Watch This Before Tesla Earnings: Fundstrat TSLA Technical Setup

Episode Overview

• This episode features technical analyst Mark Newton discussing the long-term price trajectory of Tesla (TSLA) and the broader market through 2026-2028.
• The central discussion focuses on the significance of the $500 price level for Tesla, explaining why breaking this specific "ceiling" would signal a massive structural shift for the stock.
• Newton contrasts technical analysis with fundamental valuation, arguing that price action and cycle studies are better tools for navigating high-growth, volatile stocks than traditional metrics like P/E ratios.
• The conversation frames 2024 as a "choppy" year of consolidation that serves as a launchpad for a powerful bull run predicted for the 2026-2028 window.

Key Concepts

• The Power of Long-Term Consolidation Tesla has traded in a sideways range (consolidation) since 2021. In technical analysis, this is not stagnation but energy building. The longer a stock churns within a base, the more explosive and sustained the eventual breakout tends to be. Newton identifies the "Cup and Handle" pattern, a classic bullish formation, suggesting this period is setting the stage for a major upward move rather than a decline.

• Resistance Turning into Support A fundamental technical principle explained is the transition of price levels. Currently, $500 acts as a "ceiling" (resistance) where sellers emerge. However, once the stock breaks above this level with conviction, that ceiling transforms into a "floor" (support). Breaking $500 changes the stock's structural reality, signaling that it is time to buy strength rather than sell into resistance.

• Seasonal and Cyclical Patterns Stocks often follow predictable time-based patterns. Newton notes that Tesla historically shows weakness in the spring but strength in the second half of the year. Furthermore, he utilizes multi-year cycle studies (4-year and 6-year cycles) to forecast a "pause that refreshes" in 2024, followed by a powerful bull market acceleration between 2026 and 2028.

• The "Overshoot" Principle vs. Fundamentals Fundamental analysis (like fair value estimates) often fails with high-innovation stocks because it assumes rational pricing. Newton teaches that markets run on sentiment and momentum, causing prices to overshoot targets on the upside and undershoot on the downside. Technical analysis is presented as a superior tool because it tracks this actual behavior rather than theoretical value.

• Price Projection via Historical Precedent Instead of guessing future prices, targets can be derived from a stock's own history. By analyzing previous major rallies (which saw gains of 190%–240%), Newton projects that a similar percentage move from current levels would target the $650–$740 range. This method uses historical volatility to set realistic expectations for future performance.

• Relative Strength Indicators Even when a stock isn't hitting new highs, its behavior relative to peers is a key signal. Newton points out that while other "Magnificent 7" stocks corrected, Tesla's ability to hold ground indicates "relative strength." Holding value while the sector weakens is often a precursor to market leadership during the next rally.

Quotes

• At 0:08 - "Once we get above 500, I think it's an even more important breakout than what we saw recently because we're dealing with the entire base since 2021." - Explains the technical significance of breaking a multi-year resistance level versus a short-term one.
• At 13:17 - "Fundamental analysts always get one key thing wrong: the stock almost always overshoots what they believe is a meaningful price target to the upside, or it goes well below where they believe it should be valued on the downside." - Highlights the limitations of logic in a sentiment-driven market and why prices detach from "fair value."
• At 16:45 - "Things have been largely pretty range-bound over the last few years... It hasn't been a lot of net change in yields even though despite the swings." - Contextualizes market volatility, showing that despite scary headlines, the structural financial environment is more stable than it appears.
• At 24:19 - "You have to take a victory lap in that the stock [Tesla] is more than doubled since last April... The stock is acting honestly better right now than many of the Mag 7." - Reframes the narrative that Tesla is "lagging," pointing out that its stability during peer corrections is actually a bullish signal.
• At 32:40 - "The next time it goes through 500 should not be the time to sell it. It should be the time to buy it, honestly, because that's the time we're going to see the real acceleration." - A counter-intuitive lesson in momentum investing: buying the breakout often yields better results than trying to buy the dip.
• At 33:00 - "You want to own the stocks that are at or near 52-week highs, not the ones that are plunging to new lows because it takes a remarkable amount of time for these stocks to claw back." - A critical lesson in risk management and opportunity cost regarding which assets to hold.

Takeaways

• Buy the Breakout, Don't Fade It When a stock breaks a multi-year resistance level (like Tesla at $500), do not sell immediately in anticipation of a pullback. Recognize this as a "change of character" for the asset and a signal to enter or add to positions to capture the acceleration phase.

• Ignore "Fair Value" During Manias Stop trying to trade high-growth stocks based on P/E ratios or analyst price targets alone. Acknowledge that prices will "overshoot" rationality. Use technical trends to stay in a trade as long as momentum persists, rather than selling early because a stock seems "expensive" on paper.

• Utilize Seasonality to Manage Emotions Learn the seasonal rhythms of your core holdings (e.g., Tesla's tendency for Spring weakness and Fall strength). Use this knowledge to avoid panic-selling during predictable seasonal dips and to time your entries ahead of historically strong periods.