The NASDAQ 100 index was little changed as investors digested news about Tesla, the electric car company.
Tesla stock falls as China sales evaporate
Tesla, a key component of the NASDAQ 100 index, was among the worst performers in premarket trading. This is after the China Passenger Car Association (CPCA) released the monthly car sales in the country. The data showed that sales of Model 3 declined to 3,635 in April, a 64% decline from the previous month.
The staggering decline came in a same month that electric car sales in the country rose by 9.8%. Also, the decline came a week after the company said that it was lowering its price of the Model 3 vehicle in the country. The price decline was to enable the shoppers to get a government subsidy.
Elon Musk threatens to move headquarter from California
The market also reacted after Elon Musk threatened to move Tesla’s headquarter from California. He also announced a legal action against the Alameda County, calling the continued restrictions, a “power grab.” This is after the county said that it would remain closed until the end of the month.
In a series of tweets, Musk said that he was considering moving the company’s headquarters to Nevada or Texas. Such an exit would have major repercussions for the county because Tesla is among its biggest employers. Still, analysts believe that it will be a tough call for Tesla to leave the state. An analyst at Wedbush said that it would take between 12 and 18 months for the company to shift production to another state.
Tesla, a NASDAQ 100 company, does not have operations in Texas, although SpaceX, another company owned by Musk has operations there. A move to Nevada would be relatively easier because Tesla has a factory, called Gigafactory 1 in the state.
Tesla shares dropped by more than 3.35% in premarket trading.
Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!
— Elon Musk (@elonmusk) May 9, 2020
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NASDAQ 100 technical outlook
On the daily chart, we see that the NASDAQ 100 index has been on a strong upward trend since March. The index moved above the 78.6% Fibonacci retracement level last week and is also above the 100-day and 50-day EMA. Therefore, even with the today’s pullback, I expect the upward trend to continue as bulls attempt to test the YTD high of $9746.
On the other hand, a move below $9,000 will send a signal that there are still sellers in the market, who will want to push the price lower. This price is slightly below the 78.6% retracement and is also an important psychological level.
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