Going into last week, the Magnificent Seven stocks were looking more like the Magnificent Four. Leadership within the group became more concentrated, with Amazon, Meta, Microsoft and Nvidia having done most of the heavy lifting.
This is far different from the first 6 weeks of 2023, when gains among these Magnificent 7 names was more evenly dispersed — as shown by the orange bars below. The blue bars show the performance for this year and, as you can see, Tesla (TSLA) is far underperforming its peers.
LPL Financial
In fact, TSLA is currently 50% off its highs, with what Musk terms as the company being caught between its recent success and preparing for what will ultimately drive its future growth. Tesla’s sales have slowed down in recent quarters; however, the company is arguably the best positioned to create new products that will potentially entice new customers to the brand.
Daily Chart of Tesla (TSLA)
Tesla’s chart also shows a promising future after posting a double bottom formation over the past two weeks, as well as a move back above its 21-day moving average on Thursday on above-average volume.
Using last May’s downtrend reversal following a weak quarterly earnings report as precedent, I’ve highlighted the key characteristics of the stock’s reversal. Last May, in addition to moving above its shorter-term moving averages, the MACD and RSI turned positive, which pointed to bullish momentum. At this time, Tesla is in the beginning stages of a similar reversal, with the RSI a hair away from turning positive and the MACD already having posted a positive crossover.
The longer-term 50- and 200-day moving averages may present near-term hurdles; however, a close above these MAs would be ideal, as that would give TSLA free reign to trade higher.
Subscribers to my twice-weekly MEM Edge Report were alerted to this year’s 4 biggest winners among the Magnificent Seven, as well as other big winners, and I’d love to share those names, as well as my next picks from my Suggested Holdings List. Use the link above to trial this report at a nominal fee.
Warmly,
Mary Ellen McGonagle
MEM Investment Research