Noteworthy Tesla Move:
The automobile space has been a bifurcated one and we all have seen the comparison to best in breed TSLA to TM recently, and we have been on that bandwagon with Toyota strength for some time. The stock is benefitting not only from regional strength with the Nikkei at 34-year highs but on its own individual merits. It is higher by more than 50% over the last one year period and pays a dividend of 2%, and is continuing to dominate rival HMC. Now we have been speaking about the concern of the ratio chart with the XLY against the XLP and lots of the weakness for the XLY was due to TSLA (AMZN is doing its part as it carves out a bull flag formation). Could TSLA be ready to start helping the ratio chart? Both bulls and bear can paint their individual biases as the former would point to the possible double bottom and the pessimists that it is just a retest of the bearish head and shoulders breakdown. The daily chart below shows a good risk/reward play to the long side if this week’s lows can hold on a CLOSING basis. A gap up would complete a bullish island reversal in the coming sessions, and last week’s spinning top candle, a very tight range (bullish) after the prior week slumped 14% could be a positive sign. It suggests bears were unable to push follow-through lower.