Is the after hours selloff something more than a typical sell-the-news reaction or the start of something bigger?

Tesla Record Earnings

Tesla is down about 4 percent after hours after reporting Record Earnings.

Q2-2023 was a record quarter on many levels with our best-ever
production and deliveries and revenue approaching $25B in a single
quarter. We are excited that we were able to achieve such results given
the macroeconomic environment we are currently in.

Our operating margin remained healthy at approximately 10%, even with
price reductions in Q1 and early Q2. This reflects our ongoing cost
reduction efforts, the continued production ramp success in Berlin and
Texas and the strong performance of our Energy and Services & Other
businesses.

Our commitment to being at the forefront of AI development entered a
new chapter with the start of production of Dojo training computers.

In conclusion, we are focusing on cost reduction, new product
development that will enable future growth, investments in R&D, better
vehicle financing options, continuous product improvement and
generation of free cash flow. The challenges of these uncertain times are
not over, but we believe we have the right ingredients for the long-term
success of the business through a variety of high potential projects.

The Reaction

CNBC reported “The stock price remained flat after the initial report, but began dropping during the earnings call as CEO Elon Musk and other executives failed to deliver precise specs and start of delivery dates for the Cybertruck, and for a robotaxi-ready vehicle. Musk and other execs also said during the call that vehicle production would slow down during Q3 due to shutdowns for factory improvements.”

Was the reaction a typical sell-the-news event?

If so, the reaction was mild. The four percent drop was not even enough to wipe out the prior six day gain.

If it’s something more, Tesla has a long way to drop.

Tesla Monthly Chart

Tesla chart courtesy of StockCharts.Com

Elliott Wave E-wave View

Technically speaking, the E-wave count suggests the more bearish view may be correct.

We had 5 waves down from the top followed by three waves up. 5-wave moves in either direction are impulse moves while 3-wave moves are corrective.

If my larger font 1-2 count is correct, wave 3 down is about to start. Wave threes tend to be the longest and strongest, but the only technical requirements are waves threes cannot be the shortest and waves cannot overlap other waves.

Support Levels

Monthly technical support levels are approximately 160, 100-120, then nothing until about 30.

Other timeframes will have additional support levels.

Tesla Fundamentals

Fundamentally speaking, Tesla does not have many of the problems traditional dealers have. It does not have dealers or huge inventories.

Tesla, is not struggling to make a profit.

And now, most analysts have written off or at least discounted the odds of a strong recession.

Congrats to the longs.

Goldilocks View

The Goldilocks view seems to be Hooray! No recession!

Yet, I wonder what the heck is priced in for a stock whose PE is over 85 despite record earnings.

The Fed Reports Abysmal Industrial Production Numbers and Negative Revisions Too

Recession lead time calculation and chart based on Fed data, chart by Mish

Meanwhile, please note The Fed Reports Abysmal Industrial Production Numbers and Negative Revisions Too

Peaks in industrial production tend to indicate economic peaks as well. The Recessions in 2001 and especially 2020 were exceptions.

IP peaked eight months ago, a long time by historical standards.

It would be amusing if recession started the very month nearly everyone gave up on the idea.

Electric Vehicles for Everyone? If the Dream Was Met, Would it Help the Environment?

Are EVs really going to happen as fast as people think?

For discussion, please see Electric Vehicles for Everyone? If the Dream Was Met, Would it Help the Environment?

Finally please consider A 5 Percent Pay Cut is Coming for 37 Million Student Loan Borrowers.

Something is likely to give on spending, across the board on spending.

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The Fed Reports Abysmal Industrial Production Numbers And Negative Revisions Too
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