Possible Rally Projection & TSLA Update

In my last post on Tuesday I was looking at the prospects for this rally on US equity indices and the first thing to say is that the tariff reprieve that triggered this rally still looks partial, temporary and fragile and that the new tariffs currently being trailed by the administration as coming soon on electronics, semiconductors and pharmaceuticals may well kill this rally when they start being implemented and that may well start soon.

The other thing I’d mention here is that while there are a lot of negotiations going on with US trading partners, it does appear that the bottom line for this administration seems to be a baseline tariff level at 10% across the board, with an additional 15% across the board on steel, aluminium, cars and perhaps soon tariffs other goods such as pharmaceuticals and semiconductors that may also not be negotiable.

This being the case then it would appear that the best case scenario for tariffs going forward this year may well be a lot worse that the worst case scenarios for tariffs that I and many others were thinking about late last year. I would also note that if the trade war with China is resolved soon, which currently seems doubtful, then there is good reason to believe that this administration may be planning to start another shortly afterwards against the EU, which likely wouldn’t be resolved anytime soon either. This is a very news rich and scary environment for equity investors and there is no current reason to think that will be ending anytime soon. Just sayin’ & this is where I am coming from with my analysis.

That said, we are currently seeing a rally here and, subject to newsbombs, this rally can and may well go higher.

I was saying in my last post that ideally there would be more downside next and we have seen that. In my premarket video yesterday morning I was looking for a further decline that would reach the targets on the 15min RSI 14 sell signals on SPX, QQQ and DIA and would ideally reach the weekly pivot on ES at 5250 and we saw that deliver yesterday as well, with some help from Jerome Powell at the Fed yesterday afternoon. So what now?

At this point I have a projection that is what I would expect/like to see at this point in any likely counter-trend rally like this, and that is for price to set up some decent bear flag patterns. I was talking about that in my premarket video this morning and I have drawn what I would ideally like to see in terms of support for that further decline and then ideal resistance trendlines for a (currently theoretical) next rally leg up to form those decent bear flag patterns to signal either the retest of the 2025 low or a new leg down from there.

On SPX that ideal pattern would be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

SPX 15min chart:

On QQQ that ideal pattern would also be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

QQQ 15min chart:

On DIA that ideal pattern would also be a bear flag wedge. That would likely keep price under the 61.8% retracement level and last another couple of weeks. There are other resistance trendline options that might develop on a move higher but I have drawn the most obvious option on the chart below.

DIA 15min chart:

How would this look on the SPX bear market projection I drew last week? I’ve drawn that below. The right shoulder for the H&S would be a little higher than ideal but overall this would still be a high quality H&S pattern.

SPX weekly chart - bear market projection:

Back on 12th March I did a post looking at the prospects for NVDA and TSLA and I want to post a follow-up chart on TSLA today. I was saying then that I have a good quality H&S pattern that has broken down with a target in the 150 area and, if that target was reached, then there would then be an obvious follow through target at a retest of the January 2023 low at 101.81.

I was also saying in that post that TSLA car sales outside the US were collapsing, and weren’t looking great in the US either with 6 out of seven US Teslas apparently owned by climate-conscious democrats, and that remains true. I further suggested that a P/E ratio for TSLA still over 100 was looking rather high for a company likely to see fast declining sales over the next couple of years & that remains true as well. Personally I think TSLA would be an interesting though risky potential long here at a price level at 25, but there are many that strongly disagree, and perhaps they are right. I’m a numbers and history guy & don’t use faith much in my analysis, though I do recognise that faith and expectation underpin all prices on all markets everywhere, so I respect them accordingly.

To me though TSLA in 2025 looks strongly reminiscent of Hitler’s Thousand Year (forecast) Reich in 1944, being pushed back on all fronts and with the Fuhrer trying to cheer his doomed armies by trailing the development of secret weapons that would scatter the Allies and decisively win the war. Maybe Musk can deliver that for TSLA, and I will say that his robot prototypes do look very interesting, but this approach didn’t work out for the Twelve Year (actual) Reich in 1945, and I remain skeptical about the prospects for TSLA here.

That being the case, I have an update and a possible case for at least a decent rally on the TSLA chart here, and I want to run through that.

A decent quality falling megaphone has formed on TSLA from the late 2024 high at 488.54, and a high quality possible double bottom setup has formed at the 2025 lows. On a sustained break over double bottom resistance at 291.85, currently being crossed by that falling megaphone resistance, the double bottom target would be in the 366-70 area, between the 50% retracement level at 353 and the 61.8% retracement level at 385. From a pure TA perspective this is a good quality setup and might well have a shot. We’ll see.

TSLA daily chart:

I’m doing a series of (currently four) posts at the moment on my The Bigger Picture substack on the US Dollar, US Treasuries, and the reasons to be very concerned about the possible further sharp declines on both that may be coming this year. These complement the overall picture that we are looking at equities and, even if I have to stay up all night to finish it, the second in that series looking at the very scary setup here on US treasuries will be published today (EST). The third will likely be published on Saturday and everyone trading equities in this wild year should read these.

Everyone have a great holiday weekend! :-)

As I have been since the start of 2025 I’m still leaning on the bigger picture towards a weak first half of 2025 and new all time highs later in the year, very possibly as a topping process for a much more significant high. One way or another I think we’ll be seeing lower soon and I’m not expecting this to be a good year for US equities, not least because both of the last two years have been banner years for US equities. A third straight year of these kinds of gains looks like a big stretch. I could of course however be mistaken. UPDATE 11th March 2025 - I am wondering if this may be a bear market that dominates the whole of 2025.

If you like my analysis and would like to see more, please take a free subscription at my chartingthemarkets substack, where I publish these posts first. I also do a premarket video every day on equity indices, bonds, currencies, energies, precious commodities and other commodities at 8.45am EST. If you’d like to see those I post the links every morning on my twitter, and the videos are posted shortly afterwards on my Youtube channel.