Stock Of The Day – Where Will The Tesla Selloff End?

Core Viewpoint - Tesla, Inc. shares have experienced a significant selloff of over 15% on Monday, but are showing signs of a small rebound on Tuesday, with the stock down more than 50% since December 17, finding a bottom around the $222.00 level, which is identified as a critical support level for the stock [1]. Price Levels and Market Dynamics - In the stock market, certain price levels hold more significance due to high trading volumes, where trends may pause or reverse upon reaching these levels [2]. - Support and resistance levels are crucial; a downtrend occurs when there are insufficient buy orders to absorb sell orders, leading to forced price reductions [3]. - Conversely, an uptrend forms when there are not enough sell orders to meet buy orders, causing traders to outbid each other [4]. Support and Resistance Conversion - Price levels that were previously support can become resistance, and vice versa, indicating a dynamic market behavior that traders must consider [5]. - The $222.00 level served as resistance for Tesla in October, marking the end of a selloff [6]. Market Sentiment and Potential Recovery - Many investors who sold shares at the $222.00 level regretted their decision when the stock price increased after breaking through that resistance, leading to a concentration of buy orders at this level during the recent drop [7]. - This influx of buyers has created a support level, suggesting that Tesla may be poised for a potential rally following its recent price movements [7].