Tesla, Inc TSLA witnessed a sharp decline of about 13% on Thursday subsequent to reporting a fourth-quarter earnings miss. This outcome, which was anticipated and indicated by a bear flag on the stock’s chart, was highlighted by Benzinga on Wednesday.
The electric vehicle (EV) giant posted fourth-quarter earnings per share of 71 cents on revenues of $25.17 billion, falling short of the Street consensus estimate of earnings per share of 74 cents on revenues of $25.62 billion.
Traders and investors who leveraged Tesla’s downward movement by adopting a position in the AXS Short Innovation Daily ETF SARK observed a return of approximately 0.9% on Thursday.
SARK is an actively managed ETF aiming to inversely track the daily performance of the Cathie Wood-led ARK Innovation ETF ARKK, which holds a 7.77% weighting of Tesla.
The Tesla Chart: Tesla experienced a breakdown from a bear flag on Thursday with higher-than-average volume, indicating the recognition of the pattern. The measured move of the flag suggests a potential decline of about 21%, pointing towards Tesla falling to the $171 level over the near term.
- The drop confirmed the continuation of the downtrend, with the Jan. 22 high of $217.80 emerging as the most recent lower high within the formation. Ultimately, Tesla is expected to rally temporarily, marking at least another lower high.
- Bullish traders are on the lookout for Tesla to eventually form a bullish reversal candlestick, such as a doji or hammer candlestick, indicating the occurrence of a local bottom and an anticipated rebound. This potential bounce is likely to be accompanied by diminishing bearish volume.
- Bearish traders are keen to witness the stock closing Thursday’s trading session near the low-of-day, signifying the continuation of selling into Friday. Should this occur, Thursday’s candlestick will resemble a bearish kicker candlestick, possibly leading to a second downward gap.
- Tesla faces resistance above at $190.41 and at $200.51, with support below at $177.59 and at $166.71.
- Image sourced from Shutterstock
