Papafox's Daily TSLA Trading Charts

[Sancho]

Since the capping Friday at $244 was so blatantly obvious, it’s worth considering what’s so special about $244. I’m not sure about your theory that it was trying to engineer a $242.50 close. The capping was still going on with 45 minutes until expiry in a rising TSLA and general market, so they had to figure it was unlikely to close down much from there.

My guess is that there is nothing about $244 that is tied to any particular call option. Rather the capping is protecting the value of all calls sold at all strike prices and all expirations. It is the price that day the call sellers collaboratively determined would be the line in the sand to hold.

How did they determine that price, short of direct communication that I don’t believe occurs? Because $244 is where the first wave of buying in the morning ran out of steam. It was natural to make that a point of resistance the rest of the day.

That $244 was breached in the last 45 minutes, I don’t view as much of a failure for the manipulators. They succeeded in controlling the price for almost the entire day and it ended only a dollar more than the cap. If anything, I believe Thursday was more of a defeat for the manipulators when they seemed to be trying to reverse Wednesday’s pop and failed to do so, setting up another positive week for the stock. That was their worst showing in awhile, but Friday’s successful capping demonstrates they are far from giving up the fight.

Next week? Guaranteed to be more epic battles.

 

[Papafox]

Since the capping Friday at $244 was so blatantly obvious, it’s worth considering what’s so special about $244. I’m not sure about your theory that it was trying to engineer a $242.50 close. The capping was still going on with 45 minutes until expiry in a rising TSLA and general market, so they had to figure it was unlikely to close down much from there.

My guess is that there is nothing about $244 that is tied to any particular call option. Rather the capping is protecting the value of all calls sold at all strike prices and all expirations. It is the price that day the call sellers collaboratively determined would be the line in the sand to hold.

How did they determine that price, short of direct communication that I don’t believe occurs? Because $244 is where the first wave of buying in the morning ran out of steam. It was natural to make that a point of resistance the rest of the day.

That $244 was breached in the last 45 minutes, I don’t view as much of a failure for the manipulators. They succeeded in controlling the price for almost the entire day and it ended only a dollar more than the cap. If anything, I believe Thursday was more of a defeat for the manipulators when they seemed to be trying to reverse Wednesday’s pop and failed to do so, setting up another positive week for the stock. That was their worst showing in awhile, but Friday’s successful capping demonstrates they are far from giving up the fight.

Next week? Guaranteed to be more epic battles.

Sancho, I appreciate the perspective. It is reasonable, especially when you consider the number of calls expiring this coming Friday, 7/19. Whereas we saw maybe 8K 242.50-strike calls expiring this past Friday, the number of 250 calls expiring on 7/19 is nearly 35K. That's a lot of exposure for the sellers. They also have quite a few 240 and 260 calls, but I suspect 250 is more likely to be the battleground in the coming week. If the macros deteriorate, the hedge funds might try for a knock-down to 240, however.

What saved TSLA's bacon last week was the late Tuesday email from Jerome. We probably won't have the benefit of such an email this week, but on the other hand, Friday will be the last Friday before the Q2 ER, and we might see some price levitation as traders wonder how 95,200 deliveries will improve the financial results over the expectations of analysts. We could also see some carryover of enthusiasm from Jerome's email into the coming week because the news indicated some huge surprises ahead, some of which will either be revealed or hinted at in the coming ER. Second half of 2019 projections should be very bullish. Yep, should be an interesting week.

 

[Papafox]

Today started off with the SP opening higher as a continuation of Friday's rally. As the NASDAQ dipped, so did TSLA. What was unexpected was as the NASDAQ started climbing in the afternoon, TSLA's climb kept accelerating until just a few minutes prior to close. Those of us who expected a big fight for 250 were surprised at a close above 253 today.

When comparing the NASDAQ chart to the TSLA chart, keep in mind that TSLA closed up 3.44% today and the NASDAQ closed up a mere 0.17%. Although there was loose correlation between the two, TSLA gained about 20x times as much.

The NASDAQ closed up a mere 0.17% today, but encouraged

Shorts were tagged with 41.5% of TSLA selling today, suggesting a moderate level of manipulations

Taking a look at Dusaniwsky's chart, you can see that covering by shorts has accelerated over the past couple of days as the stock price has been rising. This tail wind helps propel the stock price to rise further.

Looking at the tech chart, notice that the SP has climbed away from the descending wedge. Notice, too, that in recent days we've seen more typical climbs from start of day to end (fat part of candle, not the wicks). For weeks previous, notice that much of the gains took place on open and that inter-day price gains were extremely small. I suggest that the small inter-day gains were caused by successful manipulations.

The big news this afternoon is that Tesla has redone its pricing of vehicles once again. Price changes are modest in some areas. For example, SR+ is about $900 less expensive than before. LR (which is AWD) is about $2,000 less, which amounts to about 4% of the sale price. For the P3D, the price cut is over $4000. I suggest that since the P3D is basically an AWD LR M3 with better brakes, it's not significantly more expensive to produce than the LR. If Tesla sells more than double the number of P3Ds because of this price cut, the price cut could actually help raise ASP because more people will be opting for performance.

Models S and X are only being offered again with the bigger batteries, which will likely constrain sales and not be looked upon favorably by the market. On the other hand, perhaps S & X are moving to a single body in white like at Fremont to make room for Model Y production, which could be beginning sooner than expected. If that's the case, the whole rearrangement of prices could make sense, but in the short term TSLAQ will cry "demand cliff" and the market will fret. Expect some turbulence in the short term until Tesla's strategy is explained during the ER or a leaked email to employees.

Conditions:
* Dow up 27 (0.10%)
* NASDAQ up 14 (0.17%)
* TSLA 253.50, up 8.42 (3.44%)
* TSLA volume 11M shares
* Oil 59.45
* Percent of TSLA selling tagged to shorts: 41.5%

 

[Papafox]

Today we were able to see the results of yesterday evening's announcement by Tesla that they were changing prices of vehicles, including several Model 3 price reductions. You would expect the shorts to respond with serious effort to this news as it backs up two of their top reasons for shorting the stock: 1) demand is drying up and 2) margins will never allow Tesla to be profitable except in rare quarters. We did indeed see negative pressure on the stock in pre-market trading and at open. In fact, over 300,000 shares traded hands in the first minute of market trading, and volume was very heavy for the first 40 minutes. You can see the telltale icicles of manipulations in the morning, but the stock showed great resilience to the negative pressure and even flirted with going green as 2pm approached.

Macros did not help today, with a negative Trump announcement about China around 11:30am which sent the NASDAQ cliff diving until about noon when it reversed some.

The NASDAQ lost 0.43% today, just about the same as TSLA. Look how little movement TSLA experienced during the 11:30am - noon plunge of the NASDAQ, though.

How do I interpret TSLA's surprising resilience today to forces likely to push it lower? What I suspect is that as TSLA has finally floated free of the descending wedge and news has turned favorable, we've attracted the attention of at least one big, institutional-like investor. Although volume is still relatively light, we're seeing the other signs of a big investor buying in. Look at the tech chart below and see how the SP closed today just about right on the upper bollinger band. Big investors generally like to stay within the bollinger bands with their buying. Thus, Tesla has entered a phase where it is running along the upper-bb and thereby encouraging it to turn higher. Just look at how the heavy selling on opening today was bought up. If news is favorable at the 2Q ER, I suspect we'll get a few more fish on the line. That's my theory, at least. Let's watch for the next few days and see what happens, but today made me especially bullish as I thought we'd take a much bigger hit from yesterday's news.

No big surprise that percent of selling by shorts increased to 45% today as they sought to push TSLA down on the news of some price decreases in Model 3

TSLA is now above the 100 day moving average (I had used blue for 50 day for a while but now switched back to 100 day) and is still following the upper bollinger band. This is a very healthy climb and let's hope it continues. If it does, it confirms that some big buyer is loading up on shares at the moment.

Conditions:
* Dow down 24 (0.09%)
* NASDAQ down 35 (0.43%)
* TSLA 252.39, down 1.12 (0.44%)
* TSLA volume 8.0M shares
* Oil 57.63
* Percent of TSLA selling tagged to shorts: 45%

 

[FrankSG]

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We did indeed see negative pressure on the stock in pre-market trading and at open. In fact, over 300,000 shares traded hands in the first minute of market trading, and volume was very heavy for the first 40 minutes. You can see the telltale icicles of manipulations in the morning, but the stock showed great resilience to the negative pressure and even flirted with going green as 2pm approached.

Thanks for doing these analyses, they are super informative!

One question I have is about this part. You say that you can see the manipulations in the morning on the chart, but isn't it in theory much easier to manipulate a stock price during low volume rather than during high volume like yesterday morning? What makes you think those icicles were from manipulation rather than people selling because they thought the price drop news was bad?

 

[Papafox]

Thanks for doing these analyses, they are super informative!

One question I have is about this part. You say that you can see the manipulations in the morning on the chart, but isn't it in theory much easier to manipulate a stock price during low volume rather than during high volume like yesterday morning? What makes you think those icicles were from manipulation rather than people selling because they thought the price drop news was bad?

That's a valid question and not a simple one to answer.

On most days the call is much easier than yesterday. If we see no news of significance, no macro move to justify it, and elevated percent of selling by shorts, then typical short-selling artifacts in the chart such as icebergs and the mandatory morning dip can most likely be attributed to manipulative short-selling.

Yesterday was an exception, however, because with the Model 3 price reductions, there were valid reasons for some longs to be selling, and no doubt they did in fact account for a good portion of the morning selling. A big first minute of trading number such as 300K shares traded suggests longs were heavily involved in the selling. Where things get tricky is with the other selling in the morning. When you see huge numbers of shares sold in a minute's time, followed by robust buying, followed by substantial selling per minute again, you have to doubt that the selling is being done by prudent longs. Such heavy selling in a minute's time is incompatible with a long decreasing TSLA exposure in a reasonable fashion, because 25K or more shares sold in a minute moves the stock price downward, and a long would be much better off selling at a slower pace, even if they wanted out quickly. Of course some of that selling in that busy minute is being done by algobots that are trying to front-run a trend, and they're typically being suckered into the sale by the overly-large sized sale that has just transpired through shorting.

What I do in a typical day is look at the trading chart and compare it to both news and macros. I form an opinion about the level of short-seller manipulation I think is happening that day, and then I wait for the volumebot readout of percent of selling by shorts. If the selling percentage by shorts number is substantially different than what I expected, I try to reevaluate my conclusions. On the other hand, sometimes my original conclusion remains intact, and I suspect the validity of the number, rather than my reasoning. Other times, I accept the number and rework my understanding of what happened during the day.

This is a very unscientific approach and of course sometimes I will be off. Selling is always a mixture of longs and shorts, after all. However, I think the system is working well enough so that I can get a feel for when there's going to be a change in direction of stock movement. For example, if I see lots of evidence of manipulations by short-selling (short-selling is a tool that can be used by different groups of people), I see the manipulations failing, and I see buyers snapping up the shares because of good news, then I presume that a downward movement is about to end and an upward movement is going to start. When yesterday's percentage of selling by shorts came in at 45%, that number was consistent with the types of gyrations I was seeing in TSLA stock price, and I stuck with my opinion that manipulations were fairly widespread.

I make assumptions and then watch the trading to see if those assumptions remain likely. For example, I've recently assumed that the strength we're seeing with the stock price while it hugs the upper bollinger band is likely proof that a big investor has started buying in and is still buying. You would assume that a really big investor would time the acquisition of shares so that some dry powder still remains when you reach the day of the ER. Otherwise, the stock price runup could be unwound by bears. So far, whoever is buying seems to still have dry powder because we're following that upper bb closely. If I see a big break from the pattern I will reevaluate.

I hope this helps.

 

[Papafox]

Today we saw strong trading of TSLA but a fade into close. Of course market trading began with a mandatory morning dip, but when it was defeated, TSLA rallied to well above 257. A dip in the NASDAQ that bottomed out a bit before 11am caused a TSLA dip as well, but TSLA bounced back from this dip as well and nearly hit 258 not much more than an hour before close. Alas, the NASDAQ began falling about 2pm and did a swan dive in the closing minutes, which gave manipulators a chance to profitably go after TSLA with a dip on steroids into close, which they achieved. According to the percentage of selling by shorts graph below, short-sellers did 52% of TSLA selling today, indicating robust manipulations.

The NASDAQ closed down 0.46% but TSLA nonetheless managed to hold onto a nearly 1% climb. Notice the dip in after-hours trading. Right after market close, Netflix disclosed disappointing sales data, which caused the stock to drop 10% after hours. Look for the Netflix dip to cause red trading on the NASDAQ tomorrow. I am not aware of the cause for the NASDAQ's late session swan dive prior to close.

Shorts were tagged with 52% of TSLA selling today, a big jump up from earlier this week

Leading into the April 24 Q1 2019 ER, manipulators upped their game by doing 60% of TSLA selling several days prior

Looking at the tech chart, you can see that TSLA is still riding the upper bollinger band, suggesting that a big investor is still accumulating. Somewhat higher than normal volume supports this theory.

Best as I can tell, a big investor is still accumulating TSLA ahead of the ER. Meanwhile, the manipulators saw an opening and decided to flex their muscles to both knock TSLA down a few dollars today and make some money by selling high and covering low into the close. This is a setup for a very interesting day tomorrow as the NASDAQ will most likely be depressed from the Netflix drop and both the bulls and the bears are flexing their muscles. I suspect the accumulations will continue and the mischief the manipulators pull off tomorrow will give the accumulator a discount but will not stop the buying. Certain hedge funds would love to see TSLA below 250 at close on Friday, I suspect, but I'm not sure they're going to be able to do that if the buying continues. Never a dull moment.

Conditions:
* Dow down 116 (0.42%)
* NASDAQ down 38 (0.46%)
* TSLA 254.86, up 2.48 (0.98%)
* TSLA volume 9.6M shares
* Oil 56.66
* Percent of TSLA selling tagged to shorts: 52%

 

[Papafox]

Today the hedge funds that sold calls likely tried a push-down in order to keep TSLA below 255 for Friday's close. You can see ups and downs in the morning as the manipulators pushed down while buyers bought the dips. As a result, the day turned into a form of temporary truce, where manipulators played whack-the-mole every time TSLA rose to the red/green line and any big buyers out there slacked off in the afternoon to keep from driving up the price. In the final minutes of trading, the manipulators did a $1 price grab with a descent into close.

Normally, I would be concerned about the low 4.6 million shares volume, but I think the buying adequately handled the morning's assault and so I suspect the accumulating investor is still out there, but playing it cool in the afternoons right now to avoid bidding up the stock price.

In news:
* From a couple days ago, Tesla autopilot safety improves over previous quarters
Jeff Bezos apparently could not stand to see Tesla getting such good press and so his Washington Post published this article in an attempt to rain on Tesla's parade. Basically, the article suggests that other autonomous driving efforts use LIDAR and are careful to only drive in limited locations, so therefore Tesla's approach is dangerous, will result in pedestrian deaths, and shouldn't regulators jump in and stop it? Blatantly biased material from an organization whose space efforts are being overshadowed by the brilliance of SpaceX.

Although the NASDAQ began the day in the red (likely from the Netflix news), it managed to close in the green. Notice that the final NASDAQ climb of the day was directly opposite what TSLA did in the final minutes.

This recent graph from Dusaniwsky gives us an idea of just how much effort was needed to keep TSLA under control yesterday. That jump in short interest looks close to 300K-400K shares over past couple days after net covering before that. There's no news to support rising short interest and I suspect once the short interest stops rising the stock price will return to its rise. It is truly amazing that 41.5 million shares are shorted this close to the ER when we know that over 95,000 Teslas were delivered in Q2 and guidance for the rest of 2019 could be eye opening. There's such potential for a big jump in stock price if things go well.

If the recent shorting was done by hedge fund manipulators to protect this Friday's options, then I would suspect that they'd unwind that short position before the ER, as it would be too dangerous. Such unwinding would place upward pressure on the stock price.

So, what happens tomorrow? Looking at the open interest and option volume graphs for Friday expirations, you can see lots of activity in 255 and 260 calls and 250 and 255 puts. The delta-hedging market makers may engineer a close right at 255 tomorrow to minimize the payouts, and that solution would likely be palatable to the hedge funds that weren't delta-hedging. On the other hand, if macros are weak or FUD is lively tomorrow, the hedge funds might try for a 250 close. Of the two, I think 255 close is much more likely.

That said, next week becomes an entirely new animal as longs and shorts place their bets going into July 24th's ER. Do you like fireworks? Chances are you'll see some next week.

Shorts were tagged with 39.5% of TSLA selling today, down sharply from yesterday's activity. It's possible that Friday could be more of the same.

Looking at the tech chart, you can see that today's tiny dip gave the upper bollinger band time to gain some headroom above the stock price. We now have more than $4 room for appreciation. If Friday is also a constrained trading day, then the stage would be set for a very lively Monday.

If word of good earnings results for next week's ER leak out on Friday, however, all bets are off as the stock price will zoom.

Conditions:
* Dow up 3 (0.01%)
* NASDAQ up 22 (0.27%)
* TSLA 253.54, down 1.32 (0.52%)
* TSLA volume 4.6M shares
* Oil 55.30
* Percent of TSLA selling tagged to shorts: 39.5%

 

[Stars aligned]

It's always interesting and entertaining to read your daily analysis. I just wonder why you think that there is exactly one accumulating big investor out there vs. several?

 

[Papafox]

It's always interesting and entertaining to read your daily analysis. I just wonder why you think that there is exactly one accumulating big investor out there vs. several?

There could indeed be more than one institutional investors accumulating, but I say one because I mean "at least one" and also because the volume of TSLA this past week has been low, even though it shows a following-the-upper-bollinger-band behavior of a stock that is being accumulated in a regular and ongoing fashion. If there were many institutional investors accumulating large stakes, volume would be higher.

 

[Papafox]

Congratulations longs on week 7 of nonstop climbing. The day began with the macros up and TSLA up as well in pre-market trading. Shortly after a feeble attempt at a mandatory morning dip TSLA climbed to 257 where it was capped and by noon the capping moved closer to 256 as the sellers of call options expiring today did everything in their power to prevent the stock price from running too high.

At around 2:25pm the cap not much above 256 failed and volume picked up as traders and investors realized that TSLA had just achieved escape velocity and was going to climb away from the cap. I think 257 and then 256 were used as capping targets by the sellers of calls expiring today because the manipulators kept TSLA close enough to 255 where a late-session push-down into close could reach a target price of 255. When TSLA climbed higher, a new capping effort was placed at 259.60ish so as to prevent TSLA from reaching 260 and encouraging more climbing.

Fortunately for the manipulators, the NASDAQ really started losing value after 2pm and eventually became too apparent to completely ignore. Nonetheless, with the macros heading downward, TSLA still managed to hold 259 until 15 minutes prior to close, at which time the manipulators seriously increased their selling and managed a dip into close that reached about 258. It took nearly 42,000 shares being sold within one minute at 3:59pm to achieve the lower price, and the following minute, at 4:00pm, 186K shares traded as the manipulators worked to unwind as much of their shorting prior to the day's close.

The NASDAQ opened in the green but lost 0.74% by close. In contrast, TSLA soared today

Keep in mind that between 240, 250, 260, and 270 calls, roughly 100,000 contracts would expire today, representing 100 times that many shares at stake. The sellers of those calls had significant incentive to prevent TSLA from running away and threatening those 260 and perhaps even those 270 calls. Next week has nowhere near as many options at stake, and so the market makers and hedge funds which sold TSLA options will likely play a less heavy-handed role.

Looking at the tech chart, you can see that TSLA stayed below the upper bollinger band today but is following it closely enough so that the trend is still intact going into Earnings Report week. July 24 will be a Wednesday. I expect more climbing on Monday but Wednesday is usually a down day as profit-takers take some chips off the table prior to the ER.

How TSLA does after the ER of course depends upon how strong the report is. Sources I've spoken with think that a non-GAAP profit is quite possible but a GAAP profit might not be in the cards. Today, Tesla perma-Bear Brian Johnson of Barclays revised his profit prediction and is looking for a mere 16 cent loss/share at the ER. I did not see him revise his price target, though. Overall, I think this move (which helped the stock price a bit today) is a Trojan Horse, as Johnson is likely trying to set Tesla up for reporting results that are below analysts' expectations and then call the ER a miss. Same old games by same old players.

For the week, TSLA closed at 258.18, up 13.10 from last Friday's 245.08. It's been a good week, my friends. Enjoy your weekend.

Conditions:
* Dow down 69 (0.25%)
* NASDAQ down 61 (0.74%)
* TSLA 258.18, (1.83%)
* TSLA volume 6.9M shares
* Oil 55.76
* Percent of TSLA selling tagged to shorts: 38%

 

[Stars aligned]

There could indeed be more than one institutional investors accumulating, but I say one because I mean "at least one" and also because the volume of TSLA this past week has been low, even though it shows a following-the-upper-bollinger-band behavior of a stock that is being accumulated in a regular and ongoing fashion. If there were many institutional investors accumulating large stakes, volume would be higher.

Thanks, that's helpful.
My thought is that the supply is very limited - few willing to sell - and every attempt to buy more would send the price through the roof, so even if there are several interested buyers, they have to act very careful if they want a price near the current levels. They probably go via near the money calls they execute, and that's why we have seen so many of these calls in the 240-260 range in the past week.
Does this sound plausible?

 

[Papafox]

Thanks, that's helpful.
My thought is that the supply is very limited - few willing to sell - and every attempt to buy more would send the price through the roof, so even if there are several interested buyers, they have to act very careful if they want a price near the current levels. They probably go via near the money calls they execute, and that's why we have seen so many of these calls in the 240-260 range in the past week.
Does this sound plausible?

I agree that big buyers would have to be careful with the speed at which they're picking up TSLA shares during the past few weeks because there just seems to be a limited number of sellers at these prices. Otherwise, the stock price rises too quickly. The compromise position looks like it is to buy along the upper bollinger band to keep from pushing the stock price up too quickly. Whenever in the high volume morning hours the manipulators sell quickly to depress the stock, there's been no shortage of buying to keep the push-downs from getting out of hand, which reinforces the theory that one or more big buyers are accumulating.

Consider a late afternoon short-selling spree in the final 15 minutes before close. Rather than buying up this push down, I think the big accumulator(s) can occasionally give a wink to the manipulating hedge funds and allow a dollar or two push down. Any discount at opening the following trading day would be a good thing for the accumulating parties.

Hedge funds buying calls and then executing them when they originally sold similar calls doesn't make sense to me. There's time value left in those near-the-money calls they would purchase and then execute, and buying shares would be a less expensive option to hedge (even if it caused the stock price to run higher). I'm sure that some of the buying we're seeing is delta-hedging against sold calls that are likely to pay off. With TSLA running up 4-5% every week, at some point the hedge funds just biting the bullet and buying shares to delta-hedge their call options would make sense as they realize the manipulations cannot stop the SP appreciation. It's entirely possible that the same hedge funds which pushed the stock price down in the final 15 minutes of trading on Friday were also buying to hedge and might even be net buyers for the day. They're really in a pickle if the short term calls they've sold haven't been hedged, with the medicine (buying shares to hedge the calls they sold) acting to further elevate the stock price.

 

[Stars aligned]

Thanks again for your insight, Papafox.
I still see the call execution story as plausible, for three reasons:
1) It's probably not the HF's who buy calls and execute them, but those investors / big buyers who want in for the longer term.
2) I've seen this happening in the past, with other companies. Using calls to get a bigger strategic share of a company.
3) If the buyers expect the price driven up slowly they are happy to pay a small premium vs. buying in the open market and drive the price up sharply. After all, every 10k options equals 1 million shares or roughly 0.8% of the float.

Will be interesting to watch the changes in institutional ownership for Q2 once it is out after Aug 15.

 

[Papafox]

Today began as one would expect, with a continued rally from Friday's, as we have seen in 4 of the 5 recent Fridays that closed up. I think the problem that evolved was that with TSLA running up to 262 shortly after 10am and then creeping back down, it was too tempting a time to sell the stock for those shorts hoping to get in and those longs hoping to profit take prior to the ER. Thus, some of the positioning we'd normally expect on Tuesday or Wednesday happened today. Consider, too, that volume was only 6.7 million shares for the day, so there really wasn't much overall selling taking place. A small amount of selling might have been inspired by the Needham sell note from a Tesla perma-bear before market open.

In any event, if a big buyer was accumulating today, there were limited opportunities to buy without pushing up too hard on the stock price, as small investors jumped in during the first hour of trading and volume fell after that.

Manipulations? Of course! The morning looked like a game of whack-the-mole as TSLA sought to return to green. The SP bottomed out around 2:30pm and started a nice recovery that could have continued to the green except for intervention short-selling such as the 52K shares sold at 3:18pm to get TSLA back below 256. With percentage of selling by shorts up to 41.5% today and 148K shares trading hands in the final minute, there's substantial suggestions that manipulative selling was taking place to minimize price climbs today.

News over the week and today:
* In order to avoid a scenario where Trump imposes a 25% tariff on European vehicles imported to the U.S., this story says the E.U. is considering a 0% import rate for U.S. vehicles imported into the E.U.
* This story suggests that interest in the U.K. for fleet sales are several times higher than normal after the treasury announced plans for a 0% BiK that will kick in during the upcoming tax year, a vast improvement from an earlier plan

Whatever turbulence TSLA encountered today cannot be blamed on the NASDAQ, which was up 0.71% in a slow, steady climb

Short-sellers were tagged with 41.5% of TSLA selling today

What should we expect for trading in the coming week? It looks like the following the upper bollinger-band pattern is possibly being interrupted through Wednesday by position for Wednesday afternoon's ER.

As for the ER itself, bears will be looking for a miss in terms of GAAP profitability and bulls will be pointing a finger at the enormous positive cash flow. Manipulators might try to cap the the initial response to the ER if it is positive. The problem for shorts and sellers of calls that haven't hedged is that if gross margins or ancillary revenues are unusually high and TSLA managed to post a decent GAAP profit, they're in a world of hurt because then the bear case has little to fall back upon.

My personal belief is that sometime in the coming 12 months TSLA is likely to regain its previous ATH and then move higher as the pieces start to fall into place. Those pieces are:
* The bottleneck of battery cells gets resolved
* Efficiency improvements, especially a move to Maxwell DBE techniques in cell construction, go into effect
* Substantial demand solidifies as the current prices for Model 3 make it very attractive worldwide
* Big FCA agreement revenues start flowing in next year
* Shanghai starts producing in volume and the depth of China demand becomes clear
* Model Y enters production. This is such a huge part of the equation because as Tesla's deliveries grow substantially, costs such as R&D and S,G,&A get spread over far more vehicles, enabling attractive profits at Tesla
* Full self driving delivery of in-city features, which will allow Tesla to claim more of the already-collected FSD revenue as profits, will encourage more buying of FSD, and will hopefully be impressive enough when teamed with new hardware to push the SP higher as Tesla gets recognition as a leader in the autonomous driving field

The biggest downsides are trying to predict the exact timetables for each of these events and getting a nice bump upward in stock price before the next economic shockwaves hit.

Does the pop happen this year or next? I hope this year, but my investment planning always gives at least a year for things to work out, because we've seen delays in the past. The good news is that Tesla is on a roll right now, delivering on guidance and getting things done sooner than original timetables, which is, of course, a great sign.

Conditions:
* Dow up 18 (0.07%)
* NASDAQ up 58 (0.71%)
* TSLA 255.68, down 2.50 (0.97%)
* TSLA volume 6.7M shares
* Oil 56.12
* Percent of TSLA selling tagged to shorts: 41.5%

 

[Papafox]

You could tell today would be an interesting day as over 100K shares traded in the next minute. The first attempted Mandatory Morning dip didn't take, the manipulators tried again at 9:38 by selling 47K shares in a minutes followed by 16K the next minute, but that dip too evaporated in a couple minutes as buyers immediately returned TSLA to a price over 256.

Despite numerous climbs and fades, TSLA found its mojo by 2pm and after a nearly hour long fight for 260 closed 17 cents to the good. What we're seeing is two types of price action. The market (longs) want to bid the price up. Not many longs want to sell ahead of the ER at these prices, as evidenced by the mere 5K volume today. Then you have the clear manipulations and the results are a mixture of the two.

News today included this Barron's article written by Third Square Capital suggesting TSLA could triple in value. FUD today included a WSJ article suggesting S&X are doomed because of Model 3 and a Citi note suggesting that the one most vulnerable measurement of the 2Q ER, gross margins, is the only number that counts.

The NASDAQ opened in the green, briefly dipped into the red at noon, then climbed for the remainder of the afternoon. Notice that the nice run upwards for TSLA today coincided with the 1:40pm-ish jump upwards of the NASDAQ. Word that face to face trade talks between the U.S. and China will resume sent the broader markets higher today.

TSLA shorts were tagged with 45.5% of the selling today. After the final hour's battle for 260, you knew the short percentage of selling would be elevated today because such a battle took ammo.

We're entering the ER with over 41% of the float shorted. This means that 1) there's the potential for lots of shorts jumping ship if the ER surprises unusually to the high side and 2) the shorts and other stakeholders have a vested interest in manipulating TSLA after the ER to protect their positions.

Did any of you find the price action of TSLA extremely inappropriate in after hours trading when the P&D report showed amazing results of over 95K vehicles delivered? Take a look at the tech chart below. The big black candle a few days into July was the first market hours trading after the P&D report.Black means that even though it was a positive day, the stock price ended the day lower than where it opened. Look at the next three days, all negative. Does this type of trading make sense when Tesla has just delivered production and delivery numbers that greatly exceeded anyone's predictions? Of course not. What we saw was a week of manipulation to keep the stock price from running away in the hopes that the ER would contain some bad news. Fortunately, the stock price rallied after ER week, and it is now, at 260, at a pretty appropriate price for TSLA after the P&D report. It just took a while. Consider that the trading after the ER might be similar. Here's why.

Ihor Dusaniwsky said today that 2.5 million TSLA shares were borrowed today. Why didn't we see the results of that borrowing in today's trading? Another Dusaniwsky tweet says that shorts have up to 3 days to actually sell the stock after borrowing it. Looks like the shorts are saving up borrowed shares for after hours tomorrow and for Thursday and Friday. I would be careful about trading any call options that expire this Friday because TSLA will likely be trading at an artificially low price, manipulated through short selling, compared to where longs would otherwise value it in the market. The good news is that if the ER is good, the manipulations can't go on forever, and so the stock will rise, just as it finally has done so after the P&D results justified a 260 (or higher) price.

If the ER is earthshakingly good, however, all bets are off for the shorts and this stock will run higher right from the get-go. I'd love to see this, but I'm not betting on it.

Looking at the tech chart, you can see that during this ER week, TSLA has departed from hugging the upper bollinger band and is trading flatter as we await the ER news.

Conditions:
* Dow up 177 (0.65%)
* NASDAQ up 47 (0.58%)
* TSLA 260.17, up 4.49 (%)
* TSLA volume 5.0M shares
* Oil 57.07
* Percent of TSLA selling tagged to shorts: 45.5%

 

[Sudre]

With that air gap between the price and the upper BB the shorts could be in really trouble if things don't go their way. TSLA already wants to fill that space in. Even moderate news might hold the price relatively even whereas good news could cause it to rise even if the shorts dump 5-8M shares.

 

[MP3Mike]

Fortunately, the stock price rallied after ER week, and it is now, at 260, at a pretty appropriate price for TSLA after the P&D report. It just took a while. Consider that the trading after the ER might be similar. Here's why.

Did you mean "rallied after P&D week"?

 

[Stormy]

* Big FCA agreement revenues start flowing in next year

Tesla sandbagged their delivery numbers when acting like they'd just barely make 91k deliveries. I wonder if they sandbagged their profitability numbers as well in guiding for a small loss in Q2. Reporting a large profit would be the one way I see for them to get a huge SP jump from this ER, given all the quietly raised 'expectations' from all these 'analysts'. I wouldn't place a bet on that happening.

The only other wild catalyst that I can think of would be FCA contributing enough to their bottom line to start the S&P 500 inclusion process. But that would take a net profit of at least 251M. I wouldn't bet on that either, but I thought it could be considered in the space of reasonable possibilities.

I'm curious, @Papafox, why you say we'll only see the impact of that deal next year. I haven't been able to find much reliable info on the deal, so I'm wondering if my ideas above are invalid. Thanks for your insight.

 

[Papafox]

Did you mean "rallied after P&D week"?

Yes, thanks.