2017 Investor Roundtable: TSLA Market Action

[FredTMC]

I thought they said the first product will be based on popularity, TBD? Has that changed?

If pricing is somewhat in the ballpark I'm buying this on day 1. I think I want the glass or textured glass, though.

I recall reading specifically that the flat non-textured slate would be first

I could be wrong... but I DID attend the event and I slept in a Holiday Inn Express last night

 

[Papafox]

shortvolume.com says shorts leaned more heavily on tesla yesterday than any time in the last month (on a relative basis, meaning percent of shares sold short vs. sold outright). it was a 0.648 ratio, meaning almost 2 shares were sold short for every 1 sold by a real seller. the volume to the downside was unusual yesterday but other than that volume has been fairly light past few days.

i wonder how many of these shorts are willing to gamble through earnings. the volume has been drying up and i'm not sure they will find an exit for that much volume below 300 ahead of the may 3 earnings.
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One inconsistency that we've run into trying to track selling and repurchasing by shorts is that the high percentage of trades involving shorts, often over 50%, is too high when you look at Fidelity and use it as a measure for short drawdown and covering. For example, in a typical day we see less than 200,000 shares drawn down for shorting at Fidelity and a smaller (often much smaller) number of shares covered.

I've been assuming that Fidelity represents nearly half of shares available to short, but maybe that's where the trouble lies. In a day with volume at 5M shares, there are 5 million transactions and if short selling/buying is at 60% of total, that means shorts were involved in 3 million of those trades. If the Fidelity drawdown plus covering < 150,000 shares, though, you would conclude that Fidelity's involvement in making shares available to short or cover is only about 5% of what's going on in the market, which seems way too low.

The question is how do you explain 60% of transactions involving shorts when the drawdown/covering at a brokerage such as Fidelity is so low? I have followed TSLA shorting extensively for the past year and this is the question that most bugs me.

One possibility is that market makers are doing lots of micro transactions, positive and negative, and that their volume dwarfs what a brokerage such as Fidelity is making available to the public. I just don't know enough about this side of the trading world to grasp the big picture.

 

[Papafox]

The prospects for TSLA going up next week look pretty good in my eyes. This was week two following the run to 313, and the consolidation is complete. Since the overall trend of the stock for the past months has been upward, I think TSLA will resume its climb next week. The big question is whether some traders will bid the SP up into the close today, in anticipation of a good Monday. I think market makers would like to see TSLA close no higher than 305 today but if volume picks up enough we could see a late afternoon rally. It'll be interesting to see.

Edit:

Will the market makers apply the brakes at 305 today? That is the question.

 

[ValueAnalyst]

Solar Roof order launch and pricing is due next week...

Can you provide source for this?

 

[vgrinshpun]

One inconsistency that we've run into trying to track selling and repurchasing by shorts is that the high percentage of trades involving shorts, often over 50%, is too high when you look at Fidelity and use it as a measure for short drawdown and covering. For example, in a typical day we see less than 200,000 shares drawn down for shorting at Fidelity and a smaller (often much smaller) number of shares covered.

I've been assuming that Fidelity represents nearly half of shares available to short, but maybe that's where the trouble lies. In a day with volume at 5M shares, there are 5 million transactions and if short selling/buying is at 60% of total, that means shorts were involved in 3 million of those trades. If the Fidelity drawdown plus covering < 150,000 shares, though, you would conclude that Fidelity's involvement in making shares available to short or cover is only about 5% of what's going on in the market, which seems way too low.

The question is how do you explain 60% of transactions involving shorts when the drawdown/covering at a brokerage such as Fidelity is so low? I have followed TSLA shorting extensively for the past year and this is the question that most bugs me.

I think that it all depends on how shortvolume.com tags transactions as "short" vs. "long".

For example if all the following transactions tagged "short", the total "short" volume would be 2,100, but total net shorted shares - 100, i.e. shorted shares/short volume = 4.76%

1. Short seller A sells 1000 shares of borrowed stock
2. Short seller B covers 1000 shares
3. Short Seller C sells 100 shares

 

[ValueAnalyst]

One inconsistency that we've run into trying to track selling and repurchasing by shorts is that the high percentage of trades involving shorts, often over 50%, is too high when you look at Fidelity and use it as a measure for short drawdown and covering. For example, in a typical day we see less than 200,000 shares drawn down for shorting at Fidelity and a smaller (often much smaller) number of shares covered.

I've been assuming that Fidelity represents nearly half of shares available to short, but maybe that's where the trouble lies. In a day with volume at 5M shares, there are 5 million transactions and if short selling/buying is at 60% of total, that means shorts were involved in 3 million of those trades. If the Fidelity drawdown plus covering < 150,000 shares, though, you would conclude that Fidelity's involvement in making shares available to short or cover is only about 5% of what's going on in the market, which seems way too low.

The question is how do you explain 60% of transactions involving shorts when the drawdown/covering at a brokerage such as Fidelity is so low? I have followed TSLA shorting extensively for the past year and this is the question that most bugs me.

One possibility is that market makers are doing lots of micro transactions, positive and negative, and that their volume dwarfs what a brokerage such as Fidelity is making available to the public. I just don't know enough about this side of the trading world to grasp the big picture.

Could it be that shorts are trading with each other to manipulate the stock intraday?

 

[ValueAnalyst]

I think that it all depends on how shortvolume.com tags transactions as "short" vs. "long".

For example if all the following transactions tagged "short", the total "short" volume would be 2,100, but total net shorted shares - 100, i.e. shorted shares/short volume = 4.76%

1. Short seller A sells 1000 shares of borrowed stock
2. Short seller B covers 1000 shares
3. Short Seller C sells 100 shares

Exactly my point above.

 

[Papafox]

I think that it all depends on how shortvolume.com tags transactions as "short" vs. "long".

For example if all the following transactions tagged "short", the total "short" volume would be 2,100, but total net shorted shares - 100, i.e. shorted shares/short volume = 4.76%

1. Short seller A sells 1000 shares of borrowed stock
2. Short seller B covers 1000 shares
3. Short Seller C sells 100 shares

If short drawdown and covering were fairly close to each other, your explanation would make a great deal of sense. Looking at the 15 minute drawdown/covering stats from Fidelity, though, we simply haven't seen much covering on a typical day. If drawdown and covering were anywhere close to each other, we would see more fluctuations between the drawdown and covering columns on a 15 minute look, and we don't see that.

 

[luvb2b]

i think i trolled the use of fidelity data as a meaningful indicator a while back. as someone pointed out, the cost to borrow is the meaningful indicator.

the number of shares fidelity has available can change for a variety of reasons, many of which have nothing to do with shorting or covering.

one thing you could do to cross check is go over the daily estimates you guys reach of shorting activity and compare to what's reported at places that aggregate daily short sale data. i have my own sources for this, and below is what those sources show for shorting volume as a percentage of the total for the past month. keep in mind these sources don't cover 100% of traded volume, but usually cover 60-70% of daily volume. they also don't give any information about the buy side of the transactions.

@vgrinshpun - to be clear: this data takes the sell side of the transaction only, and asks if that was a long sell or a short sell. all shorts are then grouped into one bucket and reported, all long sales by default are the other buckets. you could have: short a shorts 1000 shares. long b sells 1000 shares to short a who covers 1000. short a shorts 200 shares. short volume = 1200, total volume 2200, net shorting 200. my data reports that day as 54.5% short volume (assuming i cover the full sample).

finally you can also cross check against reported short sale transactions. those get reported with a 1 month lag, but there you would actually be able to get some visibility into not just the shorting activity but when and what price that activity took place. i've never done that analysis but if someone else does and finds something interesting please share.
TRF Regulation SHO - 2017 | FINRA.org

table below is this year's activity from my daily short data source, which has date, % of day's volume included in my source's sample, % of volume sold short within that sample, and the total volume traded that day. realize it makes the post long but there's so much interest around the subject that figure it's good to know what data we are talking about.

	date	sample%	short%total	tot volume
	01/03/17	0.637	0.607	5,923,300
	01/04/17	0.642	0.613	11,213,500
	01/05/17	0.669	0.621	5,911,700
	01/06/17	0.648	0.596	5,527,900
	01/09/17	0.674	0.562	3,957,000
	01/10/17	0.623	0.603	3,660,000
	01/11/17	0.654	0.549	3,650,800
	01/12/17	0.634	0.549	3,790,200
	01/13/17	0.651	0.557	6,093,000
	01/17/17	0.669	0.588	4,617,500
	01/18/17	0.694	0.566	3,769,000
	01/19/17	0.622	0.616	7,732,300
	01/20/17	0.632	0.564	4,204,300
	01/23/17	0.609	0.585	6,262,900
	01/24/17	0.643	0.635	4,965,500
	01/25/17	0.649	0.623	5,142,600
	01/26/17	0.630	0.613	3,152,100
	01/27/17	0.608	0.549	3,166,300
	01/30/17	0.657	0.532	3,801,100
	01/31/17	0.629	0.600	4,116,100
	02/01/17	0.637	0.502	3,958,800
	02/02/17	0.633	0.592	2,499,800
	02/03/17	0.542	0.632	2,186,700
	02/06/17	0.643	0.567	3,562,500
	02/07/17	0.651	0.632	4,244,800
	02/08/17	0.631	0.628	3,933,000
	02/09/17	0.631	0.733	7,820,200
	02/10/17	0.623	0.664	3,619,700
	02/13/17	0.661	0.676	7,029,600
	02/14/17	0.652	0.674	7,329,400
	02/15/17	0.665	0.652	4,935,600
	02/16/17	0.660	0.590	7,053,800
	02/17/17	0.638	0.586	6,247,600
	02/21/17	0.625	0.653	5,634,500
	02/22/17	0.629	0.629	8,081,400
	02/23/17	0.616	0.659	14,867,000
	02/24/17	0.648	0.646	8,160,500
	02/27/17	0.629	0.616	11,432,900
	02/28/17	0.633	0.570	6,065,600
	03/01/17	0.648	0.637	4,800,300
	03/02/17	0.675	0.596	3,342,300
	03/03/17	0.624	0.659	2,919,400
	03/06/17	0.543	0.627	3,351,200
	03/07/17	0.575	0.606	3,449,200
	03/08/17	0.583	0.675	3,725,200
	03/09/17	0.605	0.639	3,861,500
	03/10/17	0.611	0.686	3,057,000
	03/13/17	0.561	0.560	3,010,700
	03/14/17	0.655	0.637	7,575,500
	03/15/17	0.622	0.663	4,816,600
	03/16/17	0.642	0.619	7,100,400
	03/17/17	0.583	0.702	6,475,900
	03/20/17	0.608	0.496	3,597,500
	03/21/17	0.629	0.526	6,891,700
	03/22/17	0.594	0.473	4,029,100
	03/23/17	0.635	0.537	3,299,700
	03/24/17	0.654	0.517	5,619,600
	03/27/17	0.613	0.491	6,217,800
	03/28/17	0.603	0.508	7,966,200
	03/29/17	0.614	0.588	3,667,800
	03/30/17	0.626	0.577	4,136,700
	03/31/17	0.608	0.597	3,288,600
	04/03/17	0.662	0.445	13,842,300
	04/04/17	0.620	0.476	10,099,400
	04/05/17	0.651	0.594	7,839,500
	04/06/17	0.612	0.606	5,512,600
	04/07/17	0.631	0.614	4,524,200
	04/10/17	0.625	0.510	7,619,300
	04/11/17	0.616	0.672	5,716,100
	04/12/17	0.649	0.585	6,035,100
	04/13/17	0.677	0.587	9,246,200
	04/17/17	0.683	0.533	4,107,600
	04/18/17	0.613	0.597	3,033,800
	04/19/17	0.609	0.626	3,867,300
	04/20/17	0.633	0.657	6,132,600

I think that it all depends on how shortvolume.com tags transactions as "short" vs. "long".

For example if all the following transactions tagged "short", the total "short" volume would be 2,100, but total net shorted shares - 100, i.e. shorted shares/short volume = 4.76%

1. Short seller A sells 1000 shares of borrowed stock
2. Short seller B covers 1000 shares
3. Short Seller C sells 100 shares

One inconsistency that we've run into trying to track selling and repurchasing by shorts is that the high percentage of trades involving shorts, often over 50%, is too high when you look at Fidelity and use it as a measure for short drawdown and covering. For example, in a typical day we see less than 200,000 shares drawn down for shorting at Fidelity and a smaller (often much smaller) number of shares covered.

I've been assuming that Fidelity represents nearly half of shares available to short, but maybe that's where the trouble lies. In a day with volume at 5M shares, there are 5 million transactions and if short selling/buying is at 60% of total, that means shorts were involved in 3 million of those trades. If the Fidelity drawdown plus covering < 150,000 shares, though, you would conclude that Fidelity's involvement in making shares available to short or cover is only about 5% of what's going on in the market, which seems way too low.

The question is how do you explain 60% of transactions involving shorts when the drawdown/covering at a brokerage such as Fidelity is so low? I have followed TSLA shorting extensively for the past year and this is the question that most bugs me.

 

[vgrinshpun]

If short drawdown and covering were fairly close to each other, your explanation would make a great deal of sense. Looking at the 15 minute drawdown/covering stats from Fidelity, though, we simply haven't seen much covering on a typical day. If drawdown and covering were anywhere close to each other, we would see more fluctuations between the drawdown and covering columns on a 15 minute look, and we don't see that.

I think two snap shots from the trading screen at Fidelity could show the difference of 100 shares, meaning that within that period of time there were *net* 100 shares borrowed, but in reality all three trades I gave as an example were happening in the time interval between the snap shots, so actual "short" volume was 21 times higher...

 

[Navin]

Thanks for the great insight papa, luv, etc. I'm now fully loaded. Feel like there could be some sovereign turbulence over the weekend so my fully loaded is shares and Jan 2019 calls (I personally like and bought the 300 calls). Plan would be to hold Thru earnings and bank on appreciation. Will revisit trading and position later in the summer. Do your own due diligence and this isn't any sort of investment advice. Option investing is truly a bad idea if you don't know what you are doing.

 

[luvb2b]

sage advice. everyone should be very careful playing options for earnings. a bad outcome and a lot of value goes up in smoke really fast, and often there's no way to recoup that loss. i've made many many losses gambling on earnings over the years, so i feel i have a good sense of how to position myself so that i can handle the pain of being wrong while still participate meaningfully if it goes as i hope.

“And the demolisher of dreams and dwellings was the ticker, that instead of golden jokes, was now clicking financial death.”
- Excerpt From: Edwin Lefèvre. “Wall street stories.” ​

Do your own due diligence and this isn't any sort of investment advice. Option investing is truly a bad idea if you don't know what you are doing.

 

[FredTMC]

Can you provide source for this?

Here's When You Can Order Tesla's Solar Roof Tiles

 

[ValueAnalyst]

Here's When You Can Order Tesla's Solar Roof Tiles

Given what's going on in Germany, this may be one of the those times when he's too optimistic. I don't know, but I feel like if this was going to happen next week we would've known about it by now. Or maybe it will be one of those situations where people put down deposits but end up waiting for months. What do you think?

 

[EinSV]

Given what's going on in Germany, this may be one of the those times when he's too optimistic. I don't know, but I feel like if this was going to happen next week we would've known about it by now. Or maybe it will be one of those situations where people put down deposits but end up waiting for months. What do you think?

Consistent with Elon's Solar Roof timeline, Tesla sent a friend of mine the following email message in the last week of March:

We are incredibly excited for our Solar Roof! We will be taking orders starting in April. We should have more information regarding pricing within the coming weeks.
​

 

[Papafox]

Hmm, nice afternoon uptrend that carried into after-hours trading. I believe this is a positive indication for Monday. You can see where the effort to stop TSLA at 305 failed.

 

[TheTalkingMule]

It's almost as if the traders came back from Friday lunch, and covered their long oil positions and short TSLA positions. Wrong again this week!

 

[Waiting4M3]

Given what's going on in Germany, this may be one of the those times when he's too optimistic. I don't know, but I feel like if this was going to happen next week we would've known about it by now. Or maybe it will be one of those situations where people put down deposits but end up waiting for months. What do you think?

I bet you we will have the solar roof and M3 before the GOP actually delivers healthcare repeal and tax reform

 

[neroden]

I'm going to change my opinion somewhat here. Although the market makers have the ability and the incentive to keep TSLA depressed this afternoon, I'm now thinking that the way the media handled the recall information is also at work here. Plenty of investors unfortunately will react to CNBC, rather than take 5 minutes to google the issue and arrive at a reasonable perspective.

There's definite evidence of news-harvesting bots -- how else do you make the stock drop in *10 seconds* in response to news? These things are pernicious -- we know they caused flash crashes in the past.

 

[neroden]

- Yes, but Germany and France are the only solid pillar, that can help the other countries. Spain has 20% unemployment rate, and almost 50% for the young generation. Belgium, Luxembourg... lol come on. They don't even contribute 20% of what France and Germany do.

The "Benelux" treaty predated the EU by a *lot*. If France and Germany both exit the EU, Benelux would probably keep using euros.