Tesla (TSLA) shares took a tumble today after a strong day on Wednesday. This is not what I expected when I outlined my technical take on Tesla, which was featured on the “Off the Charts” segment of Mad Money. It should be noted that Jim Cramer had an opposing viewpoint on Tesla.
Technical analysts scan charts and recognize patterns in the price action. Some patterns have the propensity to repeat, because of the underlying dynamic of the fear and greed impulses of market participants.
When analysts present there ideas about the technical condition of a stock, what they are saying is: there is a similarity of price action that, in the past, has resulted in this future reaction. Nothing more.
Obviously, neither fundamental or technical analysts are perfect. But, their value does not rest with one great call or one bad call. It rests in the quality the reader associates with their analysis over a period of time.
I write this not in defense of my position on Tesla, in fact the support lines of the large horizontal channel have yet to be tested, but for other technical analysts. Those who work hard at trying to pull some order out of the disorder that is the stock market, and have those who follow them benefit.
Watch the $250 level on the Tesla chart. If the court case does not go well for Elon and he has to step down, it could be broken, and my bullish thesis on the stock voided. If he remains, there could be a bounce. But that is not a technical opinion.