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Tesla's 17% Plunge is Just the Beginning – Expect More Pain, Crypto Coins News

Tesla's 17% Plunge is Just the Beginning – Expect More Pain, Crypto Coins News
  • Shares of the electric car maker dropped big time yesterday.
  • TSLA recorded its three largest daily trading volumes over the last three days, which indicates that the stock has topped out.
  • Other traders claim that it is too early to say whether TSLA’s parabolic run is over.

Tesla (TSLA) shocked investors yesterday as it plunged by a nauseating . percent. On Tuesday, I encouraged investors not to buy into the Tesla hype because it was showing signs of topping out. On the same day, shares of the electric vehicle maker climbed as high as $

. If you bought at the top, you would be down by a sickening . (percent in) hours.

Tesla dumping big time | Source: Twitter

Unfortunately for Tesla bulls, this is just the beginning. I expect the stock to continue crashing in the following weeks. I am not alone to have this view.

TSLA Recorded Its Three Largest Trading Volumes Over the Last Three Days

When trying to catch the bottom of a market, all you have to do is wait for volume to explode. At the height of a bear market, intense fear drives intense selling. The smart money then takes advantage of the capitulation by accumulating positions at rock bottom prices.

The opposite is true when timing a market top. At the height of a bull market, intense greed drives intense buying. The smart money then takes advantage of the soaring demand to sell shares at sky high prices.

Over the last three days, TSLA recorded its three largest daily volumes in its history:

  1. February 4th – 99. 728 million shares
  2. February 5th – . million million
  3. February 3rd – . million shares
  4. Before February 3rd, TSLA’s largest daily volume was over 58 million recorded in May 2020. At the very least, the exponential surge in volume tells me that early investors are cashing out. Once buying exhaustion sets in, and it will,

      Tesla would hit the ground hard .

      ) TSLA weekly chart shows tremendous volume and the week is not yet over | Source: TradingView

      It’s over,

      says full-time trader Johnny Lambo.

      The top was in yesterday. Tesla will be back to $ (soon.)

      If Johnny Lambo is right, that’s another percent nosedive for the electric car company.

      Too Early to Sound the Alarm

While I’m taking a contrarian stance on Tesla, others are still cautiously optimistic. They believe that yesterday’s crash does not spell the end of the stock’s impressive rally. When asked if TSLA’s parabolic rally is over, trader Scott Melker told CCN,

It is too soon to tell.

Jason Harris of StockHunterTrading.com also has the same response. He said,

Still too early to tell. It’s holding a longer term uptrend. Today might have just trapped more new shorts plus SSR is on. Let’s see what happens tomorrow.

Critical levels to watch out for | Source: Jason Harris
SSR stands for short-sale rule
. The rule restricts investors from shorting a stock that has lost percent or more of its value from the previous day’s close.

Lastly, Elliott wave trader BenjaminBlunts also thinks that more time is needed to see where Tesla is going. He told CCN,

On the daily timeframe, yesterday’s close was a confirmed evening star. So either we begin a wave 4 pullback towards $ or that was a blow off top. [It is] too early to tell which one.

While

picking a Bad time to sell can be costly

, picking a bad time to buy can be worse. Early or not, yesterday’s crash puts bulls in a defensive position. If they don’t show up in droves today, Tesla will likely continue to drop big time. The higher they go, the harder they fall.

Disclaimer: The above should not be considered trading advice from CCN.com. The writer does not own any shares of the companies or markets mentioned.

This article was edited by

Samburaj Das .

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