Tesla, Time to Buy Now? WSJ: "3 Criteria Say Not Yet"

# Is Tesla's Stock at Rock Bottom? Now is Not the Time to Jump In, Says WSJ The Wall Street Journal (WSJ) reported on the 14th (local time) that it is not yet the time to invest in Tesla stock, based on three criteria for confirming a bottom. # Signs of Capitulation: Is the Market Bottom Near? The U.S. stock market has recently exhibited unpredictable movements. Tesla shares, in particular, plummeted by 15% in a single day on Monday, erasing all post-election gains. In contrast, automaker stocks like General Motors and Ford saw increases, presenting a stark comparison. The reasons for the market's recent decline include trader 'capitulation,' hedge funds covering short positions, and macroeconomic uncertainties. It's essential to consider that stock prices tend to swing significantly above or below their actual value when the market sentiment is overly optimistic or pessimistic. # Three Key Criteria WSJ advises referring to three criteria when determining if the market has hit bottom: ### 1. Shift in Investor Sentiment Individual investor sentiment has deteriorated rapidly. According to the American Association of Individual Investors (AAII), more investors now expect a bearish market than a bullish one. Additionally, financial newsletters are increasingly forecasting negative outlooks. Historically, markets tend to rebound when sentiment reaches extreme pessimism. ### 2. Reduction in Leverage For a market bottom to form, there must be a large-scale liquidation of short positions or leveraged investments. While some hedge funds have been reducing debt, analysis suggests it is premature to say that a full-scale liquidation has occurred. ### 3. Reflection of Economic Fundamentals When stock prices overly reflect optimistically or pessimistically on economic growth rates, they may be in an oversold or overbought state. Goldman Sachs' analysis indicates that while current economic growth forecasts have been downgraded, stocks have not declined to levels reflecting a recession. This implies the market may not yet have found its true bottom. # "Not Yet" WSJ concludes, "The market is currently in a phase where short-term rebounds and further declines are both possible. There is a consensus that the panic has not reached its peak," advising a cautious approach.