Tesla: Early Stages Of A New Bull Run?
Dr. Arnout ter Schure | Aug 15, 2022 03:38PM ET
The last time I provided an update on Tesla’s (NASDAQ:TSLA) share price was in late October (see here). Back then, I found, using the Elliott Wave Principle (EWP), that:
“I prefer to look high and expect $1,200 to be reached, … once Primary V completes, an enormous cycle wave has concluded, and we should expect Tesla to drop back to around $300+/-200 during a multi-year bear market.”
And I ended my article by saying:
“The only bullish case I can make is that I am off by one wave degree. That will ultimately lead relatively soon to a significant correction, a big rally, and still that ultimate cycle-degree bear market. However, the way we slice and dice it, the big bad bear is inevitable.”
Ten months later, it is time to revisit both statements as TSLA topped on November 4, 2021, at $1243, and bottomed on May 24 this year, at $620. It has since rallied to as high as $940. Thus my top call was timely and correct, and the low was really not too far off.
However, the current rally from the May low starts to suggest I may indeed be off by one wave degree. Allow me to explain using figure 1 below.
Figure 1. TSLA daily chart with detailed EWP count and several technical indicators
The six-and-a-half-months-long correction was, in EWP terms, a flat wave: 3-3-5, (black) a-b-c. In fact, the a-wave was flat itself, and the (red) a-wave of the (black) a-wave was also flat. It just goes to show how complex corrections can be, and this pattern is better shown in Figure 2 using the monthly candlestick resolution.
At the May lows, wave-c was almost exactly equal to wave-a, and TSLA’s price bottomed in the ideal wave-IV target zone and right at the upper end of the support zone.
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Figure 2. TSLA monthly chart with detailed EWP count and several technical indicators
In figure-1, I am tracking a potential impulse higher, which means TSLA should now have bottomed for (green) minor-4 of (red) intermediate-iii/c of (black) major-1, rally to around $1000, correct to ~$875, and then rally again to ~$1100 (green/red path, which is the ideal impulse path).
If this path completes along those lines, TSLA should accomplish one last Primary wave-V up to ideally $1600+ (see figure 2), as per the assessment in October. In such case, the next larger (black wave-2) pullback will be an excellent low-risk buying opportunity.
Contrarily, TSLA will have to drop below $765 from current levels, alternatively from the (green) wave-“5?” target zone to tell me this bullish option is off the table.
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