Nasdaq Grinds at Highs as Tesla, Google Set to Report

Nasdaq, Tesla, Google Talking Points:

• There was a buying opportunity in stocks in early-Q2 trade and the Nasdaq 100 tested a major spot of support, the same looked at in the Q2 forecast just inside of the 17k figure in NDX.
• Since then – buyers have been large and in charge and more recently there hasn’t even been much for pullbacks, which complicates matters for short-term traders as risk management becomes a more daunting prospect with a recent lack of two-way price action.
• The trend is undeniable and as I wrote in the 2025 forecast for equities, I expected this to remain. But the key is working with the trend in a reasonable manner rather than just buying highs and hoping it continues.
• As we enter earnings season, there is perhaps opportunity for pullback. Tesla and Google earnings tonight will shine a light on the AI theme, and next week we hear from heavyweights Meta and Microsoft.

Paradoxically a market that goes pretty much just one direction can be more difficult to trade than one that doesn’t. While newer traders may appreciate the opportunity to simply guess and hope and ride the wave higher, more experienced traders will often prioritize risk management because they know what can happen when they don’t. It doesn’t take long for a trader’s best ideas to turn out badly, particularly when risk isn’t managed on the way into the trade.

This can also explain the ‘beginner’s luck’ phenomenon that’s often discussed around trading. New traders simply lack the context with which to overthink, and instead they can look and see that price has simply continued to go up and, well, speculate that it will continue to happen, regardless of the context of why it may not.

But, what showed up in late-Q1 and early-Q2 is example of where that hope and optimism can quickly go awry. The Nasdaq index lost as much as -25.56% from the February high to the April low and there wasn’t a significant change in the fundamental backdrop at the time; it was simply fear of the oncoming tariffs and how it might disrupt the globalized business backdrop that’s taken over in the past couple of decades.

But – as I wrote in the Q2 forecast there remained bullish motive, and I thought it unlikely that the sell-off would last for much longer as there were some very simple levers that could be pulled by some important players that could alter the backdrop quickly. First and foremost was President Trump, who ushered in Q2 with the ‘liberation day’ announcement of tariffs. It didn’t take long for the headlines to turn, from the optimistic pro-business backdrop that was associated with him in January to shift into the ‘short term pain, long term gain,’ driven by the assumption that President Trump wanted to drive down yields by pushing capital flows from stocks and into bonds.

But that didn’t last for more than a week into Q2 as Trump softened his stance on tariffs on Wednesday, April 9^th, leading to one of the strongest single day rallies that we’ve ever seen. Interestingly, that happened after SPX showed the first oversold reading on the weekly chart since Covid; and it took place amidst a backdrop that saw a noted financial figure on television spending the weekend before warning of a ‘Black Monday.’

Well, that day that was supposed to be ‘Black Monday’ marked the low for SPX, and the Nasdaq 100, as well. And the Nasdaq is up a whopping 39.64% from that inflection point.

Again, a strong lesson in why risk management is so utterly important, those same new traders that might find riding the up-trend today as simply could’ve been caught selling at the low then, and it’s only with that experience, that pain, that one realizes there’s more trading strategy than just guessing and hoping.

Nasdaq Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Tesla Earnings

There’s no company that illustrates today’s market environment better than Tesla.

While the company’s main line of business is under fire from multiple fronts, Elon Musk has built more loyalty amongst his fans/investors than perhaps any CEO in the history of American business. He’s also successfully aligned the auto manufacturer with pretty much any hot button technology theme or idea of the past decade; both inside and outside of Tesla. He’s also a lightning rod of attention and the stock seemingly defies fundamentals.

More recently, it’s the political exposure that’s been the stock’s point of challenge but, amazingly, the equity is up over 55% from the April 7^th low even despite the very public falling out with the current administration.

Today’s earnings report is widely expected to show weakness on the back of fewer vehicles delivered. This won’t come as a surprise. But – fully expect Elon Musk to spend the conference call talking about the future – about the Robotaxi rollout and about Optimus production of the humanoid robot, both products that are housed inside of Tesla. It should also come as no surprise if he talks up his other company, the private enterprise of xAI which was in the headlines recently as it’s been rumored that Tesla will be investing in the company. That company has absorbed the social media company X (formerly Twitter) and it’s created Elon’s AI offering, called Grok, built on user data from platform. It’s already been announced that Tesla will be rolling out the chatbot across their line of Electric Vehicles via software update, so again, this should come as no surprise if it becomes a focal point in today’s call pertaining to AI development and Tesla’s role in that.  

The Fibonacci retracement produced by last May’s low to December’s high has shown several inflection points of note, most recently support in June at the 61.8% level and before that, a grouping of support points in March and April at the 76.4% retracement of 221.34.

That shows support at the 50% mark of 313.67 and next resistance around the June high of 354.94.

Tesla Daily Price Chart

Chart prepared by James Stanley; data derived from Tradingview

Google Goes into the Gap

Compared to Tesla, Google seems downright tame, and perhaps even boring, to a degree (which isn’t necessarily a bad thing for portfolio managers).

It also presents perhaps more of a pure play on AI with their Gemini product. While Tesla has a few different areas of exposure on AI, those are largely unique to Tesla with driver assistance and a social media-driven chat bot. It also hasn’t been a one-way train in Google’s equity, as a massive drop showed on February 5^th driven by slowing cloud growth and increased investment into AI infrastructure that they still haven’t recovered from.

That gap goes from the high of 208.21 down to around the current level, with resistance at 192.70. That gap now represents an area of key resistance and if we are to see the AI-driven tech mania continue, then Google’s equity will likely need to begin chipping away at this unfilled gap.

Google Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist