We've just completed a week of profit-taking and consolidation: 3 days of profit-taking and 2 of consolidation. Volume dropped from nearly 19 million on Monday to less than 6.5 million on Thursday and Friday. Dusaniwsky's charts suggests lots of short-seller covering this past week. I continue to believe that once TSLA restarts its climb, the long buyers will return and the shorts will continue to cover.
Looking at the daily chart, you can see positive trading in pre-market, which would be expected on a day with macros doing well, but a Mandatory Morning Dip and one additional push-down mid-day told traders that they'd be best off with another stock on this high-flying macro day. Nonetheless, TSLA showed a nice recovery going into close. If hedge funds were maneuvering for a close below 310, they failed. The rise into close on a Friday makes sense because every Monday for the past 5 weeks TSLA has either enjoyed a Monday morning buyer's exuberance moment at open or has seen a nice run higher during the day.
News at week's end included this Business Insider story that Chrysler-Fiat would consider using some Tesla technology in upcoming EVs.
About 2pm on Friday, Russ Mitchell of the L.A. Times let loose this tired piece of recycled FUD, claiming the NHTSA was investigating Tesla regarding battery fires, apparently hoping to drive the stock price down in the final hours of options close Friday. Alas, the NHTSA contacted Mitchell and said his headline was incorrect, that the NHTSA was merely looking into a "defect petition". Rather than correct the erroneous headline, though, Mitchell just changed the wording from "investigation" to "probe". For his willingness to willfully deceive the public with intention of harming Tesla, Russ Mitchell wins this week's FUDster of the week award and his name is now nominated for the coveted FUDster of the decade award. Fortunately, the market was wise to Mitchell's antics and shrugged off the story.
The macros were strong on Friday with the NASDAQ closing up 1.13%
Here's portions of the Friday opricot.com max pain chart. Notice that despite lots of activity this week, 310-strike puts expired worthless on Friday, but 310 and 312.50 calls closed in the money, which likely cost the hedge funds some money
TSLA shorts were tagged with 36.5% of selling on Friday, an uptick that is consistent with increased manipulations on option-close Friday
Looking at the tech chart, there's much to like here. The blue line is now showing the 50 day moving average, and you can see that it will be crossing the 200 DMA this coming week and unleashing a golden cross to stir the interests of technical traders. The upper bollinger band now stands at 338.16, clearing the way for some serious price appreciation once the run-up begins. Finally, the profit-taking dip has now turning into a mostly-horizontal consolidation.
What catalyst will be enough to get TSLA climbing again? It's possible that something as otherwise insignificant as the typical Monday morning buyers enthusiasm on opening could be enough. We'll see. The counter to this exuberant run higher on open is, of course, a push-down into a Mandatory Morning DIp, but if that pushdown is unsuccessful it clears the way for further price appreciation.
We'll see if InsideEVs.com publishes Tesla October delivery numbers this coming week. They may be lower than some expect, however, because Tesla has been shipping overseas at a considerably higher rate than we've seen in any previous quarter. Demand in the U.S. is still there, however, as evidenced by the 5-8 week wait times for M3 SR+ and LR and 6-8 weeks for M3 Performance vehicles. My sense is that Tesla has enough demand so that they can move U.S. deliveries to December while sending cars overseas and then be certain of having enough U.S. deliveries to absorb all production as the quarter nears its end.
This past week of profit-taking and consolidation left TSLA closing at 313.31, down 14.82 from last Friday's 328.13. Please enjoy the rest of your weekend.
P.S. The NASDAQ is not in the habit of sending engraved invitations when your favorite stock is about to run higher. It's your decision to join the party when evidence looks promising.
Conditions:
* Dow up 301 (1.11%)
* NASDAQ up 94 (1.13%)
* TSLA 313.31, down 1.61 (0.51%)
* TSLA volume 6.4M shares
* Oil 56.20
* Percent of TSLA selling tagged to shorts: 35.5%