I think we can all agree that bull markets are way more fun than bear markets. Not that the broad market is bearish, considering indexes are still at an all time high, but the ultra speculative stocks have entered a very deep bear market. And it does not look like it is changing any time soon. Take Tesla and Nio stock, for example. Both of these stocks were the belles of the ball during the ultra mega bull market of 2020. However, these stocks are breaking down, and NIO even broke below its 200 day moving average today… So what happened and what comes next? Check out why Tesla and NIO stock got annihilated and what we predict for the second half of 2021.
Tesla and NIO Stock Technical Analysis
Are you feeling the pain today? If your portfolio is overly long speculative tech stocks, particularly EV stocks, then answer is probably yes.
No need to worry, if you are looking for high probability trading outcomes, you are in the right place.
So, let’s start at the beginning.
Tesla stock is trading around $650/share, down about 6.5% on the day and about -1.5% after hours…not stonks.
Check out the 5 minute chart below, let’s see what we can get from this chart:
This is a pretty nasty one right here. Tesla down $50 in one…not great. Still up significantly from the March 2020 lows, but if you are long since only recently, then the past couple weeks are probably stinging.
Not much to say about the daily chart, except that there was no bid whatsoever. Nada. Just slow, painful selling.
Nio stock is not much different. Check out the daily chart below:
NIO stock finished the trading day at $34.33, down about 7% on the day. And also down about 1% after hours.
I think it can be safely said that the EV stocks trade in tandem, considering they all have this beat up, no-bid 5 minute chart…
However, these 5 minute charts only tell us what happened today. We’re going to need to zoom out to understand how this is going to play out long term.
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TSLA and NIO Stock Daily Chart Analysis
Let’s see what the daily charts say and then more on to the more important monthly charts. The daily will give us clues, but it is always the monthly charts that should guide your trading…write that down!
TSLA Stock Daily Chart:
As yo can see here, the chart is pretty bullish on a long term scale. A little too bullish…
In any case, you can see from above that the short term “top” for Tesla stock (so far) is $900. Since hitting this peak, Tesla has slowly consolidated to the downside, and recently broke out of the year long bullish channel it has been riding.
Currently the stock sits below the upper moving averages (20, 50, 63dma). This does not mean anything in itself, but one can tell from this chart that a lot of momentum has been lost recently.
Not only that, but TSLA is hovering just above its 200 day moving average ($578), and the upper moving averages appear to be curling downwards. This not great if you are very bullish on the stock.
Unless you have been riding this beast all the way for a while…then you know. Tesla only takes temporary breaks before shattering new records to the upside. (This will be discussed more in the prediction section).
NIO Stock Daily Cart
Not much difference here on the NIO daily chart…
Essentially the same topping pattern.
A topping pattern is simply a parabolic chart that hits a “top” then begins to tumble, first gradually, then all at once.
If you have never seen this chart, definitely save it, considering it is one of the most important out there.
Anyway, let’s get back to NIO’s daily chart. According to the daily timeframe, the “top” for NIO in this cycle (so far) is 66.99. For those that have been trading for a long time, this type of number is a clear giveaway that it is a significant number. Most likely a sign of a reversal.
No, I am not making that up, it’s true. Very few even know about this. You’re welcome!
Unfortunately, like many (almost all) of the other ultra speculative stocks of the March 2020 Bull Market, NIO appears to be losing the 200 day moving average.
Today, it finally traded below after several attempts to get back on the bull channel of the last year…
5 minute and daily charts are great, but what we really want is the monthly chart. There you will find all of your answers.
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Finally! The monthly charts!
For the permabulls…you may want to look away. It doesn’t look pretty here.
On the daily, it does not look so bad, despite being down significantly from the highs.
However, when you zoom out to the monthly charts, it does not look great.
As you can see above, NIO has been losing momentum and price levels for about 3 months now. This lack of momentum is the last thing a bull/permabull wants to see.
If you are in from the beginning (around $1-$2), you are still doing pretty well. If you got in thinking you were “buying the dip” recently, I do not need to tell you how it must suck.
Unfortunately, I do not have good news for you, this chart is not bullish. Not only is it not bullish, but the worst part of this chart is going unnoticed everywhere. The Monthly MACD. This is the most important indicator when trading stocks, in my opinion.
And, in this situation, the monthly MACD indicator is dying. Fast. Usually around this time of the descending MACD is when you get large selloffs. If you have not noticed, that is now…
Not much else you can say about TSLA stock, it has the same exact chart as NIO. Although it has not lost its 200dma on the daily chart, it seems quite likely.
And guess what…it makes sense! When you have that monstrous of a move (both stocks are up 1000%+ since the March 2020 lows), you need a long time to consolidate those gains.
Once the weak hands are shaken out, the bull market resumes. However, this may be after a few lost price levels.
Looks like a lot of air below for TSLA and NIO…
So what is our prediction for these two?
TSLA and NIO Stock Prediction
In conclusion, our forecast for TSLA and NIO are not great. The writing is on the wall everywhere.
The fact is…all the ultraspeculative names that ran during the most powerful bull market in history…appear to be coming to an end (for now).
Is it guaranteed that these will continue to get annihilated? Absolutely not. These can come right back up with some industry related news. However, this is very unlikely.
And based on the lack of momentum, poor technical indicators and “reopening” trade, it seems like this fat lady has sung.
Are we bearish on TSLA and NIO?
No freakin way. TSLA in particular will continue to grow and shatter records in the future. Nio as well to a large extent. However, SO much growth was priced into these two stocks that it is likely they will be taking a well deserved rest.
As a result, we are looking for a drop to the 200dma on TSLA ($578) in the next couple weeks, possibly sooner.
And, it is very likely to occur considering NIO, its Chinese equivalent, has broken this level.
We would say that worst case scenario for TSLA is actually $150. Remember, this is a WORSE CASE SCENARIO. If this does occur, then it will take about a year from here. Our bear case as of now is $590, which is not that far away. If it does reach this level, we will provide an updated article on the subject, so make sure you subscribe.
Lastly, our worst case scenario for NIO is approximately $10.
Yes, we know these numbers sound crazy considering how far up both of these EV giants went, but it is very possible. And looking very likely at the moment. Most tech and parabolic 2020 bull market stocks like Palantir, QuantumScape, Blink Charging, etc. are getting DESTROYED…daily…
Although these are pretty bearish numbers, always remember…
BUY THE DIP. Stonks go up. They might go down in the short term, but ALWAYS buy the dip on great companies. We are Tesla Permabulls because we have been trading it for almost 4 years now, so our judgment is a little skewed.
And also important to remember: Don’t buy the bear market rallies. The real time to buy is when EVERYBODY sells out. So WAIT for extreme exhaustion selling, and our price targets.
What do you think?
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