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Asset Watch

Will Tesla channel its inner bull?

 

Tuesday, July 5, 2022

On Jul. 2, Tesla announced that second-quarter deliveries came in at 254,695 versus the expected 256,520 (an increase of 26.5% year-over-year (YoY)). Considering the current supply-chain disruptions and the recent COVID-19 lockdowns in China, the in-line figure was suitable.
Goldman Sachs flow trader Scott Rubner notes, “we are entering the best two-week period of the year” from an S&P 500 seasonality perspective. He adds that “1H July is the best period from now until July 17,” so if the S&P 500 rallies, Tesla may be a material beneficiary.

Goldman Sachs data also shows that median monthly flows into ETFs and mutual funds are the second-most negative in June. As a result, U.S. equities’ recent suffering has historical precedent. In contrast, median monthly flows in July are the second-highest during the July to December months, only surpassed by the optimism often seen in November.

 

Since Tesla is more volatile than the S&P 500, a short-term rally could allow the EV giant to challenge the upper trendline of its ominous bear flag pattern. The top of the channel implies a nearly 14% rally from the Jul. 1 close. However, a breakdown below support of roughly $625 could open the floodgates to much lower prices.

 

So, will seasonality and bullish fund flows drive Tesla higher this week?


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