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Tesla has a problem

Tesla has a problem

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Tesla has a problem

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Tesla’s stock keeps making record highs. But according to some indications, it is time for investors to step on the brakes.

Shares of the electric automaker closed at $261.44 on Thursday, giving Tesla a valuation of nearly $33 billion. Not too shabby for a company that only sold 22,450 cars last year (General Motors, in contrast, sold 2.8 million cars in 2013, and is valued at $55 billion).

And this latest record price comes the same week Consumer Reports said the Tesla Model S it was testing “has developed many minor problems that merit some reflection.”

(Watch: Consumer Reports' Fisher on Tesla Model S)

David Seaburg, head of equity sales trading at Cowen and Co., is doing some reflection of his own on Tesla, at least as far as its stock is concerned.

“Up here at these levels, I’m not a buyer,” said Seaburg. “I like the story and I think long term, the stock is going to do well. But I think at this current level, I’d wait to get a pullback.”

Seaburg said investors should wait for Tesla’s share price to fall to $217 per share before getting back in. Part of the reason he is concerned has to do who is playing in the stock.

“Right now, you’re looking at a stock that is in weak hands,” Seaburg said. “The hedge funds have essentially been out of the picture here at these levels. It’s in the hands of day traders right now. So I think you could really see some weakness here.”

While Tesla’s long-term picture looks promising to Seaburg, he’s not jumping into it just yet. “I’d wait here and look for much lower levels to buy the stock,” he said.

(Watch: Stocks close higher for the third time in four days on tech boost)

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Ari Wald, head of technical analysis at Oppenheimer, is also looking for a pullback. He sees some resistance around the $265 level, where the stock reached an intraday high back in February. Though his firm recently recommended the stock when the price was lower, he finds current levels “a little bit more difficult.”

That said, he is expecting a “breakout” at some point.

One positive technical signal, according to Wald, is the widening gap between Tesla’s 50-day and 200-day moving averages. “What this all means is that momentum is really just starting to pick up again,” he said.

Wald believes the stock would be a buy near $245. “I think this stock moves above $300, looking out at the rest of the year,” he said.

To see the full discussion on Tesla, with Seaburg on the fundamentals and Wald on the technicals, watch the above video.

 

 

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