A Bad Week For Tesla Motors

Why The No Good, Very Bad Week?

A few different factors may be accounting for the substantial decline this week. First of all, there has been overall rotation in the market this week, as the higher price-to-earnings ratio and higher multiple stocks have been abandoned for value stocks especially in the financial sector.

Along these lines, Jim Cramer of CNBC's "Mad Money" on Wednesday explained that if the issue traded on its true fundamentals, as opposed to people liking its product, it would be trading at much lower level.

That may have accounted for some of Thursday's decline of nearly $8.00 ($189.40 to $181.88), but does not account for the $10 decline from Monday high to Wednesday close of $189.40.

Technical Breakdown And A Look To February

Now the issue is on the verge of a major technical breakdown. In the month of November, it found support under the $180.00 area on November 10 ($180.42) and November 14 ($178.19) and subsequently rallied toward to the $200.00 level.

Based on the daily charts, there may be minor support at its February 25 low ($175.20) and it's February 24 low ($167.84). Following a breach of that level, it has an additional low from February 19 at $162.50.

However, the major support may not come in until the pair lows at the $155.00 area from February 16 ($154.11) and February 17 ($156.68).

Not A Sector-Wide Trend

Interestingly, two of the largest U.S. auto manufacturers have moved in the opposite direction of Tesla Motors this week, including General Motors Company GM shares, which rallied from last Friday's close ($33.66) to $36.66 in Friday's session. Since the election, the issue rallied over $6.00 from its November 9 low ($30.21) at Thursday's intra-day high. Profits-takers have come into the issue in Friday's session as it off by $0.97 at $35.46.

Also, Ford Motor Company F shares are having a good week, rallying from last Friday's close of $12.04 to $12.80 at its peak for the week on Thursday. Its post-election rally emanated from its November 9 low of $11.07.