Papafox's Daily TSLA Trading Charts

[oneday]

@Papafox You are a gentleman and a scholar. Thanks!

 

[Papafox]

Pure coincidence? Not! The last three days of production data are missing from skabooshka's twitter page.

 

[TrendTrader007]

@Papafox You are a gentleman and a scholar. Thanks!

Papafox's insights are truly amazing. he is better than any analyst i have ever read and does stellar daily reports for zero compensation!
totally unheard of. i am a huge fan
someday, i hope to have the high privilege of meeting him in person

 

[neroden]

I'd suggest we meet with him at the next Tesla annual meeting, but there might not be one.

Or maybe he'll continue to have one for the private shareholders. That would be awesome.

 

[Off Shore]

I'd suggest we meet with him at the next Tesla liquidity event...

FIFY

 

[Papafox]

Today Tesla issued their "Update on Taking Tesla Private" post in which Elon expanded upon previous information. He basically talked about the interest of the Saudis in taking Tesla private and suggested that they were willing and able to make available the resources to do so. His post was geared to a great extent on proving that he had indeed secured funding for the proposed privatization. The overall trajectory of the stock in pre-market trading was quite positive, exceeding 365 at one point, but as market trading began the gains faded with Tesla bottoming out slightly below 350 before recovering into the green for the day.

I think the fade was primarily caused by investors realizing that although the Saudis likely offered enough money to do a privatization deal, such a deal was contrary to the plan outlined just a couple days earlier by Elon in which no new investors would hold so much stock that they could threaten to control the company. It dawned on investors that "the" deal has yet to be put together and for this reason we saw the stock fade. Aiding the fade of the stock were the shorts, most likely, because if you look at the short volume graph below, you can see that they revved up their efforts and likely turned the dip into a dip on steroids.

Through all the noise we heard today, it was again Gene Munster in this post who got it mostly right. He said that the money is there with the Saudis but he doesn't believe Musk wants any entity to own more than 20% of the company and that more likely a syndicate would be put together. If a sufficient number of new large investors does not materialize, then he thinks that Musk would accept a Saudi ownership percentage of greater than 20%. He may be saying this second statement primarily to support Musk's "funding secured" statement but maybe not necessarily ever expecting it to happen. Munster tends to take positions that give Tesla sometimes a bit too much wiggle room, such as his not expecting profitability until Q4, but otherwise he tends to get things more right than everyone else out there.

The Saudi investment in Tesla makes a great deal of sense to that nation's rulers because it's the perfect hedge against the obsolescence of oil. They likely would prefer to take a large stake in Tesla before awarding it a contract to install an enormous solar and battery facility in their country. On the other hand, a major oil producer holding too big a stake in Tesla presents obvious threats that I think the board will remedy prior to any final deal. The remedy would likely be multiple large investors bringing the deal to fruition, but perhaps there could be a non-voting remedy for a portion of the Saudi stock if their ownership percentage would otherwise be too high. Time will sort this out.

During evening hours, the media announced that Elon had arranged for Goldman-Sachs and buyout firm Silver Lake to advise him. The Tesla board will hire its own experts. The role of Silver Lake is a bit mysterious as they are supposedly not being paid and not investing. Glad to see things moving along.

Tesla selling by shorts jumped up to 54% today, which suggests the manipulations are back

Taking a look at the tech chart, please remove the up day that peaked at 387.46 and the next down day from the chart, and you see a rather shallow climb taking place over the other days of the previous 8 trading sessions. Let's see how long that trend continues. Although macros were down today, the privatization news is a stronger influence at this time. The upper and mid BBs are climbing faster than the SP at the moment, which is opening up some nice headroom should positive news send the SP significantly upward.

Conditions:
* Dow down 125 (0.50%)
* NASDAQ down 19 (0.25%)
* TSLA 356.41, up 0.92 (0.26%)
* TSLA volume 10.4M shares
* Oil 67.43, up 0.23 (0.34%)
* Percent of TSLA selling by shorts: 54.39%

 

[Papafox]

Today Tesla's board appointed a special committee to consider Elon's privatization offer. So far, Elon has not submitted an offer. The most likely explanation for the lack of an offer is that Elon is still busy recruiting additional investors to better divide participation in the privatization. Such uncertainty plays into the hands of the shorts, who leveraged today's uncertainty to full advantage in a low volume environment. The dip below 350 in the final 6 minutes of trading was a classic dip on steroids during a low volume close. There was no news to fuel such a dip and no macro force at work, it was gamesmanship. The low volume today suggests that there are no institutional longs shedding shares at present. Rather, it is weak longs getting out and shorts selling at opportune times to juice the dips as much as possible.

Overall, the level of noise is quite high right now, compared to actual knowledge of details. Cases in point?

Elon and the SEC's response to his tweet:
Shorts: Elon was caught lying and the SEC is going to fry him like a strip of bacon on the grill and send him to jail
Reality (courtesy of Cramer): "We'll be on Mars before the SEC penalizes Elon Musk"

Elon's relationship with the Saudis and his naming Goldman and Silver Lake as advisors
Shorts: Elon is overstating the Saudi's interest in taking Tesla private, and neither Goldman nor Silver Lake will acknowledge that they have agreed to advise Musk on the privatization. Elon appears to just be making things up as he goes.
Likely Reality: Two sources claim that Silver Lake is not charging Musk for advice in the privatization but they are interested in participating as investors in the privatized Tesla

And so we see the shorts putting on a full-court press along with cooperative media to place as much doubt upon this privatization plan as possible. Remember how unlikely the same sources thought that a Solar City acquisition would be, but with Elon's determination it passed by a large margin. Now we're seeing the shorts put as much pressure as possible on the privatization process. Some of that pressure will yield desired results for them as the fatigue of dealing with this much uncertainty and conflict when something should be positive is going to discourage some weak longs from remaining in Tesla. They will take the $420 buyout or any higher number. On the other hand, strong longs are typically getting tired of the battles with the shorts and will more strongly appreciate the de-listed status of a privatized Tesla. They're more likely to vote "yes" for the privatization simply to bring an end to this unceasing harassment from the shorts.

Meahwhile, Ihor Dusaniwsky says short holdings have fallen to 33.75 million shares, suggesting that some shorts are quietly tip-toeing to the exit. With good news about Tesla or the privatization process (new investor(s) added, etc.) TSLA will climb again and the tip-toeing of shorts will transition into a a more vigorous exit.

Conditions:
* Dow up 112 (0.45%)
* NASDAQ up 51 (0.65%)
* TSLA 347.64, down 8.77 (2.46%)
* TSLA volume 6.8M shares
* Oil 66.80, down 0.24 (0.36%)
* Percent of TSLA selling by shorts: 50.69%

 

[ggr]

Elon and the SEC's response to his tweet:
Shorts: Elon was caught lying and the SEC is going to fry him like a strip of bacon on the grill and send him to jail
Reality (courtesy of Cramer): "We'll be on Mars before the SEC penalizes Elon Musk"

I have a problem with what Cramer said, which is that it sort of implies that Elon did something wrong, and the SEC is going to fail to do anything about it. But personally, I don't believe Elon did anything wrong at all. A subtle difference.

 

[AWDtsla]

I have a problem with what Cramer said, which is that it sort of implies that Elon did something wrong, and the SEC is going to fail to do anything about it. But personally, I don't believe Elon did anything wrong at all. A subtle difference.

I don't think you can speak to the alternate reality bubble the shorts live in without that implication. He's basically saying they're screwed no matter what.

 

[EarlyAdopter]

I have a problem with what Cramer said, which is that it sort of implies that Elon did something wrong, and the SEC is going to fail to do anything about it. But personally, I don't believe Elon did anything wrong at all. A subtle difference.

I watched the clip and his take was "Even if Elon Musk is lying through his teeth, I think he gets away with it and that's driving those darn bears crazy." Which is to say, you can't know for sure either way, but it just doesn't matter.

He went on to say "The thing is, the SEC looks into everything, Nobody knows if it is a formal investigation or just an informal inquiry. I'm seeing some people saying justice will investigate. That's just insane."

Watch the longer (3:55) video at the end of this article: Cramer: Tesla bears should think twice before shorting the stock

Overall, he does a good job cutting through the FUD, pointing out where the bear arguments fall apart, re-iterating the shorts are looking for a "gotcha" that's just never going to materialize even if (and it's a big if) he were making it all up ("which is insane"), and making it quite clear anyone short this stock is in for a world of hurt. Surprisingly muted and balanced response from Mr. Over The Top Stock Entertainer.

 

[UnknownSoldier]

I have a problem with what Cramer said, which is that it sort of implies that Elon did something wrong, and the SEC is going to fail to do anything about it. But personally, I don't believe Elon did anything wrong at all. A subtle difference.

Well from the perspective of Jim Cramer, everyone is always doing something wrong on Wall Street. It's how the game is played. He is a former hedge fund manager himself and has openly said that wrongdoing is how hedge funds ensure they make money in a ruthless part of the financial world.

In general everyone on Wall Street doesn't seem to trust Elon or his intentions, because Wall Street operates on the general belief that everyone else is untrustworthy, greedy, and only acting in their own self-interest like they are. Someone like Elon who isn't like that must completely baffle them 24 hours a day and 7 days a week.

 

[neroden]

The role of Silver Lake is a bit mysterious as they are supposedly not being paid and not investing.

Sure they are. All this proves is that some of the anonymous sources are wrong.

 

[neroden]

On the other hand, strong longs are typically getting tired of the battles with the shorts and will more strongly appreciate the de-listed status of a privatized Tesla. They're more likely to vote "yes" for the privatization simply to bring an end to this unceasing harassment from the shorts.

*raises hand* I'm an example of that.

The extraordinary increase in disinformation *after* the go-private announcement has really moved me over to the belief that going private is a necessity. Which I didn't think it was, before.

 

[Papafox]

This morning the SEC sent a subpoena to Tesla, requesting information about the Musk tweet regarding "funding secured". This development gave the shorts some ammo in their minds and they went to work, building on yesterday's dip, trying to flush out yet a few more weak longs. Fortunately for them, the NASDAQ lost 1.23% today, making their job much easier. As the day progressed, the reality of the SEC's mission became much more clear in this video and tweet, featuring a former SEC enforcement attorney John Reed Stark, who cast serious doubt about Musk's actions constituting manipulation. I continue to believe that Musk received enough information from the Saudis to believe they constituted a funding solution, but that he is putting together a wider distribution of new investors before submitting his proposal to the board.

Best media comments of the day goes to Ben Kallo in this clip, where he basically says it's nuts that the discussion of Tesla is focused on Musk's tweets when the big story is really the execution going on at Tesla. He says in a visit to the Fremont factory it looks like Tesla is now producing over 5K Model 3s/week and doing a great job at the factory. He's personally against the privatization but thinks the board should raise the offer to $500/share some time in the next 10 days. Most bulls I know think the $500 price is unrealistic but they do suggest that a higher price than $420 may well come forth.

Consider, for a second, the pros and cons of higher prices for the privatization buyout of non-participating shareholders. As the price offered goes higher, the amount of money needed to complete the privatization increases for two reasons: the cost per share is higher, and more shares are needed to be purchased because more shareholders will choose to take the money over the privatized shares. On the other hand, the problem of offering too low a buyout price is that there's a chance of losing the shareholder vote if too many shareholders feel the amount offered for those cashing out is not sufficiently high. Thus, a happy medium is needed, and as Tesla executes better and better, that happy medium becomes a higher number.

Looking at the tech chart, you can see that the upper BB has climbed to 383, despite today's dip, giving further headroom. I'm also thinking today's reasons for a dip were weak, and just as the 387.46 day and the following day were outliers on the high side, perhaps today's trading (and tomorrow's?) will be an outlier on the low side and TSLA will return to the slow climb toward 360 trend before news sends it higher.

Considering how well Tesla is now executing (either as a future private or public company), today's prices are real bargains.

Conditions:
* Dow down 138 (0.54%)
* NASDAQ down 97 (1.23%)
* TSLA 338.69, down 8.95 (2.57%)
* TSLA volume 9.0M shares
* Oil 64.99, down 0.02 (0.03%)
* Percent of TSLA trading by shorts: 49.43%

 

[mershaw2001]

Hi Papafox, I wanted to offer one correction to your above statement, where you said "He says in a visit to the Fremont factory it looks like Tesla is now producing over 5K Model 3s/week". Ben Kallo specifically says "5000 cars per week" in reference to the Fremont factory production rate, at minute 2:41. He does not say 5000 model 3 per week. I believe he meant model 3s per week, but he did say 5000 cars per week and by the wording that would be 3000 model 3s per week.

 

[AZRI11]

Hi Papafox, I wanted to offer one correction to your above statement, where you said "He says in a visit to the Fremont factory it looks like Tesla is now producing over 5K Model 3s/week". Ben Kallo specifically says "5000 cars per week" in reference to the Fremont factory production rate, at minute 2:41. He does not say 5000 model 3 per week. I believe he meant model 3s per week, but he did say 5000 cars per week and by the wording that would be 3000 model 3s per week.

You know he was talking about model 3. I would cover if I were you.

 

[Stormy]

You know he was talking about model 3. I would cover if I were you.

Actually, its not that clear. I, too, think he did mean model 3, but its definitely not what Kallo said. And mershaw offered the correction in a *really* respectful manner. No need to jump down his throat and accuse him of playing for the other team. That attitude makes us an echo chamber, and I'd like to leave the bears to dominate the echo chamber market.

 

[Papafox]

Today was a huge up day for the DOW and an up day for the NASDAQ as well. I think the shorts played it smartly with a robust mandatory morning dip and a capping of the late morning climb into the green. Such actions gave the message that TSLA was not the place for traders to make money today. That effort came at a cost, however, with shorts needing to do 57% of TSLA selling today in order to keep TSLA from rallying. Volume was low, a mere 5.9M shares. The first minute of market trading saw 112,000 shares trade hands. I suspect some was shorts reloading after a day of manipulation yesterday and with eyes on a big day today.

My guess about near future trading? I think the shorts have just about milked this "Elon is in hot water with the SEC" dip for all it's worth. The low volume today, the high short percentage of selling, and the inability of the shorts to get much of a dip out of TSLA suggests it's about time the stock turned around and started heading higher, FUD and macros allowing. The process of the SEC researching claims and then finally coming to a conclusion on the matter will take months, at least. It is time for this issue to go on the back burner.

There was some good news of substance today as Tesla announce legal action against Ontario regarding the biased handling of the $14,000 rebate removal. This electrek.co article spells out how Ontario discriminated against Tesla, which is illegal. It would be great to give Ontario residents a fair chance to benefit from the rebate. Other news of substance is that multiple analysts toured the Fremont factory and we're seeing price target upgrades due to the excellent progress on Model 3 production. This Teslarati article gives a good summary. The analysts are impressed and once we get out of the negative FUD cycle this stock will climb.

Shorts really cranked up the manipulations today to keep TSLA from running uphill with the macros.
Short percentage of TSLA selling stood at 57.38%


Conditions:
* Dow up 396 (1.58%)
* NASDAQ up 32 (0.42%)
* TSLA 335.45, down 3.24 (0.96%)
* TSLA volume 5.9M shares
* Oil 65.30 down 0.16 (0.24%)
* Short percentage of TSLA selling: 57.38%

 

[Papafox]

Sigh, what a difference a day makes. Yesterday, volume was light, shorts were doing more than half the selling, and TSLA was holding its own. Then the New York Times article came out with Elon's interview. While Elon most likely wished to convey the personal pressure being put on him by the short-sellers (and thereby show a good reason for going private), the interview was twisted into a negative piece which really hurt the stock today. This post by @Johan in the Market Action thread does a good job of laying out the damage done in the NYT article by two unidentified sources. We have no idea how truthful these unidentified sources are. Reuters, for example, has been wrong on just about every major claim they've made in the past week. The interview was more about the negatives put forth by the unidentified sources than it was about Elon, in his own words, which is an outright betrayal of the interviewee. Shame on you New York Times. TMC's @fact200 does a good job here of laying out the character assassination of the NYT piece.

While Elon's taking Ambien to sleep is concerning, accusations about his taking recreational drugs only added kindling to the fire started by the second fired employee who recently alleged that a Mexican drug cartel is working within Tesla's employee groups and Tesla is doing nothing to stop it. The allegations, at least the Tesla turning its back on the work of a drug cartel, are most-certainly fictitious, but it paints an untrue picture of both Elon and Tesla being out of control. I will have to refer to the NYT interview as "super-FUD" because it clearly twisted Elon's interview in a highly-negative fashion. Fortunately, the board offered words of encouragement about their high-regard for Elon, but the damage was done.

Short interest is holding pretty still these past days as smart shorts trim holdings and "go for the jugular" shorts add to their positions.

Selling by TSLA shorts was up to 63%, which indicates LOTS of manipulations going on

Another hit on TSLA came from UBS, which on July 30 said that TSLA will plunge more than 30% in the coming 12 months (in order to justify their rock-bottom $195 price target of the time). UBS then supposedly tore apart a Model 3 and concluded the car will not be profitable. Since when has UBS been known for its ability to disassemble vehicles and derive a valid cost? I think that was an exercise to justify their previous conclusion. No thanks. I'll value the Frank Munro and the German firm's conclusions instead.

One possible positive outcome of recent events is that the stress on Elon is apparent and parties are open-minded about finding a COO if a good enough one exists out there.

Additional good news is that whether Tesla goes private or not, the company is executing very well right now and once this FUD cycle is over we will see a very nice recovery of the SP. While yesterday's TSLA prices were attractive, today's are a true gift to those investors who still have dry powder available, provided you believe that Elon will weather the storm and hang in there. From past history, I strongly suspect he will. The SP action is out of touch with Tesla's execution and is instead focused on the transient drama about the privatization tweet, Elon's relationship with the board, and Elon's state of mind. Have we bottomed out yet? I'm going to be careful this time and simply say that lots of investors are on the sidelines, waiting to see just what additional FUD comes forth before this stock turns around. One should never underestimate the efforts of the shorts and the efforts of media outlets that value "the scoop" over getting the story right.

Keep in mind that the shorts have a very risky thesis they're championing lately. They've lost the "Tesla can't build Model 3" thesis and almost certainly have lost the "Tesla can't make money on Model 3" thesis as well. They're down to "Musk is going to fall apart or go to jail" theme now, which received a big boost from the news today but such big days are gifts not likely to come again, and when the emphasis turns back to Q3 and Q4 cash flow and profitability, they're on really rocky terrain.

For today, I suspect the shorts set their goal of reaching 305 but they couldn't quite hold it until the finish line of market trading. They failed to hit the 10% decline circuit breaker, so they'll be able to continue shorting. For tomorrow, I suspect they'll try a big push to hit 300 and thereby trigger stop losses at that number. Maybe they'll get there, maybe they won't, but be careful of stop-loss settings because there's tremendous volatility in the stock, both on the downside and the upside. We know there are better days ahead, it's really a question of the number at which TSLA makes its reversal.

Conditions:
* Dow up 111 (0.43%)
* NASDAQ up 10 (0.13%)
* TSLA 305.50, down 29.95 (8.93%)
* TSLA volume 18.7M shares
* Oil 65.92, up 0.46 (0.70%)
* Percent of TSLA selling by shorts: 63.44%

 

[neroden]

This reminds me of the July 4th bear raids, only on steroids.