Tesla, Inc. (TSLA) shares fell just 1.62% during Friday's session after rebounding from lows near the 50-day moving average at $607.48. In addition to the wider stock market rout, nCov-19 led to a 46% month-over-month drop in new Tesla car registrations in China, and nearly three-quarters of its vehicles were built in China, whose factories are at a standstill.
Earlier this week, the National Transportation Safety Board (NTSB) concluded its investigation into a March 2018 incident involving a Tesla Model X on Autopilot that slammed into a concrete barrier and killed the driver. The NTSB found that the automaker bears some responsibility for the crash and should restrict the use of Autopilot and ensure driver attention.
The good news is that the China nCov-19 cases appear to be stabilizing, which could indicate a return to normal operations for Tesla. While the company said that the virus could delay its Model 3 roll-out, these delays could be temporary in nature as the region starts to improve. The big question moving forward will be the impact on U.S. market demand.
From a technical standpoint, the stock rebounded after hitting the 50-day moving average at $607.48. The relative strength index (RSI) fell slightly below neutral levels with a reading of 43.55, but the moving average convergence divergence (MACD) accelerated its bearish downturn. These indicators suggest that the stock could see further downside over the coming sessions.
Traders should watch for a breakdown from the 50-day moving average at $607.48. If that happens, traders could see a move toward Fibonacci retracement levels of $513.66 or trendline support just below those levels. If the stock rebounds, traders should watch for a move toward the next Fibonacci retracement level of $724.32 or a move to close the gap to $776.11.
The author holds no position in the stock(s) mentioned except through passively managed index funds.