US100 reverses from all-time high; Tesla still in focus

Summary:

• US100 prints possible reversal signal

• Market ends lower after reaching new high

• Tesla to face 40% tariff in China

A bright start to the week for US indices has fizzled out with the rally on the optimism surrounding a new North American trade deal being erased in its entirety as both the US500 and US100 closed the gap higher. The US30 remains above Friday’s closing level but the market has still shown a notable pullback in the past 24 hours. Some soft trade in Europe on more concerns surrounding the political situation in Italy has weighed on sentiment and the forthcoming US session could well prove pivotal going forward. The US2000 could be the proverbial canary down the mine with the small cap index being hit with a wave of selling shortly after Monday’s cash open and the market has today fallen to its lowest level since mid-August.   

The US2000 dropped sharply lower yesterday after beginning brightly. The market has been trending lower since the bearish cross identified last week and could be seen as a warning sign for bulls in the large-cap US indices. Source: xStation

If the US2000 has been the worst performing of the bunch, the US100 has been the opposite and the star, with the latter rising above 7700 yesterday to post a new all-time high of 7728. The selling into the close saw a red doji candle printed on D1 with the possible reversal signal also coming on the upper bound of a bollinger band. Further utilising the bollinger band it is also apparent that this has now flattened off after pointing higher for much of the past 6 months. This could be taken as a possible sign that the uptrend has at least paused and the price could possibly be set for pullback. In addition the market failed to make a new record closing high after ending below the prior record of 7681.

The US100 has printed a possible reversal signal on D1 as a doji with a red close formed on the upper Bollinger band. HIghs of 7728 now become potentially key resistance. Source: xStation

Tesla continues to dominate the news with the stock staging an impressive comeback on Monday after Musk and the SEC reached a settlement. The stock recouped all of Friday’s declines and the market is now back near possible resistance around its 200 day SMA at 316. Further gains and a break above 316 would change the outlook for this stock and could be seen to signal the start of a new uptrend, but unless that happens the market remains vulnerable to deeper declines.

On the fundamental front there’s been a couple of developments to keep a close eye on which could drive today’s trade. Firstly, Tesla’s total 3rd quarter vehicle deliveries of 83,500 beat its own guidance and also Wall Street expectations. However the delivery of 52,239 Model 3 Sedans was marginally short of its 52,425 guidance and well below the Wall Street forecast of 55,600. Furthermore the company stated in a press release that US and China trade tensions have “resulted in an import tariff rate of 40% on Tesla vehicles compared to 15% for other imported cars in China.”  

Tesla shares rebounded strongly yesterday with the market recouping Friday’s losses. With price back near the 200 day SMA the next few sessions could prove pivotal going forward. Source: xStation