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Asset Watch
Monday, March 3, 2025
Manic moves have plagued risk assets recently, as tariff fears collide with decelerating economic growth. And with momentum-driven stocks the hardest hit, fan favourites like Tesla came under heavy pressure in February.
However, with S&P 500 seasonality turning bullish in early March, could the EV giant get back on track this month?
A perfect storm stuck Tesla, as the ‘Trump Trade’ crashed in recent weeks. Popular assets like Bitcoin, unprofitable technology companies, and domestically-focused small-cap stocks were deemed winners alongside a Republican Presidential victory.
Moreover, because CEO Elon Musk is a major part of Trump’s administration, the victory was considered bullish for Tesla. Yet, with that momentum unravelling, and some analysts believing that Musk’s governmental responsibilities distract from his focus on Tesla, sentiment has soured on the stock.
Consequently, the recent correction could be a buying opportunity for long-term bulls.
Because traders are so jittery these days, daily volatility could be amplified for the foreseeable future. Thus, monitoring the weekly chart could provide greater insights into where the drawdown could end.
For example, Tesla rallied near $275, and the level is near the previous highs witnessed over the last 18 months. Furthermore, the upward-sloping white line highlights how trendline support isn’t far behind.
Put together, they could provide a medium-term floor as long as tariff concerns don’t cause a deeper market sell-off.
The 50-week moving average (the blue line) is sandwiched between price and trendline support, and should provide another layer of protection. Therefore, you should monitor all three levels and see how the stock responds when the next daily pullback occurs.
While the S&P 500 and NASDAQ 100 rallied sharply to end the Feb. 28 session, there is an old saying that markets don’t bottom on a Friday. And while an end of tariff threats could be a catalyst for a rebound, a lot of technical damage has been done on the hourly and daily charts.
As such, risk management should be the priority, and that means waiting for confirmation of a bottom, even if you have to bypass some gains to obtain more clarity on the policy and economic outlooks.
In other words, you could build a small position now, or wait for Tesla to successfully retest the low and bounce before building a larger one.
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