Analysis from Musk's xAI

$Tesla(TSLA.US) Strategy

With the surge in trading volume yesterday, the market is in a phase of emotional venting, and short-term volatility will be higher. Below are the strategy recommendations:

1. Mainly observe (currently recommended)

• Reason:
  • The surge in trading volume (293 million shares) indicates extremely strong selling pressure, and market sentiment has not yet stabilized. There is still a risk of further decline in the short term.
  • RSI≈42 is not yet oversold (needs to drop below 30), and the MACD histogram is downward, indicating that bearish momentum has not been fully released.
  • The price is at $284.70, not far from the $260 support level, but it has not yet reached a solid support level. Rushing to buy at the bottom carries high risks.
• Action:
  • Continue to observe and monitor whether the price approaches the $260-270 support range.
  • Focus on today’s and the next few days’ trading volume: If the volume rapidly declines (e.g., falls below 100 million shares), it may signal weakening selling pressure. If the volume continues to surge (>200 million shares), the downward momentum may persist.
  • Also monitor the follow-up developments of the Musk-Trump incident. If the situation escalates, it may intensify selling.

2. Short-term rebound play (bullish)

• Conditions:
  • The price stabilizes in the $260-270 range (MA60, MA200 support) without breaking below $255.
  • Trading volume significantly declines (e.g., drops below 100 million shares), indicating reduced panic selling.
  • RSI falls below 30 (oversold) or shows a bullish divergence (price hits a new low but RSI does not).
  • MACD histogram shortens, or the fast line shows signs of turning upward (potential golden cross formation).
  • Short-term candlestick patterns (e.g., 4-hour chart) show signs of bottoming (e.g., hammer, bullish engulfing).
• Action:
  • Test-buy with a small position (10-15%) in the $260-270 range, targeting $290-300 (MA20≈$305.42 as resistance).
  • Set stop-loss at $255 (a $5 buffer after breaking below $260).
• Reason: High trading volume (293 million shares) may mark the peak of selling. If volume subsequently declines and the price stabilizes, the $260-270 range is a strong support level, increasing the probability of a rebound. A short-term play could yield 10-15% gains.

3. Buy PUTs (bearish)

• Conditions:
  • The price breaks below $260 (breaking MA60, MA200, and trendline) with sustained high volume (>200 million shares).
  • RSI falls to around 30 with no signs of bottoming, and the MACD histogram continues to extend (bearish momentum strengthens).
  • Short-term candlestick patterns (e.g., 4-hour chart) show accelerated downtrend (e.g., large bearish candle or gap down).
• Action:
  • Buy PUTs after breaking below $260, targeting $240-220 (Bollinger Band lower band≈$200 as extreme support).
  • Take profit/stop-loss: If the price rebounds to $270 (reclaiming $260), stop-loss; if it falls to $220, take profit.
• Reason: After high-volume selling, if the price breaks below $260 with sustained volume, the downtrend may worsen, with a potential 15-20% downside.

4. Risk management

• Position control: Limit short-term positions to 10-15%, as high volume indicates extreme volatility. Yesterday’s 14% drop may only be the beginning.
• Time management: If no signs of decline or bottoming appear within a week, reassess the trend to avoid prolonged capital lockup.
• Event monitoring: The ongoing conflict or reconciliation between Musk and Trump may continue to affect market sentiment. Monitor news and X platform updates.

Current optimal strategy

Mainly observe, focusing on:

• Whether trading volume declines in the coming days (<100 million shares is ideal).
• Support strength in the $260-270 range. If the price stabilizes and volume declines, consider a small position for a rebound (target $290-300, stop-loss $255).
• If the price breaks below $260 with sustained high volume (>200 million shares), buy PUTs (target $240-220, stop-loss $270).

Summary

Yesterday’s trading volume surged to 293 million shares (300% above average), indicating extremely strong selling pressure and unstable market sentiment. Currently, it is recommended to mainly observe and wait for the price to approach the $260-270 support level with signs of declining volume and RSI<30 before considering a short-term rebound play. If the price breaks below $260 with sustained volume, consider buying PUTs. Avoid rushing to buy at the bottom, as high-volume declines suggest continued high volatility, requiring further confirmation signals.