Today the broader markets turned green and TSLA had a chance to run. Unfortunately, the NASDAQ entered a downtrend not long after opening, and shorts used a good deal of ammo turning the dip into a dip on steroids by selling as the macros descended, so as to exaggerate the dip. Notice how the NASDAQ bottomed out mid-day with still a fair amount of green but TSLA touched the red/green line. Shortly after 2:00pm, shorts tried for another dip towards the red, but the market wouldn't allow it and TSLA climbed with the NASDAQ for the remainder of the afternoon. If the shorts had succeeded, it would have been a sticky dip on steroids.
For a tech stock, you'd expect about double the gain as the NASDAQ, and most big tech stocks gained 4%+ today. I suspect it was gaming by the shorts that held TSLA's gains to not much more than the NASDAQ's. Here's why. When TSLA was descending in the morning, this was a profitable short manipulation because shorts were selling in high and then covering lower. Once the stock started a serious climb after 2:30pm or so, there was no money to be made with the manipulations. The second reason I suspect the shorts were working a dip on steroids is if you look at the percentage of TSLA selling chart below. Normally, percentage of selling by shorts on green days decreases because it is unprofitable, but with a long morning slow dip, shorts could manipulate on the way down and still make a buck.
I had considered picking up a couple leaps today. Waiting until after 10:30am allowed me to see the downtrend developing, and I didn't have time to watch the ticker to catch at the bottom. Hope some of you did.
The NASDAQ gained 2.29% today, with a dip mid-day that greatly affected TSLA trading
Percent of TSLA selling by shorts was up a few percentage points from yesterday, to 59.18%
Looking at our alternate tech chart until the old chart comes back up again, you can see that TSLA is not far above the lower bollinger band (bottom of blue) and has a long way to run to reach the upper bb, which currently stands at 325.61.
What can we expect for next week? The negative is that the shorts are remaining ferociously involved with the trading, believing they'll be able to control the SP through FUD and manipulations as TSLA starts a climb toward the 3Q ER that should be in early November. I believe the shorts also think they can neutralize good news by claiming Q3 (and maybe Q4) will be one-hit-wonders and not sustainable. I think the market and the shorts will be surprised by hundreds of millions of dollars of positive cash flow in Q3, and so I remain heavily invested. The manipulations of the shorts are only particularly powerful when there's a dread held by the longs and I see the dread issues disappearing. Check out these developments:
* Q4 production began with impressive numbers, if you believe this electrek.co article. With less than 2 weeks into the new quarter, Tesla has already produced over 11,500 vehicles, according to their source. Over 7,000 were Model 3s. Think about how significant it is that Tesla is producing Model 3s at over 5K/wk rate without any significant dip in production like we saw at the beginning of Q3. Further, a production of over 4,000 S&X this early in the month suggests a rate well in excess of what we've ever seen before. Q4 is looking good so far.
* Elon Musk and the SEC submitted their joint letter this week to the judge. Since the entire letter is three and a half pages long, you would expect a response from the judge approving the settlement to come fairly soon. That approval will be a positive catalyst for the stock. Elon's Twitter behavior has been restrained. As Elon shows consistently good judgment and Twitter restraint over time, the SP will respond favorably.
* Demand is looking good if you realize that Tesla is producing Model S and Model X in record numbers to get ready for the final quarter of full tax credits. Further, Tesla employees today were calling Tesla owners and reminding them that Oct 15 is the last day to get in a Tesla order and guarantee delivery this quarter. I think at some point later this month Tesla will announce that they have sold out the entire Q4 production already, and that will be a catalyst. There will still be inventory cars for sale, but they too should sell briskly as end of quarter approaches.
This week TSLA closed at 258.78, down 3.17 from last Friday's 261.95. The big difference between the two weeks is that we ended last week with a 19 point drop and a question mark about many issues. This week was one of the toughest macro environments of the year and we ended on a 6 point climb day with positive developments regarding demand, production, and both the SEC suit and Elon's Twitter behaviors. Have a good weekend.
Conditions:
* Dow up 287 (1.15%)
* NASDAQ up 168 (2.29%)
* TSLA 258.78, up 6.55 (2.60%)
* TSLA volume 7.0M shares
* Oil 71.34, up 0.37 (0.52%)
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