Before You Sell TSLA, Read This

By TradeSmith Research Team

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By Lucas Downey, Contributing Editor, TradeSmith Daily

If you’ve ever seen the aftermath of a violent riot… or felt the rush of excitement in a packed football stadium… you know crowds are powerful.

You can feel the emotion like a wave of energy. Especially when those spirits are negative.

According to, “the collective behavior of crowds causes people to lose their individuality and act irrationally.” This is remarkably accurate when it comes to the stock market… and especially after the advent of social media.

Think back to NVIDIA (NVDA) and Meta Platforms (META) back in late 2022. Both fell in spectacular fashion, causing the online crowd to spit bile at anyone who suggested better days ahead.

And back in September, Target (TGT) falling hard after management told Wall Street how big of a deal theft is.

But irrationally following the crowd does nothing good for investors. Those trying moments, while tough to swallow, ultimately proved to be great buying opportunities.

Today another well-known company is under fire in the media. Once hailed as part of the elite Magnificent 7, Tesla (TSLA) has fallen 34% in 2024. (Disclosure: I’m long TSLA.)

After calls from analysts suggesting the iconic EV maker will not grow this year… the crowd is selling — and yelling about it.

This got me thinking. Is there a potential bullish signal in all this noise? Turns out there is.

Today I’ll share a historical study on the current drawdown and see what our research says is likely ahead.

If you hold TSLA and are itching to sell, this might just change your mind…

The Worst Performing Stock in the S&P 500 is a Buy

Stocks go up… and they go down. Tesla is now very much part of the down.

In 2024, shares have lost a third of their value. And the last two weeks have seen a monster slide, with shares off nearly 20%:

A chart like this could have you frozen like a deer in headlights.

Or worse… as part of an angry mob.

But I don’t see that as a meaningful way to view price action. I’m more interested in trying to uncover a data-driven meaning to this staggering move.

And that’s what we’ll do today… by utilizing some killer TradeSmith software.

Given that Tesla shares have slid 19% over the prior two weeks, we went back and asked two pressing questions:
  1. How often has TSLA fallen 19% or more in a two-week period
  2. What happened to the share price afterwards?
Turns out, since 2010 there’ve been 59 instances when TSLA shares fell 19% or more in a two-week period. This is a nice chunky dataset to study!

And what we learned is that siding with the crowd on this one is likely a bad idea…

When Tesla stock falls 19% or greater in 10 trading days, here’s what the bears miss:
  • A month later, shares jump 24%
  • Two months later, the stock gains a mind-blowing 39%.
Check it out…

Even more impressive is the hit rate: 77% or greater a month after this signal.

These drawdowns have ultimately offered value to those using fear to their advantage. And when you think about it… it makes intuitive sense.

By focusing on top-tier companies, pullbacks ultimately equate to rare buy-the-dip opportunities.

Think about any of the all-time-great companies. Every single one had meaningful setbacks from time to time, alongside a mad crowd.

I’ll say it again. Crowds are powerful… when you know how to use them to your advantage.

Let them yell, but don’t follow their emotional moves.

Instead, focus on stacking the odds in your favor with TradeSmith’s elite data.

Chances are, your portfolio will leave the doubters in the dust.


Lucas Downey
Contributing Editor, TradeSmith Daily