Bear Market For Tesla Inc (TSLA) Could Be Just Beginning

Tesla Inc (NASDAQ:TSLA) shares dropped around 10% last week alone, and one prominent equity strategist believes there’s more trouble ahead.

Matt Maley, equity strategist at Miller Tabak, explained his outlook on CNBC recently:

“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.

That failure to hit new highs is a major factor in the stock’s subsequent technical breakdown, Maley notes. However, TSLA still has a long way to drop before true red flags begin to emerge. If the shares break down below the $250 level, he says, then it will be time to panic.

Tesla Inc shares closed at $308.90 on Friday, down $0.26 (-0.08%). Year-to-date, TSLA has declined -0.79%, versus a 4.09% rise in the benchmark S&P 500 index during the same period.

TSLA currently has a StockNews.com POWR Rating of B (Buy), and is ranked #4 of 24 stocks in the Auto & Vehicle Manufacturers category.