Calling another highly likely top: Tesla longs should run away right now.

In this post I provided a model that called the top on Tesla shares nearly to perfection.  In subsequent posts I modeled the bottoming to be between $90 and $120.  It got down to $116.  But what transpired since then did surprise me.  I thought that the last peak was large 1 up.  But now I see that it was the 3rd wave.  Since then we got an a-b-c into a 4th wave and then an ending diagonal into a 5th wave.  The shares were up recently on better than expected earnings and so nobody is going to expect the trap door to open on this one.

But unfortunately, earnings do not directly affect stock prices.  The mood of the herd does.  And the charts help show the mood of the herd.  In the case of TSLA shares the mood is at a 5th wave and that mandates a 3 wave pullback to the prior 4th which is back down around $115.  So yeah, this is going to take TSLA lovers for a bad ride.  They are all partying on the Yahoo TSLA message chat board today but the chart tells me they will soon be complaining about "manipulation" and "the evil shorts" when in fact it is the smart money longs running away from shares that are too well loved too soon.

Right now there is zero indication of the coming collapse unless you know how to interpret Elliott Waves.  There is nothing but blue sky, up up and away written all over this chart to a standard technical analyst. That last wave up is being called a breakout because of being a "higher high".  There are a few wise old players out there like Doug Kass who said he took a "small short position at $205" (he must know an ending diagonal throw over when he sees one) but in general everyone loves the shares.  That is the perfect reason to run away from them IMO. 

• Failure to break below the lower support negates this view. 
• A re-breakout of the top resistance negates this view.
• Breaking down below the lower support and then breaking back up into the channel should be cause for pause of anyone shorting this.

The good news for shorts is that if you short right now and the chart somehow goes against you there are well defined criteria for bailing out of your position at a very small loss.