Tesla (TSLA) has been stuck in a clearly defined down trending channel since early September of 2014. The question is……
Is Tesla about to bottom and surge higher to $400 as some people expect or will it break down to test support at $120 and possibly $40?
Fundamentally speaking, the company is grossly overpriced and highly speculative. And with competition from major auto makers ramping up, Tesla is just as likely to end up bankrupt as it is to be the next run away success story. That is to say, it is still a 50/50 proposition.
Here is the bottom line. As of right now, the stock is neither a short nor a long. It is neutral. Should it reverse this downtrend and re-establish a bullish pattern, you might want to consider going long. At the same time, should the stock break below $175 level, it becomes a short sellers dream. Given our overall bear market forecast (2014/15-2017), the probability of Tesla accelerating its bear leg increases daily. If so, you might want to get ready to load up on the short side.
