Tesla in the Crossfire While the Bull Wants More

Can Tesla Weather the Storm of the Musk-Trump Feud? - Key Indicators to Monitor for the Stock Market and Crypto Space

Last Saturday, I posted a fundamental analysis for NVDA that was open to all subscribers. The analysis highlighted the company's competitive and financial strengths with the monthly chart, which indicated bullish continuation for the stock. NVDA subsequently climbed +4.8% during the week. The potential short-term hiccup was postponed since the central weekly level of $137.2, mentioned as a condition for bullish continuation, was recovered. As also noted last Saturday, the bullish target in that scenario would be $141.4; the stock closed at $141.7 on Friday. The analysis proved remarkably precise. The Support and Resistance levels for NVDA and over 40 other securities were updated yesterday. Access to the publications mentioned is available via the links below.

• Weekly Compass “Bull Gearing Up” with NVDA analysis open for everyone

• Updated S/R Levels “Emotion-Proof Trading Edge” with TSLA and SPX cases

That said, the fundamental analysis for NVDA highlighted how financially stronger the company is versus the other Magnificent Seven, today we will study another Magnificent that was hammered on Thursday. The bearish reversal was not a surprise considering the weekly shooting star at a resistance zone anticipated to subscribers (chart now open for everyone in the S/R Levels edition linked above). Let’s study the fundamental context and the technical implications.

Tesla Shares Plummet as Musk-Trump Feud Escalates

Tesla (TSLA) shares plummeted more than 14% on Thursday, June 5, as a public confrontation between CEO Elon Musk and President Donald Trump sent shockwaves through the electric vehicle market. The social media spat has introduced unprecedented political risk for the world's most valuable automaker.

The confrontation erupted when Musk publicly criticized a U.S. spending bill backed by the Trump administration. The legislation contains a provision that would accelerate the expiration of the $7,500 federal tax credit for new electric vehicles, moving the deadline from 2032 to the end of 2025, a seven year acceleration that could significantly impact EV adoption.

Trump responded swiftly to Musk's criticism, threatening to cancel all government contracts and subsidies benefiting Musk's business empire. While SpaceX would bear the brunt of such action, Tesla faces its own vulnerabilities, particularly the potential loss of its lucrative regulatory emissions credit sales to other automakers. The market reaction was swift and brutal (and consistent with a shooting star analyzed last weekend), erasing over $150 billion from Tesla's market capitalization in a single trading session, a record daily loss. The stock partially recovered during Friday's session, though uncertainty remains elevated.

Key Market Implications

Subsidy Cliff Creates Near-Term Challenges The potential early elimination of the $7,500 EV tax credit poses immediate concerns for Tesla's sales trajectory. All Tesla vehicles currently qualify for this incentive, and its removal would effectively increase consumer prices, likely dampening demand across the EV sector in 2026. This pattern mirrors what occurred in international markets following similar subsidy removals, where EV sales experienced notable declines.

Political Risk Reaches Critical Mass Trump's threats to terminate government contracts have injected unprecedented uncertainty into Musk's business operations. While SpaceX faces the most direct exposure through its multi-billion-dollar government contracts, the broader political rhetoric elevates risk across all Musk enterprises. For Tesla specifically, the potential loss of emissions credit sales—a significant revenue stream—could directly impact profitability.

Fundamental EV Trends Remain Intact While government incentives influence short-term demand patterns, the long-term shift toward electric vehicles depends on more fundamental market forces. Industry analysts emphasize that achieving cost parity with internal combustion engines and expanding fast-charging infrastructure remain the primary drivers of mass EV adoption, rather than temporary government support.

Technology Leadership Under Scrutiny Beyond the immediate political turbulence, Tesla's competitive advantage continues to rest on its technological capabilities. The company's autonomous driving software development represents a potentially game-changing differentiator that could reshape consumer preferences and unlock new revenue opportunities, including a future robotaxi network.

Brand Risk and Competitive Pressures Mount The public feud underscores a persistent concern among Tesla investors: the risk that Musk's political activities could alienate potential customers in key demographics. Simultaneously, Tesla confronts intensifying competition from established automakers and emerging EV companies, all of whom are investing heavily in electric vehicle technology. This competitive pressure threatens to erode Tesla's market share and compress profit margins over time.

For financials and more fundamental details about TSLA, click here.

Looking Forward

The Musk-Trump confrontation has created significant near-term volatility while exposing Tesla to heightened political risks that were previously theoretical. The potential early elimination of federal EV tax credits could materially impact delivery volumes in 2026, creating a challenging transition period for the company.

However, Tesla's long-term investment thesis remains anchored in its ability to maintain technological leadership, achieve manufacturing cost advantages, and successfully compete in an increasingly crowded marketplace. The company's valuation will ultimately depend less on political winds and more on its execution of core business fundamentals in a rapidly evolving automotive landscape.

The technical analysis for TSLA is presented below including also SPX, NDX, VIX, DJI, IWM, SMH, TLT, GLD, SLV, TLT, BITCOIN, BRK-B, PLTR, NFLX, MSFT, AMZN, NVDA, META, AAPL, GOOG and a stock participation analysis. If you invest or trade in some of the securities mentioned, the premium subscription is a no brainer. All of them are constantly analyzed every week, so you can count on my consistency, and the weekly price target updates.

For the medium and long term (investors), the bullish targets posted in this publication for META, NFLX and MSFT previously, they all have been reached already, as PLTR did the same four weeks ago with $129 as TSLA considering $353. The market has brought bear traps while staying consistently bullish as I have been documented since mid April with charts and statistics. You can visit smartreversals.com and navigate the site, the educational content (click here) presents all the studies that supported a bullish thesis.

Technical Analysis Updates

Last Monday, a publication open for everyone presented the fundamentals for United Healthcare (UNH), click here the stock is about to squeeze in extreme oversold conditions and historical track record of strong financials. Another stock will be studied next week, stay tuned. (Suggestions? comment in this article)

On Wednesday, two technical charts were made open to everyone: AVGO and LLY, which have now been included in the weekly price target updates (Support and Resistance Levels). Why these two? AVGO has outperformed even the Magnificent Seven, currently standing as the 8th largest company globally by market cap, and 7th in the U.S. if Saudi Aramco is excluded. As I noted in a fundamental edition for semiconductors at the end of 2024: if you appreciate AMD, you should definitely consider Broadcom. LLY, a non-tech company with robust fundamentals, much like Broadcom, is among the top 15 companies listed in the S&P 500 and is currently showing signs of a potential bullish reversal. click here for access.

The Support and Resistance Levels, published every Friday, now include more securities and combine weekly with monthly levels. The significant attention from premium subscribers to these levels have motivated me to model more stocks and ETFs, and since few weeks ago to combine them, here are some notes:

• Combining them: For one year, the weekly levels have proven to be the best validators for setups (like the weekly shooting star for TSLA) or invalidators when they are not breached (like the weekly shooting star for NVDA). In March and April, the monthly levels acted as strong resistances during volatile weeks, and some reversals occurred at those levels, which are sometimes between weekly levels or significantly above or below them. For that reason, sticking to the weekly levels and being mindful of the monthly ones provides a significant capacity for anticipation or validation.

• Levels are supply or demand zones where the price may or may not reverse or consolidate, but the price can cross above or below them with conviction. Thus, they are used as targets, and these targets can be exceeded, so the next bullish or bearish level provides a measurement of potential moves until the next potential reversal. Both weekly and monthly levels are effective for analyzing price action, so you should use them in the daily timeframe in the same way you use them in shorter ones like the 2-hour and 4-hour candles. This relates to the point where I mentioned why I combined them.

• Are the monthly levels stronger than the weekly levels? Yes, they are, and especially when they have confluence with weekly levels and vice versa. As presented in the S/R levels, the weekly central level is a reference of momentum and an effective validator or invalidator of reversals. The central monthly level speaks more about the general mood of the security; staying below it indicates weaknesses in the stock, unlike losing the central weekly level, which can signify a consolidation and bounce. That said, staying above the central and weekly levels is bullish (and after several weeks can generate overbought conditions in oscillators), and the opposite is bearish, which after some weeks can bring oversold oscillators.

• More examples of how using the S/R levels are presented in today’s edition in the analysis for SLV, NVDA, TSLA, MSFT, and META.

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Let’s continue with the indices, ETFs, stocks and crypto mentioned, including the key indicators to monitor for the stock market and crypto space.

SPX: Bullish Momentum as Anticipated - Potential Implication of the Daily Doji

Every week has presented a bear trap, and last week the price maintained itself above $5,899, the central weekly level, despite the TSLA selloff, ultimately closing on Friday in the $5,999 zone, which was within the levels analyzed for the week that just ended.