Eoin Treacy's view

Tesla broke out to new highs yesterday. The share’s stratospheric advance stopped three years ago when it announced it was going to build a battery “gigafactory” which would cost billions of Dollars it didn’t have. That investment is now over and the company is ramping up production. That’s great news for Tesla’s long suffering investors but what does it say about all the other car companies. 

GM is Tesla’s closest rival right now with the Chevy Bolt priced at around $35,000. Tesla still has a significant edge since the cache of owning a stylish Model 3 versus a similarly priced but boxey Bolt isn’t hard to understand. Nevertheless these are not the only companies investing in electric vehicles, not least as companies have to comply with emissions standards which will now be enforced. It is only a matter of time before other companies, not least European and Japanese car manufacturers release their own interpretations of electric vehicles. 

There is a clear difference between electric and internal combustion vehicles. The former have far fewer parts. That’s bad news for parts manufacturers and retailers. I’m sure it caught more than a few people’s attention yesterday that while Tesla was the leading mover O’Reilly Automotive was the leading decliner. 

The share posted one of the most impressive advances from the 2008 lows but experienced a sharp pullback in early 2016 and has since lost momentum. Veterans from The Chart Seminar will recognise that as a good example of a previously consistent trend losing consistency at the penultimate high. The share now has Type-3 top formation characteristics and a sustained move below $250 would complete it.  

Autozone has a similar pattern. 

Advance Autoparts offers a textbook example of a Type-2 top with right hand extension characteristics.