Trump's victory triggers a surge in Tesla's stock price! How to determine the market trend ahead? (2024.11.08)

Hello everyone, this week's 【Technical Tracking】, let's analyze $Tesla(TSLA.US)$With the dust settled from the U.S. presidential election, Trump will return to the White House. As one of Trump's most important supporters, Musk has seen his fortune increase by over 20 billion dollars overnight due to his successful 'bet', making him the biggest winner among the world's top billionaires. But why does Musk support Trump, who clearly does not like electric cars? Is Tesla overvalued?

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On November 6, 2024 (Wednesday), Tesla's stock price soared nearly 15%, reaching a 52-week high, with a Market Cap surpassing 900 billion dollars. This surge followed the announcement of Trump's victory in the Republican presidential primary, and it is widely believed that Musk will become one of the star figures and major beneficiaries of Trump's return to the White House.

To help Trump regain the White House, Musk spent 75 million dollars last month, becoming the largest financial backer of the Republican Party. He has repeatedly expressed support for Trump in public, playing a certain role in boosting Trump's victory. Trump has also promised reciprocation, stating that if elected, he would establish a government efficiency commission headed by Musk, responsible for reviewing federal expenditures and cutting unnecessary spending.

Analysts predict that Trump's election as president could accelerate Tesla's research and promotion of fully autonomous electric vehicles. Garrett Nelson, an Analyst at CFRA Research, believes that Musk and Tesla are undoubtedly significant winners in this election, forecasting that under the new government's leadership, there will be a quicker advancement in the regulatory approval of fully autonomous vehicles. The Analyst upgraded Tesla's rating from 'hold' to 'Buy' and significantly raised the Target Price for the next 12 months to 375 dollars.

In fact, Trump's election has both advantages and disadvantages for Tesla. It is well known that Trump has always been skeptical of electric vehicles, having criticized their high costs, low range, and potential negative impacts on employment and the American automotive industry.

In light of this, industry insiders expect that Trump may cancel the support policies for electric vehicle production and consumption established during Biden's administration. These policies include billions of dollars in loans provided to automakers, funding for the construction of public charging facilities, and a tax credit of 7,500 dollars for consumers purchasing electric vehicles.

Technical Analysis

Trend analysis:

The weekly chart shows, $Tesla(TSLA.US)$The trends in recent years have shown significant fluctuations. At the end of 2021, the stock price reached a historic high of $414, and by early 2023, it dropped to a low of $101, forming a downward channel in the process. After hitting the bottom, the stock price entered an upward trend, then shifted to a downward trend, and is currently back in an upward trend.

The daily chart shows that Tesla's stock price recently experienced two significant upward gaps, attributed to two major events: the Q3 earnings report and Trump's victory. As a result, the stock price has formed a bullish flag pattern, suggesting further upward momentum.

Indicators interpretation:

● Tesla's stock price is running above the major moving averages, including the 50-day moving average (MA50) and the 200-day moving average (MA200), and is far from these moving averages, indicating the market's strong bullish sentiment recently.

● The MACD indicators are above the zero axis, and the bullish histogram is expanding, indicating that the upward momentum of the stock price is strengthening.

● The RSI Indicators have broken through the overbought threshold of 70, indicating that there may be a potential price correction or sideways consolidation ahead.

● Analyzing through Fibonacci trend extension lines, the significant potential resistance level for the stock price is roughly around $299, with the first key support level around $286, while a more important strong support level below is around $277.

Overall, the short-term trend of Tesla's stock price appears bullish, while the mid-term trend remains neutral. Analyzing through the daily chart's rising flag pattern and some momentum oscillators, after experiencing two significant rises recently, Tesla may have reached a phase Target Price, thus, investors can pay attention to potential short-term price corrections or sideways consolidation.

This content discusses technical analysis; other methods, including Fundamental Analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

All investments involve risks, including the potential loss of principal, and there is no guarantee that any investment strategy will be successful.