Tesla Stock Falls Toward Channel Support as Challenges Mount

Tesla, Inc. (TSLA) shares fell more than 4% during Tuesday's session before finding some footing on Wednesday. Chinese customs put a brief hold on 1,600 Model 3 vehicles due to a lack of proper labeling on Tuesday, underscoring some of the risks associated with trade tensions. The news also comes as the company is nearing completion of its Shanghai manufacturing plant at a time when NIO Inc. (NIO) scrapped its own plans for a new electric vehicle (EV) plant, citing concerns about China's new EV subsidy policy and weaker demand for electric SUVs in early 2019.

Investors have also been concerned about talks of Tesla requiring a capital raise over the coming months if business conditions don't improve, as well as CEO Elon Musk's ongoing legal troubles with the Securities and Exchange Commission (SEC). The company's second largest stakeholder suggested that the investment firm wouldn't be against having Elon Musk in a non-CEO role if the SEC were to take action to remove him from the role.

From a technical standpoint, the stock moved toward the low end of its bearish price channel over the past few sessions. The relative strength index (RSI) moved toward oversold levels of 36.36, but the moving average convergence divergence (MACD) recently experienced a bearish crossover. These indicators suggest that the stock could see a brief reprieve before resuming a trend lower, absent of new bullish developments.

Traders should watch for consolidation above S2 support at $275.49 over the near term. If the stock breaks down from these levels, it could retest reaction lows at the bottom of its price channel near $250.00. If the stock rebounds higher, traders should watch for a move toward S1 support at $297.69. There's heavy resistance at the pivot point, 50- and 200-day moving averages, and trendline resistance at around $310.00.

The author holds no position in the stock(s) mentioned except through passively managed index funds.