After rallying more than 1000% in the span of two years TSLA is showing technical signs that all is not well. Since topping out in September the stock has hammered out a textbook head & shoulders top pattern (H&S top):

TSLA_H&S

Some 'purists' don't like drawing slanted necklines on H&S patterns, one can also place the neckline in the 215-220 area. Regardless, there is a very clear H&S top in place on this chart and the December sell-off broke the neckline. Three weeks ago with TSLA shares trading in the $197s I posted the following chart on Twitter:

 

TSLA_12_16

 

Thus far this tweet has played out exactly according to script with a rally back to the $220s ending last week.  This morning's weakness in TSLA shares has begun the leg lower which should bring us down to test at least the $180 area. Notice that since the September peak each bounce in TSLA has been roughly $30-$40 and the RSI has consistently peaked just above the median line and was unable to reach 'overbought' territory (above 70):

TSLA_Daily_1.2.2014

 

Moreover, since September the down days have occurred on heavier volume than the up days. These are all signs of a stock that is under professional distribution (institutional shareholder selling). The big test for TSLA will come when the next leg lower encounters the major area of support/resistance between $175 and $195:

TSLA_Weekly_1.2.2015

 

This weekly chart of TSLA illustrates the meteoric 2013-2014 advance in its shares. It is far from unusual to see stocks that have risen more than ten-fold in such short time spans to retrace 50% of the rise. If this were to take place in TSLA we would see the shares fall to ~$165.

 

Full Disclosure: The author is long put options on TSLA