Papafox's Daily TSLA Trading Charts

[Papafox]

Hoping you found this Monday Morning Buyer's Exuberance to be satisfactory. TSLA at 780 anyone? Today was one of the biggest single-day gains TSLA has ever seen, with a percentage gain of nearly 20% (In May of 2013 we saw a 24% increase one day). Notice the volume spikes that accompanied the upward spikes in the trading today. Volume was super-high at 47 million shares.

After-hours trading showed a gain and then a net loss of about $10. Normally I would take the dip after hours as a sign of potential weakness the next day, but we may just be looking at some profit-taking after an extraordinary gain day.

Naturally, business journalists looked to other business journalists to find the "explanation" for today's climb. Explanations which certainly were catalysts included:
* A report that Panasonic's GF1 battery operation is now profitable, and
* Argus Research upgraded its price target to $808

Now for the Papafox version of what happened...
Since the 4Q ER on Wednesday, TSLA's stock price has been capped by hedge funds trying to prevent carnage to their short positions and calls sold that Friday:
* Wednesday after-hours: TSLA climbs to 620 and plateaus, then escaped higher and is capped at 650
* Thursday: TSLA is capped for almost the whole day at 645 and SP wanders just a few points up and down
* Friday: TSLA in whack-the-mole game for most of day with 645 as top of green excursions until final 20 minutes of the day when traders overwhelm the hedge funds and bid TSLA slightly above 650.
Weekend: Allow knowledge of TSLA 4Q ER to marinate until buyers are tender
* Monday morning: The catalysts were lining up including solidly green macros, Monday Morning Buyer's Exuberance, Panasonic GF1 profits, and Argus PT upgrade to $808.
* In a nutshell: Today's climb was continued Q4 ER reaction that had been capped all of last week until the final 20 minutes but exploded today with excellent catalysts to take it higher

Although the Dow was up only half a percent, the NASDAQ had a big day and closed up 1.34%. The big NASDAQ day was a catalyst for a good TSLA day, but didn't explain a 20% rise in TSLA.

Meanwhile, from Ihor Dusaniwsky...

I believe these numbers are similar to those our TMC gurus came up with. If you consider there are about 24 million shares still short and about 12 million are hedges for converts or derivatives, then there's still about 12 million shares that can be shaken out. With the nearly $130 price climb today, expect some shorts to be covering for margin calls tomorrow and Wednesday.

These losses, particularly in January and today, are mind-boggling

Surprisingly, percent of TSLA selling by shorts rose to 56% on Monday

The upper bollinger band at end of day was at 697, placing the closing price about $80 over the upper bb, which might constrain some institutional investors from picking up shares tomorrow.OTOH, who was buying with such gusto today, then?

Congratulations to all longs on an epic day!

Conditions:
* Dow up 143 (0.51%)
* NASDAQ up 122 (1.34%)
* TSLA 780.00, up 129.43 (19.89%)
* TSLA volume 47.2M shares
* Oil 50.13
* Percent of TSLA selling tagged to shorts: 56%

 

[ggr]

Although the Dow was up only half a percent, the NASDAQ had a big day and closed up 1.34%. The big NASDAQ day was a catalyst for a good TSLA day, but didn't explain a 20% rise in TSLA.

Some of the NASDAQ rise was actually due to TSLA.

 

[Earlian]

Historic days.

Thank you @Papafox for saving all that for us -everyday- in such an outstanding style! #Thumbsuplikethestock!

 

[israndy]

I am waiting to hear what the HECK happened at the end of today.

 

[Papafox]

I know everyone wants to talk about the final 10 minutes of trading today, but first let me just say that at 3:47pm TSLA traded at over 968, which was a daily increase of more than a 23% and threatened to eclipse the 24% single-day gain set back in 2013. Imagine the headlines if that end to the day had transpired. Volume for the day was massive, more than 60 million shares traded.

With the exception of the day's end dip, TSLA longs showed very little willingness to sell. We saw an MMD a climb and then a valley following it (likely a short-selling artifact) and then the most amazing, relentless climb for all but the final 12 minutes of the day. To me, the big story of the day was not the days end dip but rather the strength of TSLA longs in not parting easily with their shares above 900 as the climb continued.

The macros were way up today, due to excellent manufacturing data and strong earnings. The NASDAQ rose steadily through the day and closed at a record high, up 2.10% for the day. Notice that there was no dip of significance at the end of the day.

The Reason the ferocious rally continues
Why such a run higher these past couple of days? Tesla delivered a good earnings report last week, but the rally has intensified. Why? The easiest explanation is that this two month rally has been so relentless that every week in the past 8 has been a winner. The Q4 ER confirmed that TSLA remains on track. Thus, investors speculate that the rally has more room to run ahead, and so they are buying call options like there is no tomorrow. They keep buying these options because they keep winning. See this CNBC video. Those massive call option buys require the market makers who sold the options to buy shares for delta-hedging as the stock price rises. That delta-hedging adds to the upward pressure on the stock price, which pushes TSLA higher, which leads to more call buying, which leads to ... you get the idea. At some point the cycle comes to a crashing halt and hedge funds which sold call options and still are short lots of TSLA shares want that cycle to be broken now rather than later. Normally too high a price becomes obvious for investors, but with TSLA's long term prospects looking so good right now, there's more fog than clarity on what is a fair price for the stock.

The final 12 minutes of market trading today
So, what happened in the final 12 minutes of market trading that caused a dip of more than $80? I see no macro dip nor news that would trigger such an event. Nor do I see a negative trend in the trading. In fact, TSLA, which was creeping higher as the final 15 minutes began suddenly jumped higher at 3:47pm with 40K shares traded that minute. This must have been the event that sounded the alarm in the hedge fund laird of the manipulators. They responded by shorting the stock, hard. This set up a series of events including selling by market makers for delta-hedging as the end of day approached, selling by traders who are in for a quick buck and wanted to protect their earnings, selling by bots not knowing why the stock is going down but trying to beat the next guy to the sale, and selling by weak longs who got scared by the plummet.

Selling included:
3:48pm- 59K shares sold to stop the uptrend and start the downtrend, price 964.37
3:49pm- 83K shares sold, price 954.10
3:50pm- 400 shares sold, price up to 954.95
3:52pm- 150K shares sold, price down to 927.75
3:56pm- 196K shares sold, price down to 884.01
3:57pm- 154K shares sold, price down to 881.47 (notice it took 154K shares sold to drip the SP 2.50, buyers were returning now)
3:58pm- 1400 shares sold, price up to 883.32

As the experienced hands at TMC will tell you, big institutional buyers don't sell shares like this. If they want to get rid of shares, they let them out slowly so as to preserve the stock price as much as possible during the sale. The selling hand-over-fist in the final minutes of market trading today was a clear manipulation with no justification (usually the hedge funds will team up with a FUDster to give the appearance of a reaction to news).

What happened in after-hours trading? Investors called "Bullsugar!" and bid the stock price back up pretty quickly. It closed above 900 in after-hours trading today. How will the dip affect tomorrow's trading? I suspect we'll see the recently-frequent pushdown into market open by you-know-who with intentions for a mandatory morning dip. Remember that a dip at end of day today plus manipulations on opening tomorrow will affect the delta-hedging and ultimately investor sentiment. Macros have been really strong the past two days and I suspect macros may have some bearing upon whether we resume the climb or take a dip.

Why such a drastic manipulation?
Manipulations occur all the time with TSLA. Each of those icicles (sharp dips on heavy selling followed by near immediate rises) is a test by the hedge funds to see if they can get some traction out of a dip. The 3:48pm selling today alllowed a dip to begin, the 83K shares sold at 3:49pm accelerated the dip, and the hedge funds realized they had the kind of response they needed to really push down hard. With only 10 minutes left in the trading day, there was not going to be enough time for the stock price to make a substantial rebound, and so it was a prime opportunity.

Last week we saw lots of call options expiring that Friday with 650 strike prices. This week's big options expirations include 800, 900, and 1000 (see chart below). The 800-strike is likely off the table for reaching through manipulations, but 900 might be possible if everything goes right and 1000 is definitely possible to prevent through serious manipulations. Thus, we have a situation similar to last week. The main difference is that we're at 900 rather than 650, which makes the job of the manipulators just that much easier because investors are just that much more inclined to sell in order to protect earnings.

This Friday's Opricot.com max pain chart shows lots of call options at 800, 900, 1000, and 1160.

Shorts were tagged with 60.5% of TSLA selling today, a remarkably high number when you consider that the stock was rising all day except for the final 10 minutes, which makes most of the short manipulations unprofitable. Further, volume was an amazing 60 million shares traded, which suggests the hedge funds were running their algobots heavily throughout the day to try to discourage the running higher of the stock price.

Even after the end of day dip, TSLA is still 887, which places it more than $100 above the upper bollinger band. The stock price is more vulnerable to manipulations so far above the upper bb. Notice the volume of the past two days towering over the other trading days of this rally.

What to expect for tomorrow? If macros are green, the strong longs may say "bullsugar" to the manipulations and reclaim lost ground from those last 12 minutes. If macros are red, then expect the hedge funds to outdo themselves with a dip leading up to market open, followed by a mandatory morning dip. What I hope to see is those stubborn longs relentlessly pushing higher once the mischief is completed. Who will win? Macros will be important I suspect, but ultimately it comes down to whether the longs realize that the final 12 minutes of today's trading was a manipulation rather than a retreat by longs. Maybe some out-of-the-blue idea such as a Texas gigafactory could help TSLA tomorrow. Should be interesting.

Conditions:
* Dow up 408 (1.44%)
* NASDAQ up 195 (2.10%)
* TSLA 887.06, up 107.06 (13.73%)
* TSLA volume 60.9M shares
* Oil 49.69
* Percent of TSLA selling tagged to shorts: 60.5%

 

[AudubonB]

Why do you think the big end of day players were hedge funds rather than the market makers? It seems more than a little conspiratorial to tag the former, all the more so in that the MMs have all the tools to hit a high-flyer like this by shorting naked and covering at their leisure.

 

[Papafox]

Why do you think the big end of day players were hedge funds rather than the market makers? It seems more than a little conspiratorial to tag the former, all the more so in that the MMs have all the tools to hit a high-flyer like this by shorting naked and covering at their leisure.

My understanding is that traditional market makers delta-hedge as a matter of course in order to avoid placing themselves at risk to losing money through stock price variations. On a Friday afternoon with rapidly-changing prices, they might have an incentive to manipulate, but they make money by staying delta-neutral and profiting from the decay of options time values.

Hedge funds, on the other hand, are the prime holders of TSLA short shares, according to Dusaniwsky (along with parties hedging their convertible bonds). Thus, hedge funds have an incentive to manipulate. The problem with being short and delta-hedging your sold options in the same stock to stay neutral is that as the stock price rises, delta-hedging requires to you buy shares, which is helping the stock move even higher.and harming your short position. If you could manipulate heavily enough on Thursdays and Fridays to keep TSLA from rising, you could eliminate or minimize your delta-hedging and not be a party pushing the stock price higher through buying.

This is my understanding of hedge fund behavior vs. market maker behavior. If you know differently, I'd be all ears to hear.

 

[gerebgraus]

The problem with being short and delta-hedging your sold options in the same stock to stay neutral is that as the stock price rises, delta-hedging requires to you buy shares, which is helping the stock move even higher.and harming your short position.

On the flip side when SP goes down delta-hedging requires to sell stocks, so self enforcing goes both ways.

 

[Papafox]

On the flip side when SP goes down delta-hedging requires to sell stocks, so self enforcing goes both ways.

Of course delta-hedging requires selling when the stock price is descending in order to remain neutral. That's one of the reasons why a coordinated bear attack like we saw Tuesday before close and this morning can be effective. The sellers of options are selling to remain delta-neutral and they're reinforcing the dip.

Let's say, though, that some hedge funds on Tuesday held back on the delta-hedge buying as the stock price appreciated and instead were planning a bear attack to readjust the stock price. Initially, those hedge funds would not need to sell as the stock price began a descent because the price decrease would bring their options sold into a delta-neutral position at some point (they might sell anyway to accelerate the dip, however). At some point they would have to delta-hedge by selling in order to remain neutral and to reinforce the dip.

 

[Papafox]

Today we received our answer on whether the bear attack on TSLA late Tuesday would become the catalyst for an unraveling of the TSLA buying frenzy. It did. I was wondering if good macros would be enough to interrupt the bear attack today, but despite positive macros, it proceeded anyway.

Should you have sold yesterday in anticipation of a dip today? Although the TSLA stock buying frenzy was in my mind an offshoot of the options buying frenzy, it was unsustainable in its accelerating form. Would the break come yesterday with a greater than 23% gain, would it come today at over 1000, or would it happen in two days at over 1100? We didn't know the answer to this question and so most of us are just riding out this dip.

I did make one protective move yesterday near the peak. I sold a few covered calls for early March at a 1200 strike price. In my mind, I didn't think we'd get to 1200 by the first week of March (I thought the rally would get disrupted before then) but I would have been OK with selling a small portion of my shares and taking nearly a quarter million in cash for them. Near the low today I bought back those covered calls for pennies on the dollar. I'll consider the use of a covered call again in a similar situation (and only for a relatively small portion of my shares), and now that I've lost my covered call virginity I'll share with you if I use this tool again. The big problem with covered calls is that the rally can run much higher than you think. I know of TSLA investors who wrote covered calls for 450 and really regret the trade. Even 800 strike looked like an unlikely to execute price, but we all know how that turned out.

Studying the daily trading chart above, you can see accelerated selling leading up to market-opening, as we have seen on big manipulation days in recent months. With huge volume, the mandatory morning dip was initially overruled, but sufficient selling followed to cause TSLA to resume the dip. TSLA's closing price yesterday had been 887, and so when the SP reached about 800, it exceeded a 10% drop and the SEC's alternate uptick rule went into effect. Unlike most days when the rule goes into effect, the trading afterwards was anything but benign. Perhaps with momentum traders fleeing the stock, some of those dips were from traders.

Keep in mind that capping by shorts still functions well during the alternate uptick rule. As such, we're seeing resistance at 750, which is likely you-know-who trying to keep TSLA from rebounding too quickly. The rule will be in effect Thursday as well, then the shorts get to take off the gloves Friday morning.

Naturally, the media will look to other media stories to explain the dip. Consider this CNBC story that says TSLA "cratered" 17% due to coronavirus delaying China Model 3 deliveries. The problem with this story is that the delay in reopening the Shanghai factory has been known for a while already and Tesla certainly isn't going to stay on track with deliveries if no Model 3s are being produced. It also ignores the market gyrations/manipulations that caused today's dip.

Good news is that three different sources have said today that GF3 should be reopening on Feb 10, that's just 5 days away. Further, an announcement of a gigafactory in Texas would confirm that Tesla is in fact expanding rapidly. Both of these events would be positive for the stock price. I think that by Monday TSLA will be ready to rise again, but this time hopefully in a sustainable fashion that is fueled by pertinent news rather than call option mania.

The macros were up today with the Dow up 1.68% and the NASDAQ up 0.43%. Notice the similarities in the fall of TSLA this morning and the dip in the NASDAQ until 10:15am. Even though the scale is way off between the two, you can sometimes see the deep TSLA dips following dips in the NASDAQ. If the dip is a bear raid, the similarities make for good camouflage of what's happening.

Percent of TSLA selling by shorts dipped to 48.5% today, which makes sense since the alternate uptick rule constrained the tactics that shorts could use today with TSLA.

Looking at the opricot max pain chart of options expiring this Friday, the 800 strike calls number nearly 7K, and so I suspect the hedge funds will be working hard to keep TSLA below 800 through Friday's close. The 900s, 950s, and 1000s are also very high, but they're not likely to be in play before Friday afternoon. If you're planning to buy some shares or options this week, I would probably do so before the final 20 minutes of Friday since that buying time is becoming well known and we could see the SP starting to creep up before then.

Looking at the tech chart, you can see that TSLA is still well above Monday's opening price and that we now have nearly $60 headroom between the stock price and the upper bollinger band.

After a dip such as yesterday afternoon's and today's, it's good to keep in mind that nothing negative has happened at TSLA. It still has the same remarkable 2020 growth story ahead of it. I'm expecting the price to be well above where we've been already once S&P500 inclusion becomes a certainty. All that changed this week is that the buying frenzy met its inevitable end. Looking forward to more sustainable growth ahead!

To give yourself some perspective, check out this Cathie Wood interview on CNBC today. Notice the commentators are not treating her sky-high valuations with flippant attitudes any more. Her base case is TSLA to $7000 by end of 2024 and up to $15000/share in her bull case.Also, I just saw this video of Jim Cramer. He does a really good job of summing up much of what I've been saying.

Conditions:
* Dow up 483 (1.68%)
* NASDAQ up 41 (0.43%)
* TSLA 734.70, down 152.36 (17.18%)
* TSLA volume 48.0M shares
* Oil 51.28
* Percent of TSLA selling tagged to shorts: 48.5%

 

[DTB]

Hello Papafox,

I really enjoy reading your daily analysis, they are very instructive.

I was wondering if you’ve noticed the following post and if you think that it could explain the manipulations that you’ve been suspecting for a while now?

Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

Thanks again for posting on a daily basis, it’s really appreciated.

 

[Papafox]

Hello Papafox,

I really enjoy reading your daily analysis, they are very instructive.

I was wondering if you’ve noticed the following post and if you think that it could explain the manipulations that you’ve been suspecting for a while now?

Tesla, TSLA & the Investment World: the 2019-2020 Investors' Roundtable

Thanks again for posting on a daily basis, it’s really appreciated.

@DTB,
Yes, @Fact Checking did a nice job of laying out the evidence of a TSLA stock price manipulation that started on the NASDAQ yesterday afternoon, moved to the Xetra Exchange in Europe and was timed to influence the NASDAQ opening Wednesday morning. I hope a large number of investors join Fact Checking in filing complaints regarding the clear stock manipulations.

The two of us are presenting different sides of the same story. Fact Checking's analysis shows the larger picture, how manipulations on two different exchanges on two continents were choreographed in such a way as to support a NASDAQ price decrease for TSLA.

I have focused on showing the methodologies by which the downward pressure was applied. Additionally, I place my focus on some unknown hedge fund or funds that have been selling call options that expire on Friday and then rather than simply delta-hedging to remain neutral, they have apparently allowed themselves to get into a bind in which they will lose money if the stock price doesn't descend. We have already heard of one hedge fund going under as a result of holding too many TSLA short positions, and I suspect we have at least one other frantic hedge fund that needed to break the law by price manipulations in order to survive.

 

[DTB]

Crystal Clear. Thanks again.

 

[Jack6591]

@DTB,
Yes, @Fact Checking did a nice job of laying out the evidence of a TSLA stock price manipulation that started on the NASDAQ yesterday afternoon, moved to the Xetra Exchange in Europe and was timed to influence the NASDAQ opening Wednesday morning. I hope a large number of investors join Fact Checking in filing complaints regarding the clear stock manipulations.

The two of us are presenting different sides of the same story. Fact Checking's analysis shows the larger picture, how manipulations on two different exchanges on two continents were choreographed in such a way as to support a NASDAQ price decrease for TSLA.

I have focused on showing the methodologies by which the downward pressure was applied. Additionally, I place my focus on some unknown hedge fund or funds that have been selling call options that expire on Friday and then rather than simply delta-hedging to remain neutral, they have apparently allowed themselves to get into a bind in which they will lose money if the stock price doesn't descend. We have already heard of one hedge fund going under as a result of holding too many TSLA short positions, and I suspect we have at least one other frantic hedge fund that needed to break the law by price manipulations in order to survive.

Filed.

 

[ggr]

Mod: we seem to have lots of new participants here recently. I can't imagine why. But I will remind all that this thread should contain only Papa's posts and discussion directly related to same. Posting "Thanks @Papafox, now I want to discuss random stuff" will be deleted from this thread. --ggr

 

[Papafox]

TSLA showed strength today as it unwound a pre-market trading dip that took it below 700 and managed to reach 795 (a $100 gain) before being pulled down. Volume for the day was massive with only a wink and a nod below 40 million shares trading hands. To close in the green on a day with 40M volume strongly suggests that the longs aren't afraid to get back into this stock already. So why the huge volume and volatility after 10am? When the mandatory morning dip was defeated along with the secondary pushdown, investors saw the stock running higher and figured this was going to be the turnaround point where they could buy back in and receive the best price. I suspect the majority of the longs who exited above 900 and during the subsequent descent have been waiting for their reentry point, and a good number chose this morning as that time. There was a massive battle leading into the 10:20am peak of the initial break into the green, with shares trading as high as 160K per minute. Shorting pulled the stock down but it ran away again and achieved its intraday high at 11:21am.

From there, it was a slow downhill slope that looked calculated to bring TSLA slightly into the red just before close. With your eyes, draw that line from the 11:21am high, along the price trajectory, and see for yourself. And that 60% selling tagged to shorts? I feel confident that the hedge funds' algos were working to get this stock into the red for close so that those darn bulls don't get frisky on Friday and spoil the stock price for options expiration.

A funny thing happened, though. In the final 15 minutes of trading, traders bid the stock price up for a close $14 in the green. True, the NASDAQ climbed into the close, but that wouldn't be nearly enough to disrupt this plan that took all day to set up. I see the climb into close as a failure of the short-selling manipulators to accomplish their day's mission, and I credit massive trading volume as one of the components. Clearly, there are lots of buyers still interested in this stock even if the crazy options-fueled climb had been turned around for now. That failure gives me some hope for Friday.

If you look back on previous Fridays, a green closing last Friday was an oddity because the previous three Fridays all closed red in order to accommodate the interests of the options sellers. Keep in mind that every one of those three weeks was a solid climb week, but the manipulations on Friday are indeed the worst because there's so much at stake for the manipulators.

Looking at the trading of the past two days, I suggest that the hedge funds want to see TSLA close below 750, or maybe even below 735. They'll try to make it happen. If buying is too strong to hold below 750, I suggest they'll try like the mischief to at least keep TSLA below 800, due to the very large number of call options with 800-strikes that will expire on Friday.

The NASDAQ closed up 0.67%, continuing its record performance.

Here's opricot.com's options expiration data for Friday, Feb. 7. What I find fascinating is all of the bets placed on strike prices that normally don't catch anyone's attention. We see 1.5K calls at 735 and 1.8K calls at 740. Why such a spreading out of the strike prices? It's because the options buyers are aware that the "sugar" is being manipulated out of this stock every Friday, and choosing a common strike price such as "800" or "900" just about guarantees that a real effort will be extended to keep your option out of the money if it is in the manipulation zone. If we had a SEC that did its job, such tactics would not be necessary, but I digress.

Check out the max pain chart above. Normally I don't include them because what I consider the effective max pain price is seldom the listed max pain price. Nonetheless, look at that number, 735. Where would a close slightly in the red have brought TSLA today? About 735. Normally I accuse the hedge funds specifically with the manipulations, but I wonder this week if they're getting a little help from the more legitimate market makers because the trading looks so tailored for max pain and max pain would be the best ending stock price for market makers who sell both puts and calls.

On the topic of the causes of the extreme climb that TSLA enjoyed until late Tuesday, more and more experts agree with me that the options trading and the resulting delta-hedging by market makers was a primary force fueling the heavy climb rate. In this video, Steve Place does a great job of explaining how the rising stock price raises the delta of call options and necessitates that market makers keep buying to remain delta-neutral. It really has been options leading the stock upwards. Both @Fact Checking and @ReflexFunds had some excellent discussion in the main thread on this topic today.

TSLA shorts were tagged with 60.5% of selling today, suggesting lots of manipulations. By the way, the four days of trading on the right side of this chart, all this week, are the four highest volume trading days for TSLA, ever.

Looking at the tech chart, the upper bb continues to rise and is at 812.13. That number should become relevant on Monday, but I suspect the manipulations will keep us south of 800 on Friday. Hoping I'm wrong. I expect a mandatory morning dip to get TSLA comfortably below 735 and an effort, possibly including whack-a-mole, to close below that number or 750. A close below 800 would be Plan B for the manipulators.

Where the trading should be especially interesting is in the final hour of trading if a break upwards has not happened before that time. We've seen traders jump in and bid the Friday price up in the final 20 minutes, but I suggest the push might start a little earlier if enough traders want to get a little ahead of the other buyer. As I mentioned in a previous post, I believe the reason why the final 20 minutes is popular for buying on Fridays is that there's too little opportunity to manipulate (short) and then delta-hedge (buy) when TSLA is running upwards at a good clip. Market makers will buy to delta-hedge that close to Friday close, and the traders are adjusting their tactics to neutralize the manipulations.

Shorts emerge from the alternate-uptick rule for tomorrow's trading, so let's see what a difference that makes.

Conditions:
* Dow up 89 (0.30%)
* NASDAQ up 63 (0.67%)
* TSLA 748.96, up 14.26 (1.94%)
* TSLA volume 39.9M shares
* Oil 51.17
* Percent of TSLA selling tagged to shorts: 60.5%

 

[Papafox]

Perhaps the biggest surprise today was that things mostly went as expected. The manipulators who sold expiring call options were able to get TSLA trading to calm down a bit with a close just below 750. In order to keep TSLA from running into another rally we saw lots of whack-a-mole moves throughout the day to keep TSLA out of the green.

In the main TMC investing thread, @Fact Checking raised the important question: who performed the Tuesday night and Wednesday morning manipulatiions on TSLA to dip the stock so suddenly in the U.S. and on a German exchange, and how did they profit from this manipulations (sold options, purchased puts)?

From about 1:20pm until about 2:20pm the NASDAQ took a dip, which set TSLA up for a dip as well. Naturally the shorts threw gasoline on the fire with some selling to exaggerate the dip (dip on steroids) as you can see by that big volume of selling slightly after 2pm. Once the NASDAQ and TSLA started recovering, I bought 100 shares at 737 for trading on Monday, and other investors jumped in as well. The final 20 minutes of Friday's trading was indeed positive for the stock price, but it had been diluted when traders such as myself bought earlier in the afternoon to begin the recovery.

Overall, TSLA did well today: outperforming the indexes and tech stocks on an options close Friday on the day the shorts lost the shackles of their alternate uptick rule.

The macros were down today with the Dow down nearly a full percentage point and the NASDAQ down 0.54%

Shorts were tagged with 58% of TSLA selling today, a number that suggests significant manipulations.

Looking at the tech chart, the upper bb continues to rise and is at nearly 828 now, setting TSLA up for a more sustainable climb if it can shake off the memory of Tuesday and Wednesday. After four days of sky-high volume, we saw only about 17 million shares traded today, suggesting TSLA trading is calming down (volume on tech chart is good, on chart above it is not). That is a good thing since the trajectory had been downward overall since Tuesday late afternoon.

For the week, TSLA closed at 748.07, up 97.50 from last Friday's 650.57. It's been a turbulent week but we actually closed up nearly $100 for the week. Including the 313.68 climb in the previous 8 weeks, that makes a climb of 411.18 over the past 9 weeks. Still nothing to sneeze at. Meanwhile the implied volatility on options is still extremely high as the market contemplates the next move for TSLA. Whether you did some profit-taking above 900 or just held your shares, your shares did well this week. Enjoy the weekend.Let's see if Monday's morning buying exuberance blossoms and allows us to reclaim lost ground.

Conditions:
* Dow down 277 (0.94%)
* NASDAQ down 52 (0.54%)
* TSLA 748.07, down 0.89 (0.12%)
* TSLA volume 17.1M shares
* Oil 50.34
* Percent of TSLA selling tagged to shorts: 58%

 

[Papafox]

Believe it or not, today's trading made sense to me as viewed through my longs vs shorts lens.
We're in a time of high volatility because:
* Shorts vs. longs expectations are so different from each other
* The quantity of calls and puts outstanding is huge, which leads to substantial delta-hedging by market makers after a move up or down
* Long investors are feeling both the pull of FOMO (fear of missing out) and FOF (fear of falling) after the big Tuesday and Wednesday moves of last week. Consequently moves either up or down become exaggerated.

So, let's walk through the day. GF3 in Shanghai reopened on Monday, which was a positive catalyst for a rising price. Monday Morning Buyers' Exuberance erupted big time in pre-market trading, sending TSLA to 818 even before the bell rung. Hedge funds likely want to protect 800 calls on Friday and we saw a near linear descent until about 8am as they chiseled away at the stock price. When the bell went off we saw over 100K shares sold in some minutes and TSLA briefly touched 818 one more time and then a quick descent began.

The descent could have been begun by short-selling or it could have been begun by traders jumping ship after the high of the day was realized. Today wasn't likely going to be one of those climb throughout the day moments because the TSLA market is too jumpy when the price rises too quickly on little news (because of last week's experience). Also, I guarantee you that hedge funds and other shorts will start selling once the peak of the morning is reached because 1) shorting at the top of a descent is a profitable manipulation in its own right, and 2) pushing the SP down offers some protection for the short shares held by the manipulating hedge funds. Traders would jump ship quickly because those who came on board Friday afternoon had huge profits to protect.

The stock price bottomed out at 11:18am and started a slow climb until half an hour before market close. That climb was interspersed with selling sprees by shorts who sought (unsuccessfully) to lead the SP into the red or at least diminish the day's gains.

You could almost have guessed that the bears would sell going into the final half hour because with the exception of Fridays, they tend to try pushdowns into close in recent weeks. Today they were right on cue. There was no news I'm aware of and no macro dips to justify the final 30 minute dip. The only other explanation that comes to mind is day traders who chose to stick around to the end had to exit their positions prior to close.

The macros were up today on diminished coronavirus fears, with the NASDAQ showing lots of strength and closing up 1.13%

How did my 100 share short term trade work out? Let me first say that there's a word for those individuals who post on TMC and try to convince you that they consistently engineer the perfect trade. That word is "liars". Nobody is that good on a consistent basis. That said, every now and then a blind pig does indeed find a truffle, so I ask your indulgence as I lay out how I got an almost perfect short term trade done from Friday afternoon until Monday morning.

On Friday, I saw TSLA dipping quickly to a new low for the day as the NASDAQ took a steep dip. The day was otherwise fairly strong for TSLA, considering that it was a Friday, and so I was primed to buy when TSLA bottomed out. The NASDAQ dip bottomed first, I was ready, and when TSLA started ascending again I bought 100 shares at 737. It was within a couple bucks of the bottom for the day. Sure enough, the usual final 20 minutes of Friday brought long traders in to load up for Monday morning and TSLA closed market trading at 748, a gain of 11 going into the weekend. We had already heard rumblings of GF3 opening on Monday, and so I thought between that likely news and the usual Monday Morning Buyer's Exuberance I had a good shot of making some money. Since I was trading shares and feel confident about the 2nd half of 2020, worse case scenario is that I'd have to wait a few months to realize a gain.

My iphone woke me about 4:30am here in Hawaii as a price alert told me that TSLA was above 755. I was going to sell those 100 short-term shares this morning at the best price I could get above it. To my delight, TSLA was running above 800. I patiently watched as it went to 818 and started to falter. I sold at 816 and change. I didn't want to chance a second rise because of all the FOMO and FOF that's out there right now (making investors and shorts jumpy). Additionally, I knew lots of longs were playing the Friday afternoon to Monday morning bet and as they exited their positions the stock price would respond negatively. My profit on the trade was slightly below $8K for a few minutes work. I truly believe that viewing TLSA trading as a battle between longs and shorts is a great aid to determining when to buy and when to sell.

This week I'll look at selling a put with a strike-price at which I'd be happy to buy.

Looking at the opricot.com max pain chart for this Friday, you can see large numbers of calls at 800 and 900. If 800 falls, the 900s might come into play and so the hedge funds will be trying hard to keep TSLA below 800 for Friday's close. The hour and a half selling spree this morning took TSLA far enough below 800 that the hedge funds have a chance of succeeding this week. Once again, I think the longs will typically do their best early in the week and the shorts will likely dominate the end of the week. News and macros can modify those expectations, however.

If Dusaniwsky's data is correct, shorts have been covering seriously lately. This will put more pressure on remaining shorts and encourage them to cover as well. We would of course get some upward push from the covering.

Percent of selling tagged to TSLA shorts dipped to 42.3% today, which would normally equate to moderate manipulations.

Looking at the tech chart, you can see that for most of this rally, TSLA has ridden the upper bollinger band. When bearish activity brought TSLA below the band, it eventually rallied and found its way back up there again. I think it would be healthy for TSLA to climb to the upper bb of 844, but I'm not holding my breath for tomorrow or this week. Actually, I'd be okay with consolidating where we are for the remainder of the week because that consolidation further cements the idea that this stock belongs in the high 700s (or above) now. That realization will of course help to diminish the fear of falling that longs experienced last week.

Conditions:
* Dow up 174 (0.60%)
* NASDAQ up 108 (1.13%)
* TSLA 771.28, up 23.21 (3.10%)
* TSLA volume 24.4M shares
* Oil 49.81
* Percent of TSLA selling tagged to shorts: 42.3%

 

[Robertj]

Many thanks Papafox
I did a similar trade , not as precise as yours
Bought some weekly options on the Friday at 25 min before the closing bell $800 and $850
Was travelling over the weekend
Woke up Monday ( NZ time Tuesday 8 am ) which is approx 2pm EST and sold my options
For approx 30 % gain
I hope to shout you several Maitai’s one day

 

[Papafox]

Today we saw the usual pre-market pushdown before open, followed by a brief run higher, followed by the mandatory morning dip. In the morning there wasn't much correlation between the NASDAQ and TSLA, but in the afternoon you can see TSLA responding to the NASDAQ movements, particularly the NASDAQ dip after 1pm, the NASDAQ dip into the red after 3pm, and the recovery back to the green before close. Overall, the trading looks like wack-a-mole, with someone working to keep TSLA's rise under control, which I think is what's happening.

Over at the main TMC investors' thread @KarenRei talks Q1 production and deliveries. Take a look. TSLA looks on track to have an amazing year 2020, but the Q1 results are going to be something we'll have to watch closely. My current feelings are that I'll make a point of having some dry powder to follow the Q1 P&D report and ER because a dip is possible, but I'm going to also be heavily into TSLA with my core holdings because there's always the possibility of revenues we've talked about (FCA payments, bond hedges, etc.) that could hugely surprise. I wouldn't want to get priced out of TSLA after the Q1 ER if I bet wrong, only to watch it run to the stars for the remainder of the year.

The NASDAQ opened high but decreased and even dipped into the red 45 minutes before close. The NASDAQ closed up 0.11%.

Looking at the tech chart, the past few days have continued to be a consolidation with a slow upward progression. Along with an upper bollinger band that has risen to 860.54, we continue to see a nice setup for continued stock price growth. The biggest wakeup call was the low volume of just 11.7M shares. With a manipulated dip last week and less volatile trading so far this week, the market makers may have succeeded in cooling off this stock's massive trading and climbing for the near future. Now the more negative half of the week begins for us. As long as the hedge funds can hold TSLA below 800 for Friday's close, I don't see a need for major manipulations. The call options placed between 750 and 800 are relatively small in number. Nonetheless, we've been enjoying mostly positive macros, so a turn to the red for macros could make TSLA a bit easier to push down as we head towards the end of the week.

Conditions:
* Dow -0 (0.00%)
* NASDAQ +11 (0.11%)
* TSLA 774.38, up 3.10 (0.40%)
* TSLA volume 11.7M shares
* Oil 50.62
* Percent of TSLA selling tagged to shorts: 42%