TSLA chart above
QQQ chart above
It's been a wild week. TSLA climbed over 148 when you add Monday's and Wednesday's gains, and it lost nearly 100 on Tuesday's, Thursday's and Friday's dips. This is a hold onto your hat kind of stock, but as long as you don't get bucked off it is going to continue bringing you rich rewards.
Friday's trading brought an immediate but short-lived dip into the red on opening, suggesting by this MMD that someone didn't want the stock climbing today. The stock immediately recovered into the green then just as quickly fell prey to an overall dip from the macros.
@Artful Dodger pointed out in the main investors' thread that TSLA was moving up and down with the macros but with a noticeably higher multiple (2X) on the way down than on the way up (1.5X), a classic method of disguising downward pressure on a stock.
News which negatively affected TSLA on Friday was downgrades by both Goldman and Morgan Stanley. I find it perfectly in character for these investment banks to be running games for profit with TSLA. Goldman's downgrade came first, which was followed by an Adam Jonas downgrade Friday morning. Various theories are out there regarding why two big dogs downgraded on the same day, which also happened to be an options expiration Friday. One possibility is that Adam Jonas saw the dip of TSLA about to continue and didn't want people thinking this was a Goldman dip, due to the downgrade. So, Jonas could have cobbled together his own downgrade so that Friday's dip was a Goldman and Morgan-Stanley dip. Analysts like to have a reputation of being able to move the market, and the easiest way to do this is to get a quick downgrade out there when you see the stock is going to move downward anyway. It's kind of like the weatherman amending his forecast when he hears rain hitting the studio's window.
Whereas honest market makers would have been content with a close at 1000 (due to a balancing of put and call quantities at that strike price plus puts outnumbering calls at lower strike prices), we have seen that everyone is not always pulling in the same direction. Apparently some big-dog hedge funds decided there was money to be made with a strong TSLA push down on Thursday and Friday. Here's how it works:
* Wednesday ATH close at 1025, followed by macros falling off the cliff on Thursday, was a perfect setup for a manipulated low close on Friday.
* The incentive for such a manipulation is that it is highly profitable if successful, even if the manipulator is not presently shorting TSLA.
* The manipulators buy Friday puts (and we saw a TON of 1000-strike puts with Friday expiration) and short then cover throughout the day to sell high, buy low, and encourage the downward trajectory.
* Legitimate longs were predisposed to "trim" some shares once the new ATH had been reached, and this "trimming" worked to the advantage of the manipulators. Look at the tech chart below. In both the Feb 4 and Feb 17 highs, we saw the stock descend below 800 in 6 days or less. There's a tendency for the stock price to overshoot a natural top on these ATH runs without substantial news to back them up. For this reason, it makes sense for some investors (such as those using TSLA to supplement their incomes now) to trim a little off the top before that dip gets too exaggerated. The question is "where's the top?" Once the full day of TSLA's dip on Thursday came about, the local top had been defined. Granted, 1025 will look low in the future after a few more ATH runs, but for now it was an attractive price for trimming, which was encouraged by enough short-selling to see TSLA's dip become nearly as great as the NASDAQ's.
* Friday's trading reveals the age-old trick of selling to achieve a higher multiple vs the NASDAQ when TSLA is heading down vs. when it is heading up.
Take a look at the final half hour of trading. Both QQQ and TSLA showed recoveries (although TSLA led by about 5 minutes). I attribute the initial recover of TSLA to traders buying some shares for the hope of a Mighty Monday, which was then fed by the natural rise of TSLA when macros are recovering.
Overall, TSLA has the potential for a nice bump upwards when the details of battery day are revealed. Can't wait. News suggests that multiple breakthroughs in cell technologies are maturing simultaneously. I've just seen word about
a possible collaboration between Novonix and Tesla. CATL has a million mile battery available now which Tesla is apparently going to be using though 2022 in China vehicles as it ramps up its own advanced cell and battery manufacturing. There could be some lumpiness as revealed technologies and changing technologies affect production and short-term demand (buyers waiting for the next great thing) but overall Tesla has managed such challenges pretty well in the past and may indeed do so again. In the long run, though, Teslas will become substantially more attractive to ICE vehicles in terms of pricing and longevity, which will lead to significant increases in demand at a time when costs are coming down.
TSLA shorts were tagged with 55.8% of selling on Friday
Two days of price dipping have left TSLA 62 below the upper bollinger band of 997 and with some nice headroom to run uphill on Monday, macros and news permitting.
Next Friday will be triple-witching options expiration, which may lead to additional downward pressure by the manipulators. OTOH, the long-term story is very much intact for Tesla, and at some point investors will see a low and start buying to benefit from the discount. The announcement of a date for battery day may itself be the catalyst for a climb.
For the week, TSLA closed at 935.28, up 49.62 from last Friday's 885.66. In the previous 3 weeks, TSLA climbed more than 85. That's a gain of about 135 in 4 weeks or about 4% per week, on average. Not bad. Hoping you enjoyed your weekend.
Conditions:
* Dow up 477 (1.90%)
* NASDAQ up 96 (1.01%)
* TSLA 935.28, down 37.56 (3.86%)
* TSLA volume 16.8M shares
* Oil 36.26
* Percent of TSLA selling tagged to shorts: 55.8%
