With Tesla in a bear market, chart watcher points to two technical yellow flags for more pain 

Tesla is speeding toward a double-digit drop for the week, its worst in nearly three months. The electric car maker tumbled this week after just barely clearing quarterly production goals last Sunday.

Its 10 percent weekly drop is just the beginning of its worries, according to Matt Maley, equity strategist at Miller Tabak. He sees two other yellow flags in its charts.

“If you go back two weeks it’s down about 17 or 18 percent and that’s been a second yellow flag for the stock,” Maley told CNBC’s “Trading Nation” on Thursday. “The first one came in the first quarter when the stock broke down below its multiyear trend line going all the way back to 2012.”

Tesla first started selling off in March, breaking below an upward trend line stretching back to 2012 when its shares first began to accelerate. A recovery rally brought its stock up to a year-to-date high of $373.73 on June 18, but it has since dropped 17 percent. Its June rally took it back up to its trend line dating back to 2012 but did not break above it.

“Not only did it fail, but it failed miserably,” said Maley. “That kind of tells me that some of these true believers are starting to lose a little bit of faith.”

Maley’s yellow flags have not turned red yet.

“The red one is really down at the $250 level,” he said. “You break below that level we got real problems in the technicals.”

A move below $250 would pull shares back to early April lows and violate the trend line dating back to early 2016.

To Boris Schlossberg, managing director of FX strategy at BK Asset Management, the technicals matter less than Tesla’s public perception.

“Tesla is a cult stock and, therefore, it does not get evaluated by any kind of real metrics,” Schlossberg told “Trading Nation” on Thursday. “The critical thing for a cult stock is it losing its cool.”

As prestige car brands like Porsche and Jaguar release their own electronic models, Tesla’s cool factor becomes more and more at risk, said Schlossberg.

“Once the public decides it’s no longer cool to own Tesla, it doesn’t matter what [CEO Elon Musk] does, the stock is dead,” said Schlossberg. “The sell-off could just be beginning.”

Tesla shares are in a bear market having fallen 20 percent from all-time highs set in September. Its stock is essentially flat for the year.

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more