Tesla Pulls Back Following Elon Musk's Plan To Cut Workforce: Here's What May Come Next

Tesla, Inc TSLA was plunging almost 10% lower at one point on Friday after CEO Elon Musk reportedly sent an email titled “pause all hiring worldwide” to his executives and said the EV giant would need to cut about 10% of its employees.

Within the email, Musk said he had a “super bad feeling” about the state of the economy, which comes in addition to comments the billionaire made last month when he said recessions were a “good thing.”

Last month, Musk wavered from saying the U.S. was already in a recession to predicting an economic downturn was approaching. He predicted the recession would last 12-18 months based upon historical economic cycles.

The Market Context: Fears of an impending recession have loomed heavily on investors this year after soaring inflation prompted the Federal Reserve to adjust its monetary policy and begin raising interest rates.

The general markets have been shaky recently, knocking the wind out of bullish traders who enjoyed a mostly clear path north since the COVID-19 lows. Musk’s ability to influence stock and cryptocurrency prices and perhaps even sentiment in the overall markets doesn’t help investor confidence, especially when his views are bearish.

Despite the downturn in Tesla on Friday, the price action has yet to give much confidence to bearish traders, as the stock was due to print a higher low to confirm a possible uptrend.

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The Tesla Chart: Tesla reversed course on May 25 after printing a bullish double bottom pattern at the $620 level on that day and the day prior. The stock then shot up 27% between to reach a high of $792.63 on Thursday, which negated the downtrend with a higher high.

On Friday, Tesla fell to an important psychological level at $700 where bulls came in and bought the dip, causing the stock to form a lower wick intraday. If Tesla closes the trading day flat or near the high-of-day, the stock will print a doji or hammer candlestick, respectively, on the daily chart, which could indicate the higher low has formed and Tesla will trade higher on Monday.

If Tesla closes the trading day near its low-of-day price or loses the $700 level as support, the stock will print a bearish Marubozu candlestick, which could indicate lower prices will come on Monday, which could give the bulls an opportunity for another push lower.

Tesla has resistance above at $720.95 and $745.63 and support below at $700 and $671.64.

See Also: Can Tesla Be A DAO? Elon Musk's Brother Kimbal Explains