The Nasdaq’s falls drag Tesla down in the financial markets

Although Jerome Powell, as we mentioned yesterday after his appearance before the US Congress and Senate, tried to ward off the fears of inflation, uncertainty in the financial markets has continued to rise due to the increase in yields on 10-year US Treasury bonds.

The rise in bond yields can be explained by investors’ fear of a potential rise in inflation due to the measures taken by central banks (liquidity injections and low interest rates) to overcome the crisis caused by the pandemic. This fear was compounded by the words of the Bundesbank a few days ago when it warned that “when the time comes there must be no lack of determination, even if the cost of financing for highly indebted countries rises” in relation to a possible rise in European interest rates.

This market movement caused Wall Street to close yesterday with declines of 3.52%, 2.45% and 1.75% in the Nasdaq, S&P500 and Dow Jones indices respectively. The sharp falls in the Nasdaq have taken the price down to the 100% fibonacci retracement level of the last upward momentum, dragging down the price of the technology giants in the market.

One of the biggest losers is Tesla, which lost 8% yesterday. In addition, Tesla has also announced that due to problems in its supply chain it has temporarily halted production in the United States of its Model 3, which may further increase the problems in the short term.

Technically speaking, these recent falls have taken the price down to the level of 682 dollars per share, dropping more than 200 dollars after reaching record highs at the end of January, where it began a correction after the announcement of its results on 27 January. It is important to see if the price is able to maintain the 50% fibonacci retracement level or if, on the contrary, it continues with its declines, which could lead it to look for its next support level.

Source: Admiral Markets MetaTrader 5 - Tesla Daily Chart. Date Range: 30 October 2019 - 26 February 2021. Date Captured: 26 February 2021. Past performance is not necessarily an indication of future performance.

Evolution of the last five years:

• 2020: 743.40%
• 2019: 25.71%
• 2018: 6.89%
• 2017: 45.69%
• 2016: -10.96%

One of the companies that has also been negatively affected by the current performance of both the Nasdaq and Tesla, is the well-known NIO, which was one of the stars of the market last year and which recently presented its new ET7 model. 

Despite the good sentiment that this company has left over the last few months, in recent weeks it has fallen in the market, currently trading at around 46 dollars per share and struggling to maintain its 61.8% fibonacci support level.

On 1 March, the company will present its results, so we will have to be very attentive and see if they are able to maintain or exceed market expectations and thus give the company some breathing space and possibly a new lease of life.

Source: Admiral Markets MetaTrader 5 - NIO Daily Chart. Date Range: 5 November 2019 - 26 February 2021. Date Captured: 26 February 2021. Past performance is not necessarily an indication of future performance.

Evolution since NIO went public:

•     2020: 1,112.24%
•     2019: -36.89%
•     2018: -8.74%

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