To some observers of TSLA, Friday's trading looked like a slight disappointment as TSLA hit resistance at 210 and then sank when the market realized it wasn't going higher. I'm going to offer you an alternative explanation for what transpired on Friday, and you're welcome to choose the explanation that seems the most reasonable.
In pre-market trading, TSLA was trading near 208 in anticipation of another up day, but as we got closer to open, someone was pushing the SP down into the red so that TSLA approached 204 in the hour leading up to open. Why would someone do such a pushdown before market opened? It turns out that 311K shares traded hands during the opening minute (where, along with final minute of trading, big buys or sells have minimal effect upon the stock price). My theory is that someone with malice in mind for TSLA bought lots of shares during that opening minute, along with other traders who expected the SP to rise. Once TSLA reached 210, capping took place as those opening shares acquired around 206 were sold to keep TSLA from rising higher. At some point, shorts not involved in the morning buy joined in with short-selling, and a noticeable push downward toward the red/green line took place despite strong macros and no news of significance.
Notice the various rallies of TSLA after the first touch of the red/green line, demonstrating longs ready to buy in and defend the SP. Several gyrations took place which brought about the icicles of short manipulations. Finally, as lower afternoon volumes appeared with big dog investors starting their weekends early, shorts pressed harder to get TSLA below the mid-bollinger band. At this point (and after the big pushdown from 210) some traders and weak longs became concerned and joined the selling. Fortunately, we saw some price recovery during the final hour of trading.
The NASDAQ opened in the green on Friday and was steady as a rock in holding a better than 1.5% gain from late morning until close
The story the shorts are trying to sell right now is that TSLA just refused to stay above the mid-bollinger band for the third time in a row (see artful dodger's story below). To back up that story, CNBC brought chartist Carter Worth back into the studio to both congratulate him on his Tesla bounce story of a few days ago and then get a new reading. What the CNBC negative-Tesla commentators were trying to do once they got Carter back to the group setting was get him to admit that if TSLA descends back below 180 it'll go lower. Worth did indeed say this, but he also said that doesn't think TSLA will go that low (a point the talking heads tried to minimize).
Important stories in Friday's TSLA trading:
*
This post by @Artful Dodger shows that TSLA's previous two rises to mid-bollinger band resulted in downward bounces
* Later on Friday,
Chartmaster Carter Worth appeared on CNBC
* This article in Marketwatch says Piper Jaffray believes Model 3 demand concerns are overblown
* Then Friday night
the media announced that Trump and Mexico have signed agreement on border that will avoid tariffs
* Over the weekend,
this Business Insider article grudgingly concedes that Tesla's stock is ready for a rebound
Meanwhile, the Piper Jaffray note continues to build credibility for TSLA's rise, due to much better demand in Q2 than in Q1.
What I see is that the shorts waited until they saw a point of potential weakness and then sprang. That point was the ability to cap 210, push the stock down to the mid-bollinger band, and hold it there. Looking at the daily chart, you can see the manipulations really picked up on Friday both because of the apparent capping, the apparent icicles in trading, and the jump in percentage of TSLA selling by shorts (see chart below). Other potential indications of significant manipulations are the 311K shares traded in the first minute of market trading and the 400K shares traded in the final minute of market trading. Shorts are now trying to sell the story that Tesla is about to bounce off the mid-bb for the third time in a row and then go lower.
Notice that where there is a max effort push by the shorts to make TSLA decline, it is profitable for the manipulators. All the legitimate long day traders plus the anti-Tesla traders who bought at opening on Friday and sold near the 210 cap price made money. That's also true with the shorts who pushed TSLA down from 210 to 204.50. What you would expect would be a mandatory morning dip on Monday to try and instill some fear in longs that the rise of TSLA is now over.
An inconvenient news story intervened, however. Trump and Mexico on Friday night announced an agreement about the border which will avoid tariffs. Such a development will most likely lead to a nice rally for broader markets on Monday. How do the enemies of Tesla cope with such a development?
One technique could be to really push hard on Monday morning's mandatory morning dip to try to persuade investors that Tesla is not where you want to invest your money on such a big macro day. The problem is that if this dip is defeated fairly quickly, it can lead to a nice rally for TSLA.
Another technique is to admit that TSLA will have a good week ahead (both with healthy macros and with Tuesday's annual meeting). That's apparently what Business Insider did with its above referenced article about TSLA being ready to rebound. Writer Matthew DeBord gave 5 reasons why Tesla could bounce back in the second half of this year, but he of course used the text to disparage the company as much as possible while saying something positive.
So, overall, I expect shorts to try to keep TSLA from rising Monday morning, and an MMD would be the most likely tactic. This tactic will probably fail because of the strength of macros and the strength of positive news about Tesla's improving perception of having more demand than originally thought by the market. An alternative plan for the shorts would be either a 10:30am pushdown or a cap at 210 (if they can hold it) and then an afternoon pushdown. Outfits such as Business Insider are all but conceding that it will fail, so they're not helping the cause of the shorts. If you have some dry powder, consider watching for an MMD on Monday that then rallies and breaks 210 with some authority.
TSLA shorts were tagged with 45% of TSLA selling, up substantially from Tuesday
Meanwhile, Dusaniwsky thinks it's going to be tough for the big shorts to get in much deeper than they already are.
The big story of the tech chart is that for the past two days, TSLA's climb has been stalled at the mid-bollinger band. What Tesla needs right now is a close a fair amount above the mid-bb, and Monday's macros might enable such a move. Fingers crossed and looking forward to the trading.
For the week, TSLA closed at 204.50, up 19.34 from last Friday's 185.16. We are good and ready for a green week. Have a great weekend.
Conditions:
* Dow up 263 (1.02%)
* NASDAQ up 127 (1.66%)
* TSLA 204.50, down 1.45 (0.70%)
* TSLA volume 16M shares
* Oil 53.99 on 6/8
* Percent of selling tagged to TSLA shorts: 45%