Tesla's Parabolic Rise Evokes Nostalgia for Old Commodity Traders

Old commodity traders have no problem with the rally in the shares of Tesla Inc. (TSLA) . Back in the 1970s, the commodity markets were in a secular uptrend. Demand had been building slowly for years and then several supply-side shocks sent a number of key commodities sharply higher. Sugar, coffee, grains, orange juice, cocoa, copper and others were affected by adverse weather, freezes, the Russian wheat deal, hoarding and fear of missing out. Traders got used to seeing parabolic advances and numerous limit-up moves. 

We wrote about TSLA earlier this month and said, after tweaking some data in a Point and Figure chart, we generated a big upside price target of $953. At the time, TSLA was around $490. We asked, "Could TSLA double from here? That would be amazing." TSLA reached $940 Tuesday morning, so what could come next?  

Too many of the media stories about jaw-dropping rise in TSLA have been focused on how much money the shorts may be losing. The phrase "parabolic rise" is used too often and by authors who probably have no skin in the game. Those who are long TSLA would talk and write differently than if they were just bystanders. I have seen it all too often.

Let's check out some new charts.  

In this daily Japanese candlestick chart of TSLA, below, we can see how prices have accelerated their rise from early December. Volume and price momentum have been increasing along with the On-Balance-Volume (OBV) line. Exactly the kind of picture that technically oriented traders want to see. Today's candle pattern could be a long-legged doji assuming that prices where they are right now around 11 a.m. The close could change and that could change the pattern. A doji is a balance of buyers and sellers and can mark a reversal. A bearish candle pattern Wednesday would increase the odds that we are seeing a reversal. The Japanese a reversal does not mean just a turn from up to down. A reversal can mean a turn from up to sideways. After TSLA's huge rally a period of sideways price action would be pretty normal. 

In this Point and Figure chart of TSLA, below, a potential longer-term price target of $1,723 is now projected. Don't shoot the messenger.  

Bottom line strategy: There used to be TSLA bears based on the burn rate and other factors. Now there are TSLA bears based on the price action. TSLA could certainly pause for a period of sideways price action, but a real peak probably will not be seen until TSLA bulls start leapfrogging each other with higher and higher price targets.

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