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Trending $TSLA: Remove the “noise”

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Last week I introduced the MACD indicator. This week I will present a different way of displaying stock charts that works well with the MACD to help in forecasting future stock behavior.

Most profits and losses are generated when markets are trending. Market “noise” is simply all of the price data that distorts the picture of the underlying trend. This includes mostly small corrections and intraday volatility. Noise removal is one of the most important aspects of active trading. By employing noise-removal techniques, traders can avoid false signals and get a clearer picture of an overall trend.

The Heikin Ashi technique (“average bar” in Japanese) is one of many techniques used to remove noise and improve the isolation of trends to predict future prices.

Heikin Ashi charts are a type of candlestick chart that shares many characteristics with standard candlestick charts, but differs because of the values used to create each bar. I will not bore you with the formulas used to calculate the candlestick components (close, open, high, low). The Heikin Ashi formula factors in the current bar with an average of past bars in order to create a smoother trend. This process creates smoother price patterns that are much easier to read.

Daily Heikin Ashi charts are used to display “pay-day cycles” that display the daily trends, without the “noise.”

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Take a look at the difference between the standard candlestick and the Heikin Ashi charts of TSLA stock for the past 5 months. First let’s take a look at the standard candlestick chart.

Candlestick Chart (Source: Wall Street I/O)

Candlestick Chart (Source: Wall Street I/O)

Now let’s take a look at the Heikin Ashi chart.

Heikin Ashi Chart (Source: Wall Street I/O)

Heikin Ashi Chart (Source: Wall Street I/O)

Notice that in the latter chart the Jan.-Feb. and the May downtrends are more clearly visible, as well as the Feb-March huge uptrend gain.

In my trading I combine pay-day-cycles with the MACD. I make sure that the pay-day-cycle has turned positive (colored green in the chart above), and then I wait for the MACD to cross to the bulls to initiate a probing bullish trade.

Taking a look at today’s situation, this may be the first day of a green Heikin Ashi bar after 12 red bars. I also notice that the MACD is starting to flatten. We may be starting to form a bottom, and this could be the beginning of a potential reversal in the downtrend in TSLA stock, so I will be watching closely for an entry point when both indicators turn positive. Notice that in general the pay-day-cycle turns positive before the MACD does.

Heikin Ashi charts are now provided by most trading platforms: Wallst.io (select Chart Type – Pay Day Cycle), TD Ameritrade’s Thinkorswim (select Style – Chart Type – Heikin Ashi, Daily), OptionHouse (select Style: Heikin Ashi, Range: 6 Months, Frequency: 1 Day).

Also StockCharts.com offers free Heikin Ashi charts (enter TSLA, Chart Attributes, Type Heikin-Ashi, Update).

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Source: StockChart.com

One interesting pattern that formed at the closed today is a “Doji”: a Doji candlestick looks like a cross, inverted cross or plus sign, and forms where a security’s open and close of the day are virtually equal. This often can be the precursor of a reversal. Secondly, the recent 50-day MA (Moving Average) move above the 200-day MA occurred a couple of weeks ago (see the chart above), again another usual precursor of a forthcoming bullish trend. And lastly, TSLA has support at the 206 level, from last November 2015. All of these are reasons to be bullish on TSLA, especially for short-term swing traders.

Is $TSLA going to reverse and move back up or will it start to compress, i.e. go sideways like it did in April?  What do you guys think?

Investor's Corner

Tesla welcomes Chipotle President Jack Hartung to its Board of Directors

Tesla announced the addition of its new director in a post on social media platform X.

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Credit: @ArthurFromX/X

Tesla has welcomed Chipotle president Jack Hartung to its Board of Directors. Hartung will officially start his tenure at the electric vehicle maker on June 1, 2025.

Tesla announced the addition of its new director in a post on social media platform X.

Jack Hartung’s Role

With Hartung’s addition, the Tesla Board will now have nine members. It’s been a while since the company added a new director. Prior to Hartung, the last addition to the Tesla Board was Airbnb co-founder Joe Gebbia back in 2022. As noted in a Reuters report, Hartung will serve on the Tesla Board’s audit committee. He will also retire from his position as president and chief strategy officer at Chipotle, and transition into a senior advisor’s role at the restaurant chain, next month.

Hartung has had a long career in the Mexican grill, joining Chipotle in 2002. He held several positions in the company, most recently serving as Chipotle’s President and Chief Strategy Officer. Tesla highlighted Hartung’s accomplishments in a post on its official account on X.

“Over the past 20+ years under Jack’s financial leadership, Chipotle has seen significant growth with over 3,700 restaurants today across the United States, Canada, the United Kingdom, France, Germany, Kuwait and the United Arab Emirates. Jack was named ‘CFO of the Year’ by Orange County Business Journal and Best CFO in the restaurant category by Institutional Investor,” Tesla wrote in its post on X.

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Tesla Board and Musk

Tesla is a controversial company with a controversial CEO, so it is no surprise that the Board of Directors tend to get flak as well. Two weeks ago, for example, Tesla Board Chair Robyn Denholm slammed The Wall Street Journal for publishing an article alleging that company directors had considered a search for a potential successor to Elon Musk. Denholm herself has also been criticized for offloading her TSLA shares.

More recently, news emerged suggesting that the Tesla Board of Directors had formed a special committee aimed at exploring a new pay package for CEO Elon Musk. The committee is reportedly comprised of Tesla board Chair Robyn Denholm and independent director Kathleen Wilson-Thompson, and they would be exploring alternative compensation methods for Musk’s contributions to the company.

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Rivian stock rises as analysts boost price targets post Q1 earnings

Rivian impressed with smaller-than-expected losses & strong revenue, pushing analysts to raise price targets.

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(Credit: Rivian)

Rivian stock is gaining traction as Wall Street analysts raise price targets following the electric vehicle (EV) maker’s first-quarter earnings report. Despite a dip after the announcement, optimism surrounds Rivian’s cost control and upcoming lower-priced cars.

Last week, Rivian reported a better-than-expected Q1 gross profit, surpassing Wall Street’s forecasts with adjusted losses of $0.48 per share against expectations of $0.92 per share. The company also reported a revenue of $1.24 billion compared to the $1.01 billion anticipated.

However, the EV automaker cut its 2025 delivery forecast and capital spending due to President Donald Trump’s tariffs. It explained that it is “not immune to the impacts of the global trade and economic environment.” RIVN stock dropped nearly 6% post-earnings, closing at $12.72 per share.

Wall Street remains upbeat about Rivian, citing progress toward launching lower-priced vehicles in 2026 and effective cost management. On Monday, Stifel analyst Stephen Gengaro raised his RIVN price target to $18 from $16, maintaining a “Buy” rating. He highlighted Rivian’s “solid progress” toward key milestones.

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Conversely, Bernstein’s Daniel Roeska gave RIVN a “Sell” rating. However, Roeska also lifted his Rivian price target to $7.05 from $6.10, acknowledging “better” Q1 results. He warned that profitability remains distant and hinges on multiple product launches by the decade’s end.

Overall, Wall Street’s average price target for RIVN climbed from $14.18 to $14.31, a modest 13-cent increase reflecting positive sentiment. About one-third of analysts covering Rivian rate it a Buy, compared to the S&P 500’s average Buy-rating ratio of 55%.

On Monday, Rivian stock rose 2.7% to $14.64, slightly trailing the S&P 500 and Dow Jones Industrial Average, which gained 3.3% and 2.8%, respectively. The uptick may also stem from broader market gains tied to news of a temporary U.S.-China tariff suspension.

As Rivian navigates trade challenges and scales production at its Illinois factory, its Q1 performance and analyst support signal resilience. With lower-priced EVs on the horizon, Rivian’s strategic moves could bolster its position in the competitive EV market, offering investors cautious optimism for long-term growth.

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Investor's Corner

Tesla (TSLA) poised to hit $1 trillion valuation again amid reports of Trump China deal

TSLA stock was up about 8% at $322.56 per share on Monday’s premarket.

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tesla-model-y-giga-texas-logo
(Credit: Tesla)

Tesla shares (NASDAQ:TSLA) are on a tear on Monday’s premarket amidst reports that the United States and China have agreed to significantly roll back tariffs on each other’s goods for an initial 90-day period.

As of writing, the premarket price of TSLA shares suggests that the electric vehicle maker might end Monday with a $1 trillion valuation once more.

Tesla and China

TSLA stock was up about 8% at $322.56 per share on Monday’s premarket. As noted in a report from Barron’s, these prices suggest that the company could achieve a trillion-dollar valuation again, a level not seen since late February. Similar to Tesla, the S&P 500 and the Dow Jones Industrial Average were also up 2.8% and 2.1%, respectively, on Monday’s premarket.

The United States and China’s decision to roll back its tariffs would likely be appreciated by CEO Elon Musk. Despite working for the Trump administration’s Department of Government Efficiency (DOGE), and despite Tesla being least affected by the Trump administration’s tariffs due to its strong domestic supply chains in the United States, China, and Europe, Musk has noted that he is a supporter of non-predatory tariffs.

The United States and China’s Agreement

In a joint statement from the United States and China posted on the White House’s official website, the two countries agreed to lower reciprocal tariffs on each other by 115% for 90 days. This means that the United States will temporarily lower its overall tariffs on Chinese goods from 145% to 30%, as noted in an ABC 12 report. China, on the other hand, will also lower its tariffs on American goods from 125% to 10%.

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The talks were led by Chinese Vice Premier He Lifeng and Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, as per the joint statement. Bessent shared his thoughts about the matter in a comment in Geneva. “The consensus from both delegations is neither side wants to be decoupled, and what have occurred with these very high tariffs … was an equivalent of an embargo, and neither side wants that. We do want trade. We want more balance in trade. And I think both sides are committed to achieving that,” he said. 

A spokesperson from China’s Commerce Ministry also shared a statement about the matter. As per the spokesperson, the deal was an “important step by both sides to resolve differences through equal-footing dialogue and consultation, laying the groundwork and creating conditions for further bridging gaps and deepening cooperation.”

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