Combo- (Exhaustion indicators) are EARLY to show a low at hand on weekly charts and suggest another 2-3 weeks of weakness are possible before a low.
Tesla daily cycles still show weakness into late January, and larger lows by Spring
Technically, TSLA cycles have been ruled by the 107-trading day cycle, which has proven quite effective in lining up with highs and lows in the past five years.
While the time from May-June is likely to coincide with a sharp bounce, (and this might initially get underway from late January near TSLA’s 1/25 earnings date) it looks premature to buy dips at current levels as January 2023 is just getting underway.
The intermediate-term cycle of 36-weeks which has proven successful in the past, suggests that TSLA likely will be higher the first six months of the year, before weakening into Fall 2023 (Not shown). However, the daily cycle, for now, still suggests further weakness into March.
Tesla’s 1/25/23 earnings (post close) might closely line up with weekly DeMark counts on TD Sequential and TD Combo which might offer an initial time to consider buying dips.
Overall, it looks like holding out for a late January low, followed by Spring low, or else in Fall of 2023 could be a better time to try buying dips in this downtrend. It’s important to see proper evidence of downside exhaustion which line up with cyclical turning points and witness some degree of technical stabilization.
107-day (Trading day) cycle shows weakness into Spring before rally
Europe still outperforming US and might continue through January
Interestingly enough when eyeing the performance of FEZ vs. SPY (SPDR DJ EuroSTOXX 50 ETF vs. S&P 500 ETF) the recent relative strength has shown no signs of reversing course.
It was thought that December might line up with a chance to sell Europe and witness underperformance. However, daily DeMark “Sells” (13-countdowns) can often prove short-lived before prices (or in this case, the ratio) continues higher. Identifying periods of confluence with daily and weekly charts remains important to have conviction of a possible change in trend.
Weekly DeMark counts on FEZ vs SPY show a 10 count, signaling another possible three weeks of outperformance in Europe’s STOXX 50 index over US’s SPX index.
I’ll monitor this closely for evidence of trend reversal. However, at present, it’s best to avoid overweighting SPX further on this recent relative underperformance given the presence of Technology lagging.
