I'm probably going to go radio silence for a while while I go into a huddle to do my tax return, but if Q1 has the major accounting changes, I think that will be a de-risking event: making SolarCity's financials comprehensible to the general public (which they certainly are not right now) will remove a large perceived risk.
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Papafox's Daily TSLA Trading Charts
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Neoden, looking forward to your future comments. The Q1 accounting changes you allude to at Solar City, added to delayed income from autopilot cars sold in Q4, added to the large number of vehicles carried into Q1 from Q4, added to ... should make for an interesting quarter.
Today the "up-down-up" proponents won the argument, due to a surprise drop in TSLA after Goldman released a negative note and adjusted their strategy from "hold" to "sell". The tough part about being an up-down-up trader is determining the proper moment to reduce your exposure. If you did so at 260 or above, you are in fine shape today. If you did so at 240, you're still behind the buy and hold investors. It looks like both groups will likely do well in the long term.
Has TSLA bottomed out? Arguments in favor include the relative lack of shares available to short and the positive movement of the SP this afternoon. Arguments against a low having been reached include the tendency of the news cycle to turn negative when the SP is dropping and the general manic-depressive nature of this stock. The solution? If you have dry powder, consider spreading out your buying. Nobody has the ability to consistently call the bottom.
The Goldman note was classic manipulation. In a nutshell, they said that TSLA runs between 180 and 280, with 180 being near reality (Goldman's target) and 280 being the result of hyping the stock. The implication is that TSLA has reached 280 now and is now taking that long descent to 180 before reversing course again. Unfortunately, there are many uninformed investors who believe such myths. With production of Model 3 only 4-5 months away, the Goldman scare looks pretty extreme. Nonetheless, these overly-pessimistic Goldman notes do move the stock, and so you may want to figure in the next Goldman note to your trading plan and expect it at some point to pull the stock down a similar amount next time the stock price is balancing on a decision point between stopping the descent and going lower. The timing of the Goldman note is anything but coincidental for taking place on a day that could have been perceived as a second trading day in a row of recovery and the beginning of the long climb back up to the 280s.
Taking a look at the technical chart, you can see that the SP came close to the lower bb earlier today but closed up a comfortable margin by afternoon.
I continue to advocate TSLA in the long-term but trying to guess the short-term movement can be a real guessing game, particularly when big players such as Goldman manipulate the news cycle for their own purposes.
Conditions:
* Dow up 16 (0.08%)
* NASDAQ up 17 (0.28%)
* TSLA 246.23, down 10.77 (4.19%)
* TSLA volume 11.3M shares
* Oil 54.03, up 0.04 (0.07%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 209,000 drawdown, 1.75% interest
adiggs
Well-Known Member
It's interesting to me how the classic investor mistake of "buy high, sell low" that haunts investors (buy the hyped stock at the peak, sell the hyped stock at the trough of negativity), can also work but in reverse for short sellers. Of course for the short sellers, for them the mistake is "sell low, buy high".
We had huge demand (and juicy interest rates lending out our shares) when TSLA was trading in the 180-220 range through the end of last year. We started seeing short interest reducing as the stock ran up to 280ish, and now that it's coming back down, we continue to see low interest rates and short covering (or modest share borrowing). If TSLA was a good deal to short at 200, it's gotta be a screaming deal to short now at 250(ish).
I'm interested to see if the stock price continues to drift lower, do we see short interest start to expand again, or does it continue to wain? I figure either way, the bulk of the open short interest must still be under water considering how briefly our run up too 280 and dropping back down has been, compared to the previous trading range in the 200 area.
We had huge demand (and juicy interest rates lending out our shares) when TSLA was trading in the 180-220 range through the end of last year. We started seeing short interest reducing as the stock ran up to 280ish, and now that it's coming back down, we continue to see low interest rates and short covering (or modest share borrowing). If TSLA was a good deal to short at 200, it's gotta be a screaming deal to short now at 250(ish).
I'm interested to see if the stock price continues to drift lower, do we see short interest start to expand again, or does it continue to wain? I figure either way, the bulk of the open short interest must still be under water considering how briefly our run up too 280 and dropping back down has been, compared to the previous trading range in the 200 area.
I normally advise caution about short-term trades with TSLA, due to the unpredictable nature of the stock's short-term trading, and I'm right now watching to see if the noise of the Autopilot 2.0 concerns for driving on local roads translates into a new bear attack.
I would expect that if the SP continues downward we would see short interest increase, since that would establish a new trend (the trend is your friend). For shorts, the recent movements are likely tempting, but it could simply be a short pull-back from a dominant up-trend. From my reading/understanding, as long-traders look for upward confirmation, short-traders are likely looking for downward confirmation. It's the permashorts that are/were getting in now, just as permalongs (us) would likely start piling in at 220.
Today TSLA re-entered a consolidation mode after some big drops. The consolidation could lead to a climbing SP if conditions warrant. Obviously, both longs and shorts will be pushing to see momentum fall in their favor. Shorts at Fidelity sold into another 187,000 shares this morning, attempting to push the stock so that it rolls downhill. Meanwhile, Royal Bank of Canada raise its price target for TSLA from $245 to $314. The battle is on.
For the past 24 hours, I've spent quite a bit of time over in the autopilot forums. Yesterday, Tesla owners were mighty restless. Frustrations about the continued 50 mph speed restriction on lane-keeping with AP 2.0 and some performance issues brought out a number of videos. The one most damaging video showed failures on a wide, winding road with poor side of street markings, which is a tough challenge for AP 1.0, too and is certainly not a valid benchmark for the value of an autopilot. With some reasonable discussion, the tone shifted to a more measured view today with some members posting videos or stories of what AP 2.0 does well at the current time. From an investor's standpoint, the situation has calmed considerably. The trolls present in that forum had their baseless assertions ignored or unmasked. The AP 2.0 Tesla owners still need to see rapid improvement in their product to counteract the current disappointment in performance, but I think Tesla will deliver before the situation gets too angry.
Looking at today's chart, you can see the near-vertical rise at opening suggests there's still serious concern about rising SP and opportunities being lost by both longs and shorts. Thus, you see much steeper uptrends and more gentle downtrends. There's still very much a concern about missing the boat on rising SP, which bodes well for the stock. Of note is the large quantity of stock changing hands on market opening today (341,000 shares) and at market close (210,000 shares). The run-up to 250 late in the afternoon is interesting. Are these investors placing bets on positive words during the State of the Union speech tonight? Do they believe TSLA has now bottomed out? Stay tuned.
Conditions:
* Dow down 26 (0.12%)
* NASDAQ down 36 (0.62%)
* TSLA up 3.76 (1.53%)
* TSLA volume 5.9M shares
* Oil 53.87, down 0.18 (0.33%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 187,000 drawdown, down to 0.75% then up to 1.25% according to Nate
adiggs
Well-Known Member
Fidelity continue paying .75% to borrow shares to lend out. Paying .75% to then receive .75% was clearly not sustainable on Fidelity's part, so the rise to 1.25% is to be expected. That Fidelity is taking .5% and paying .75% tells me the bias is downward right now on short interest rates.
A guess (based on seeing the fluctuations for several months), is we might see a 1% lending rate / .5% borrow rate from Fidelity in the next few days.
More broadly, the borrow/lend rates, whatever they do in the short term - without a bigger shock to the system (mass returns or borrowing), it looks to me like Fidelity is treading the boundary between needing to borrow shares to satisfy demand, and being able to fully satisfy demand from their own resources (margined brokerage accounts, own shares, etc..). I expect to see my shares returned "soon" (days or small # of weeks, not months).
A guess (based on seeing the fluctuations for several months), is we might see a 1% lending rate / .5% borrow rate from Fidelity in the next few days.
More broadly, the borrow/lend rates, whatever they do in the short term - without a bigger shock to the system (mass returns or borrowing), it looks to me like Fidelity is treading the boundary between needing to borrow shares to satisfy demand, and being able to fully satisfy demand from their own resources (margined brokerage accounts, own shares, etc..). I expect to see my shares returned "soon" (days or small # of weeks, not months).
Many TSLA investors were hopeful for a good day today because the broader markets were showing every intention of being up on another Trump bump, but TSLA lost its pre-market gains and closed essentially flat on a day with broader markets up more than 1% today. I would caution about expecting a big up day in TSLA simply because the broader indexes are up because TSLA has a habit of showing low connection to the broader market movements on such a day. Once TSLA started dropping after open (whether from the 200,000 shares sold short or from traders taking money to stocks that more reliably follow the broader markets, the stage was set for an underperforming day. Take a look at the NASDAQ daily trading chart above. Notice that it not only began the day up quite a bit, but it also showed a slow climb throughout much of the day. If the NASDAQ had leveled-oiff early, then there's a chance money could come back into TSLA and the stock could have made up some lost ground, but the opportunity never presented itself.
And so we see another day of consolidation today. Shorts will likely make a play towards a downward move tomorrow, but TSLA might instead just make up for lost ground one day late, and so a question mark remains. If Tesla releases its 10K, the contents of that report could determine the short-term direction of the stock.
Today is March 1, one month before the end of Q1. If Q1 delivery numbers are on track, we should see deliveries equal Q3 numbers of 24,800, which would put Tesla on track for delivering 47,000-50,000 Models S and X during Q1 and Q2, as suggested in the Q4 ER. I believe the approach of early April will put upward pressure on the stock price once we get within a week of month's end, due to investors betting that Q1 will be a good quarter. Thus, the biggest question is what to expect for TSLA stock price during the next three weeks.
Conditions:
* Dow up 303 (1.46%)
* NASDAQ up 79 (1.35%)
* TSLA 250.02, up 0.08 (0.01%)
* TSLA volume 4.7M shares
* Oil 53.67, down 0.34 (0.67%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 209,000 drawdown, 1.25%
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For three days now, TSLA has been glued to 250. FredTMC has a theory that there's artificial pressure holding the price here while Tesla performs an equity raise this week. He points out that all equity raises in the past have come within 2 weeks of an ER. A raise at $250 would be a higher level than any previous raise (I believe the highest yet was around $240), and there's enough upside potential for the stock this year to attack buyers. Every day TSLA remains glued to 250 adds credibility to Fred's theory.
So, if there's an equity raise, the most likely response from the market (since it already knows one is coming) is a sigh of relief because the raise represents derisking. The stock price would go up. On the other hand, if Elon holds out until shortly after the Q1 ER before raising capital, it likely indicates that he thinks Q1 will be positive quarter and will raise the stock price, because why would he hesitate raising money now while the SP is still quite acceptable?
Conditions:
* Dow down 113 (0.53%)
* NASDAQ down 43 (0.73%)
* TSLA 250.48, up 0.46 (0.18%)
* TSLA volume 3.3M shares
* Oil 52.72, up 0.11 (0.21%) Note: I report oil price at the time of day I look. This explains discrepancies with previous day's numbers.
* Morning's Fidelity short share drawdown or (covering) and interest rate: no reliable number (but few shares avail), 1.25%
TSLA's hovering around $250 continues for the fourth day, adding additional credibility to @FredTMC 's theory that an equity raise is underway. Some traders such as 1kEE have been trading the daily volatility, with predictable jumps at open, a noonish dip, and then a recovery. Another play that seems fashionable is to buy on close on Friday and then sell on Monday. We saw 143,000 shares trade hands at 4:00pm today.
Looking at the technical chart, you can see that the bollinger band's movement has flattened out to reflect the flat trading of TSLA this past week. A price of $263.09 would put TSLA in the middle of the bb.
For the week, TSLA closed at $251.57, down from $257.00 last week, or a loss of $5.43. TSLA closed down more than $10 on Monday, due to the Goldman Sachs note, and has been in a slow-climb for the remainder of the week as it consolidates after the drop from its recent highs.
Conditions:
* Dow up 3 (0.01%)
* NASDAQ up 10 (0.16%)
* TSLA 251.57, up 1.09 (0.44%)
* TSLA volume 2.8M shares
* Oil 53.23, up 0.62 (1.18%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: unknown, 1.25%
Today we saw the broader markets open lower, under concerns of both North Korea and Iran behaving badly, and TSLA joined the broader market in trading lower. Lo and behold, though, once TSLA started climbing in mid-afternoon, it climbed right up to taste the sweet richness of green before being pulled back slightly into the red murk by shorts unwilling to allow the stock to close up for the day. One lesson of the morning is that there's no sure thing in the stock market. The usually reliable Monday morning buying during opening hour when following a Friday with positive momentum was overruled today by general global concerns.
And so we see TSLA continue trading in a narrow range near $250 as it consolidates for the fifth day in a row.
As for the drawdown of short shares, although net covering has exceeded a million shares since Feb 6 at Fidelity, we've seen a tendency toward drawdowns outpacing covering during this recent consolidation. Where are these new shorts coming from? For the most part, looking at size of drawdowns, the shorts are smaller players than those who covered a couple weeks ago in the hundreds of thousands of shares (although we did see one drawdown of 169,000 shares today). If you look at this sponsored article (someone paid to have it appear) on oilprice.com , people who wish TSLA's stock price to remain as low as possible are paying for rather deceptive stories to appear in publications read by people who are likely candidates for shorting TSLA. The consequences of ill-informed shorts taking positions in TSLA is that when the next rally comes, they will be the first to jump ship. In other words, they are very weak shorts, and their presence bodes well for the next run-up in stock price for TSLA.
Conditions:
* Dow down 51(0.24%)
* NASDAQ down 22 (0.37%)
* TSLA 251.21, down 0.36 (0.14%)
* TSLA volume 2.5M shares
* Oil 53.19, down 0.14 (0.26%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 223,000 drawdown, 1.25%
TSLA was performing predictably in day 6 of consolidation around $250 when word came out about a Morgan Stanley structured investment based upon the price of TSLA, which has somewhat spooked the market. In a nutshell, if TSLA is trading below $250 on quarterly "determination" dates, starting in June of 2017, the purchaser of the security would be paid interest for those 3 months at an annual rate of 11.5%. If TSLA was trading above the initial March 17 reference price (let's say $250) when a "determination" date rolls around, then the security would be paid in full, plus any interest due. If, at the end of 3 years, TSLA is trading less than 60% below the March 17 price, the the security holder would be paid back a correspondingly smaller portion of the initial cost of the security.
As I mentioned in the roundtable thread, this security looks like an insurance policy of sorts, that would allow Tesla to put off an equity raise until after the Q1 ER, but enough money would (hopefully) be brought in through the sale of the security that if the economy dipped and TSLA was not trading above the $250 (or whatever price we saw on March 17) come June, Tesla would hang onto to money from the security and use it for corporate purposes until the price of TSLA exceeded the March 17 price. The supposition would be that Tesla does not want to pay 11.5% interest for borrowed debt and believes it can pay off the security with an equity raise at some point in the future when the stock price is above the March 17 price.
The good news: if Tesla raises money by such a security now instead of going through an equity raise, one would think that Tesla management is confident that the Q1 results (or Q2 results at the latest) will raise Tesla's SP value high enough for a more-favorable equity raise than at today's price.
The perma-bear take: A Perma-bear would read this security differently. The perma-bear would conclude that Tesla for some reason can't raise equity now and is willing to spend 11.5% annual interest rate to try gathering enough money in the bank to carry it through the Model 3 launch. A perma-bear would be licking his chops, wondering if poor response to the security might put Tesla in a financial bind. Further, the perma-bear would look at the reduced repayment provisions (in the event TSLA is down more than 60% 3 years from now) and conclude that there's a real possibility of TSLA trading this low in 3 years because why would these provisions even be put in?
The coming tug-of-war: Shorts would love to see the SP of TSLA decline between now and March 17 because then the "Initial share price", which would trigger an automatic repayment of the security, would be lower, and the automatic repayment value of the stock in June 2017 and each subsequent "determination" date would be lower, as well. The repayment of the security would likely necessitate an equity raise, and Tesla wants that equity raise to be done at the highest possible stock price.
Fidelity has established a policy of being careful with how many shares are made available to short at any one time, and I think this policy will continue, if not intensify. For this reason, shorts will be limited in how much effect they can have on pulling the SP down. Something that could give upward thrust to the stock price would be an announcement before March 17 that the desired number of securities have been sold already and that Tesla has its financial ducks in a row to carry it through the beginning of Model 3.
We live in interesting times.
Conditions:
* Dow down 30 (0.14%)
* NASDAQ down 15 (0.26%)
* TSLA 2248.59, down 2.64 (1.05%)
* TSLA volume 3.4M shares
* Oil 53.06, down 0.14 (0.26%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 104,000 drawdown, 1.25%
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Further discussion on the roundtable thread and a link to a reddit thread show that the Morgan Stanley security will bring no funds to Tesla but is used for other purposes. Please disregard everything I said in the previous post after, "Hello, my name is ...".
One of the more interesting posts in the roundtable forum suggests that the Morgan Stanley security is much like a put option and is being created in order to offer some risk balance as Tesla raises capital using a 3 year convertible bond offering. TMC member @generalenthu looked at this MS security with its three year duration and concluded that its purpose is to balance a 3 yr. Tesla convertible bond. Let's see if he is right, but it sounds like a good guess.
One of the more interesting posts in the roundtable forum suggests that the Morgan Stanley security is much like a put option and is being created in order to offer some risk balance as Tesla raises capital using a 3 year convertible bond offering. TMC member @generalenthu looked at this MS security with its three year duration and concluded that its purpose is to balance a 3 yr. Tesla convertible bond. Let's see if he is right, but it sounds like a good guess.
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Today the bulls and bears engaged in their tug-of-war with no less than 12 crossings of the red/green line. Bulls are hoping for news of a successful capital raise. Meanwhile, bears are calling for a resumption of the 180-280 yoyo routine, neglecting Model 3's approach as having any consequence. The bear story now is that Tesla doesn't make money and that Model 3 might not make money. Of course a positive Q1 could change that perception, but Q1 may be throttled back by the recent factory closing.
Looking at the technical chart, we see TSLA now slightly below the 50 dma, which would explain the late afternoon downward pressure by shorts to get TSLA below the 50 day moving average and spook some technically-inclined traders. If a capital raise is indeed underway, you might see some effort to push the stock back up toward 250.
Conditions:
* Dow down 69 (0.33%)
* NASDAQ up 4 (0.06%)
* TSLA 246.87 down 1.72 (0.69%)
* TSLA volume 3.7M shares
* Oil 50.64, up 0.36 (0.72%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 54,000 shares drawdown, 1.25%
This morning TSLA traded up on very low volume. As the afternoon arrived and TSLA descended into the red, volume picked up. What's interesting is that even on a down day for the stock, we often see a reversal and buyers jumping back in once the stock is heading upward. TSLA's inability to hold 250 casts some doubt upon the notion that a cap raise is underway, but the Morgan Stanley note made public yesterday still suggests that it is created as a reasonably attractive way for hedge funds and other buyers to balance the risk of a Tesla 3 year convertible bond. The jury is still out on the cap raise theory and the MS note theory, as well.
Conditions:
* Dow up 2 (0.01%)
* NASDAQ up 1 ((0.02%)
* TSLA 244.90, down 1.97 (0.80%)
* TSLA volume 3.8M shares
* Oil 49.58, up 0.31 (0.63%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 88,000 drawdown, 1.25%
Today was an up day for the broader markets and a slight down day for TSLA. It was day 10 of the consolidation in the vicinity of 250. For the week, TSLA descended from 251.57 to 243.69, a loss of 7.88. Taking a look at the technical chart, you can see another slightly downward consolidation in the low 250s that took 10 days and led to a big run-up. Most of the downward cliff dives took place after only 2 or so days of trading horizontally. Whether history repeats itself remains to be seen. Since TSLA has been mostly ignoring the broader markets lately, I think positive news would be the catalyst for resuming the upward motion. In particular, there's uncertainty about the capital raise. Is it coming soon or after Q1 results? Another issue worth considering is why did the Morgan-Stanley note pin the initial stock price for the note on March 17 trading? Why would that date be picked, and does it give us some reason to believe Tesla's cap raise would be around this date? If so, why would Tesla choose this timing?
Conditions:
* Dow up 45 (0.21%)
* NASDAQ up 23 (0.39%)
* TSLA 243.69, down 1.21 (0.49%)
* TSLA volume 3.0M shares
* Oil 48.42, down 0.86 (1.75%)
Over the weekend we saw additional tweets between Elon and various important people in Australia. It looks like a deal for Powerpacks is brewing, and so the up day today. Not long after close, Citron Research said they're no longer net short on TSLA and that smaller story may have caused the after-hours bump. Stay tuned. Good news from Australia later today could bode well for tomorrow's trading.
Conditions:
* Dow down 22 (0.10%)
* NASDAQ up 14 (o.24%)
* TSLA 246.17, up 2.48 (1.02%)
* TSLA volume 3.0M shares
* Oil 48.40, down 0.09 (0.19%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 169,00 shares covered, 1.25%
Note the similarities between the @10 days of consolidating before the break upwards in both the 250ish sideways movements
Sometimes a run-up in the stock price is not attributable to a single cause, rather it is a result of several factors piled on top of each other. I think that's what happened today. First, we had been consolidating in a slightly downward direction for 10 sessions, exactly the same number of sessions that we saw around 250 on the way up. That sideways trading led to a nice move up in the SP in the earlier instance. After 10 sessions of consolidating, TSLA was poised this week to move up or down. Elon's tweets with South Australian movers and shakers changed the news cycle to a positive one. Simultaneously, his quote of $250/kwh of large powerpack installs ignited demand for the powerpack. Not only SA, but several other states and countries responded. This response signaled that TE was about to become a credible source of revenue for Tesla, something that might lead analysts like Adam Jonas to revise their targets. With TE finally maturing, Andrew Left of Citron saw the writing on the wall and neutralized his TSLA short holdings. Today, other shorts followed Citron's example. So, today is the combination of all these factors. Notice, by the way, that the broader markets were down today. This was also a component because TSLA often trades poorly when the broader markets are on a big up day and often disregards a down day. Trader money flows into TSLA when it is running up and most other stocks are having a losing day. Word of EPA approval for 100kwh non-performance vehicles helped too. Technical traders have something to hang their hat on because TSLA climbed convincingly above the 50 day moving average. Finally, concerns that a sinking SP would harm any potential cap raise that was going on dissipated today as the SP rose.
Good work Trendtrader007 for calling this jump up.
Conditions:
* Dow down 44 (0.21%)
* NASDAQ down 19 (0.32%)
* TSLA 258.00, up 11.83 (4.81%)
* TSLA volume 7.5M shares
* Oil 48.36, down 0.04 (0.08%)
* Morning's Fidelity short share drawdown or (covering) and interest rate: 199,000 drawdown, 1.25% lowered to 0.75%
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TrendTrader007
Active Member
Thanks! Actually you called it earlier than I did. So all the credit is really due to you. As an aside I think you're an amazing technical trader and I don't say it lightly. I'm sure that you have an impressive trading record. In any case I don't know about the size of your Tesla position but if anyone deserves to make millions on this thing it's you my friend
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