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Papafox's Daily TSLA Trading Charts
- Thread starter Papafox
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- elon is an ass TSLA
I’m so sorry to hear that. Please stay safe Papafox. We need you in one piece!
Chart of TSLA
Chart of QQQ
Friday's trading of TSLA saw a dip of some 9.5% shortly after market open. I suspect there were big players who prevented the dip from touching 10% and thus they avoided the alternate uptick rule for short-selling to come into effect for two days. Once a profit-taking dip at the top of a huge run begins, it develops a momentum that can cause trading such as Friday's as people's expectations about call options are readjusted and shares are sold to unwind some of the delta-hedging put in place to cover those call options are short-term enough to likely not come into the money. Algos see the selling and join in the selling to ride the trend. Nervous investors take some money off the table. We've all seen this movie multiple times.
I had to do a double-take when comparing TSLA's chart to QQQ's chart above. They look remarkably similar. The big difference, however, is that TSLA closed down over 6% while the NASDAQ closed down less than 1% on Friday. The two days TSLA trading with negative macros strikes me as a combination of manipulations where needed, and a tendency for profit taking as well as traders playing the dip. Let's look at all these kinds of sellers.
Some profit taking and consolidation is good for the stock after a long climb
I know this sounds like a doctor telling you that athlete's foot or gout is actually good for you, but hear me out. A profit-taking dip is a form of consolidation in which investors with lower convictions at that price are selling to investors with higher convictions at that price. Once that transfer of shares is completed, the stock is ready to resume its climb. Here are some examples:
Bull profit-takers: Take me for instance. I am extremely bullish on TSLA for 2020, but I sold enough shares and leaps last Monday to buy my 2nd home. I now have taken enough money off the table that I can comfortably leave the rest in with high conviction. Once you exceed your retirement goal by 3X or 4X, you have to ask yourself, "Do I want my life to resemble Jimmy Buffet's or Warren Buffet's?" For me, the choice was the former, but I'm keeping the majority of my Tesla investment intact because of strong conviction.
Weak longs: If a Tesla investor feels that the downside is bigger than the upside, chances are that investor's time horizon is pretty short. He will sell to someone with a longer time horizon who is comfortable with the stock in the 1400s because the new investor believes this stock is going up enough in the mid-to-long run to justify the purchase. The new investor is far more likely to ride out volatility.
Traders: These investors really should be lumped with weak longs. They lack long-term conviction and are only in shares or call options because TSLA is "the hot stock" and has been going up. The stock price dips as they bail, but someone better picks up those shares.
Dip players: These investors know that TSLA is volatile and once it starts down it may run down for a while. They sell when they see the downward trend and plan to rebuy once TSLA has "bottomed out." The problem is that if there are too many dip players doing the same trade, there's too much competition for buying when TSLA starts up again, and the price can run uphill remarkably quickly, often removing the option to make money by the play.
Anyway, it's healthy to get through a consolidating, profit-taking dip after a long run because most investors are expecting one. The mindset of the market will be more positive after the profit-taking and consolidation dip is completed. Call options will become more affordable.
Why Q3 is likely going to be great
With Fremont installing new general assembly lines and with Shanghai coming closer to achieving design production rate for Model 3, the production numbers for Q3 2020 are going to be massive, something over 140,000. Moreover, the best way to quickly come up to speed on the implications of the Q2 ER is to watch this video by Rob Maurer, his first of 2 about the Q2 ER. Rob's biggest takeaway from the ER was that Gross Margins are going to be strong in the future. Thus, you combine improving gross margins with significantly higher deliveries and you should see record profits. Add September's Battery Day and a likely S&P500 inclusion surprise to the quarter and it looks just too good to pass on. On Monday we get to see how close the two parties are on putting together Stimulus 4. It's going to happen and will give the macros the necessary kick. For all these reasons, I am riding out the recent dip and look forward to riding this stock higher as Q3 shows the world what it has to offer.
Coronavirus
Along with China tensions, Coronavirus is weighing heavily on the market right now. Check out the chart below, taken Sunday evening.
Much angst has developed from the second wave of COVID 19 in the U.S., but as the chart above shows, the second wave may have already peaked. Fingers crossed. Moreover, California, Texas, and Florida, the three most watched states right now, all showed declines in new cases. The market should be happy.
One of my biggest frustrations with the coronavirus response in the U.S. has been the lack of timely studies of potential therapies. The retroactive Chloroquine and zinc study that showed a possible reduction of deaths by 80% has been stuck in peer review for weeks now. Maybe something significant has been found and maybe not, but the pacing of getting these studies out there has been dismal. Fortunately, the CDC in this article says that they're going to be conducting many scientifically sound studies immediately on a variety of coronavirus therapies.
One new therapeutic that needs to be looked at seriously in the U.S. is one made by Synairgen, a small British biotech company. Shares soared on the company as a study in this article suggests that taking this inhaled formula of the protein interferon beta "reduced the odds of a patient developing severe disease by 79%."
With positive developments in COVID 19 and progress toward Stimulus 4, futures were up Sunday evening as this post was written.
While Thursday's trading was a return to the 1500 plateau, another day of dismal macros led to TSLA testing the mid bollinger band and then bouncing. If you look at the other instances of touching the Mid-bb in the chart below, you'll see intraday excursions below the mid-bb but closing always seemed to be above. With any luck, Friday's bounce will be our beginning of a price recovery.
For the week, TSLA closed at 1417.00, down 83.84 from last Friday's 1500.84. It's been a wild week with an intraday ATH of nearly 1800 on Monday, an excellent ER on Wednesday, a Moody's upgrade, tons of price target upgrades, and two stinker trading days on bad macros. Better days lay ahead.
Conditions:
* Dow down 182 (0.68%)
* NASDAQ down 98 (0.94%)
* TSLA 1417.00, down 96.07 (6.35%)
* TSLA volume 19.4M shares
* Oil 41.14
* Percent of TSLA selling tagged to shorts: 39.8%
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So, you may be asking yourself, "is papafox looking like a drowned rat at present?" I'm pleased to state "No", and here's why. Years ago I saw a massive hurricane head straight toward 14,000 ft. Mauna Loa and Mauna Kea on the Big Island of Hawaii, get it's okole kicked, and it emerged as a puppy. Today, the 10,000 ft. mountain on Maui, Haleakala, gave Douglas the shoulder as it marched by, and Douglas at that point veered slightly to the north. Thus, as you can see from the image below, Douglas is passing harmlessly north of Papafox's den in Kailua. You gotta love a Hawaiian mountain with attitude.
As with Tesla, I rely on my own observations rather than trusting the media for updates. How could it be that the media was still issuing these dire warnings even after it became clear that Douglas had left the neighborhood? All I had to do was think of the media as CNBC and Douglas as Tesla, and it became crystal clear. The media will emphasize the negative in order to put together a more dramatic story. They want you glued to the TV. Once I had that figured out I jumped on the computer and began writing my daily post. Cheers!
As with Tesla, I rely on my own observations rather than trusting the media for updates. How could it be that the media was still issuing these dire warnings even after it became clear that Douglas had left the neighborhood? All I had to do was think of the media as CNBC and Douglas as Tesla, and it became crystal clear. The media will emphasize the negative in order to put together a more dramatic story. They want you glued to the TV. Once I had that figured out I jumped on the computer and began writing my daily post. Cheers!
Alphacrux
Member
Thank you, Papafox, from those of us who have been HODLing for years. One additional item to look forward to by the end of the year is the FSD rewrite currently in Alpha. You may remember that all of ARK’s higher priced scenarios, $15K and above, were all dependent upon robotaxis. If the market suddenly realizes that FSD is not 10 years away but merely dependent on “the march of the nines”, we may get an additional nice bump in valuation.
TSLA chart above
QQQ chart above
Monster Monday III anyone? TSLA came roaring back today, thanks in part to a strong NASDAQ. Our friend the mid-bollinger band helped us out again, and TSLA built upon Friday's bounce off the mid bb to retake ground lost on Friday. Volume was relatively light for this big a move, at 16 million shares.
Morning trading was relatively weak as traders weren't really sure if TSLA had found its bottom from the recent two days of swan dives. In fact at 11:37am TSLA was only about $5 above Friday's close. The bird of fortune smiled upon TSLA longs, however, as QQQ began a steamroller climb upwards, towing TSLA along with it but at a 5X multiplier. Really, we're seeing the usual pattern repeat itself. If TSLA begins relatively low and starts climbing as the day continues, particularly with support of rising macros, then it's a scenario that likely won't be manipulated and will end well for us longs.
Shortly after 2pm TSLA crossed 1500 after some effort and traded relatively level for about 35 minutes. You guessed it, the usual suspects wanted to see TSLA settle at 1500 and begin another long plateau, but hungry longs now feeling FOMO would have nothing to do with the plan, and once TSLA surmounted 1500 it climbed steadily throughout the day. A hefty 688K shares traded in the final minute of market trading, and I see a 144K trade in after hours that brings the final minute and pre-arranged trades above 800K today.
In after-hours trading, you can see QQQ rising slowly. Futures are positive as I write, so we may see another positive macro day on Tuesday. If so, this would bode well for another day of climbing for TSLA.
I think today was really all about establishing the bottom of the profit taking. Once the NASDAQ started its steady climb, there was nothing the market makers and hedge funds could do to hold TSLA back because all those traders and investors who decided to play the dip were busy buying back into the stock this afternoon.
Check out this post by @The Accountant in yesterday's main thread (which I hadn't seen when I wrote last evening's post). His preliminary calculations for Q3 include 145K deliveries, $490m GAAP Profits, and $736 non-GAAP profits, numbers that could surely send Gordon Johnson to the hospital with heart palpitations. Last quarter, @The Accountant and Rob Maurer were both close on the Q3 GAAP profits number, with the actual number coming out somewhere in between. Let's see how the two do on Q3 numbers. Similarly, we normally see Troy a little low on the quarterly deliveries and Rob Maurer a little high, so again we can try bracketing between the two and I bet we come out fairly close.
In this youtube video by Solving the Money Problem, we get a great clip of billionaire investor Chamath Palihapitiya confirming and expanding upon what Elon Musk has already said, which is that there's so much information readily available out there that retail investors are doing a better job of understanding Tesla than the paid analysts. Quarter after quarter we continue to do so.
Where do we go from here? There are several possible scenarios. If sentiment remains positive as in the leadup to the Q2 P&D report and ER, then I think we'd see a series of plateaus and breakouts as before. Looking at the tech chart, the couple of days leading into the earnings report were trading in the 1600 area, and so that might be a place where buying trails off enough so that the usual suspects can cap for a plateau. We would then see a breakout when news brings forth the catalyst.
Another possibility is that TSLA will drift with the NASDAQ for a while. I don't expect these 5X multipliers to continue, primarily because today and the previous two trading days were exaggerated movements related to the Q2 ER.
Still another possibility is that TSLA rises after finding its profit taking bottom as investors start pricing in the good news from the earnings report.
Throughout this climb from the coronadip, TSLA has remained within the mid to upper bollinger bands, with the exception of strong climb days when the upper bb was chasing TSLA and not far behind. Check out both today's trading and Friday's on the chart and you can see what powerful support the mid-bollinger band has been.
On a personal note, it's a beautiful blue-sky day here in Hawaii.
Conditions:
* Dow up 115 (0.43%)
* NASDAQ up 173 (1.67%)
* TSLA 1539.60, up 122.60 (8.65%)
* TSLA volume 16.1M shares
* Oil 41.68
* Percent of TSLA selling tagged to shorts: 41%
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TSLA chart above
QQQ chart above
Keep in mind today when comparing TSLA and QQQ charts that movements on the TSLA chart are about 3X what you see on the QQQ chart. For example, the QQQ dip just before 10am was about half a percent of a dip from minutes earlier, while the TSLA icicle of that same time was a dip of about 4 times that amount over the same time period.
Today TSLA suffered through negative trading of the NASDAQ, with a large dip after 2pm. Two trends are emerging. First, when macros are heading upwards, TSLA heads upwards at an even faster pace. For this reason, TSLA climbed into the green twice near noon but QQQ never touched green on Tuesday. When the Nasdaq sinks, TSLA sinks faster. I think part of the explanation is FOMO and FOF (fear of falling). Secondly, TSLA often outperforms QQQ in the morning and then sinks noticeably below in the afternoon. I attribute this afternoon bias to the lower volumes, which makes manipulations less expensive.
Overall, TSLA seems to be drifting at an exaggerated rate with the macros at present, both up and down. Most tech stocks were down less than 2% today. With no major catalyst planned before the Sept 22 battery day, TSLA is more susceptible to market forces than before the Q2 ER. OTOH, take a look at the tech chart and you'll see that the mid-bollinger band continues to climb quickly. So far, the mid-bb has been excellent support, so let's see if we can ride the mid-bollinger band up for a while. In the meantime, every day is one day closer to S&P 500 inclusion. Tick, tick, tick.
In news:
* TSLA took a hit in pre-market trading as Bernstein analyst Toni Sacconaghi downgraded the stock from market perform to underperform.
* Reuters reports that Tesla is hiring in Shanghai as production ramps higher.
* Standard & Poor's raised Tesla's credit rating from B- to B+ today. I consider this move a vote of confidence by S&P.
Looking at the tech chart, notice how TSLA tends to close above the mid-bollinger band and it continues to rise at a brisk rate.
Conditions:
* Dow down 205 (0.77%)
* NASDAQ down 134 (1.27%)
* TSLA 1476.49, down 63.11 (4.10%)
* TSLA volume 15.8M shares
* Oil 41.13
* Percent of TSLA selling tagged to shorts: 40%
TSLA chart above
QQQ chart above
Anyone who has been paying attention understands that the stock was manipulated today to close near 1500 (it was 89 cents low). The question at hand is whether the manipulators are market makers and hedge funds looking to pin at 1500 for Friday's close (it makes some sense since below 1500 is the Put zone and above 1500 is the Call zone) or whether something bigger is afoot.
There's evidence that suggests that Tesla is getting ready to raise more money with an equity offering and this pinning at 1500 is designed to make the price attractive to a wide range of buyers. We've seen Tesla employ Goldman Sachs and Morgan Stanley for this purpose before, and their traders were able to absolutely nail the price target prior to the equity raise. A close today so close to 1500 suggest these same traders are involved and they're just showing off their manipulation skills a bit. Evidence for this second explanation includes:
* Low volume of 9.4 million, suggesting that the profit taking is done and few investors are willing to sell shares at this price. Normally you would see upward movement of the stock price on such a low volume day with macros rising during the day.
* March downs of all upward excursions. Take a look at the noonish high. The TSLA price decreased with the QQQ decline, but then QQQ rose while TSLA began a slow march back down to 1500. The same thing happened with the 2:30pm high. TSLA marched down with the QQQ drop, but in much bigger numbers. When QQQ started rising again for the end of the day, TSLA was capped for the 1500 close. The market makers and hedge funds are seldom so successful at reining in TSLA on a positive macro day.
* Morgan Stanley raised price target to $1050 today, with $2500 bull case
The idea many of us hold is that if Tesla will be doing an equity offering, it will be for a large amount. A lot of big funds would like to get in before the S&P 500 inclusion goes through. OTOH, perhaps Tesla is communicating with S&P and the offering is timed to coincide with S&P500 ETFs being notified of the coming TSLA inclusion, which would greatly expand the field of participants. There's no way the offering would be large enough to satisfy all the potential buyers who wish to keep up with the S&P 500 in their funds (and therefore need to buy TSLA), so you would think there'd be a price rise of TSLA after the equity offering is complete.
Anyway, we should learn soon enough on the questions of a cap raise and on S&P500 inclusion.
In news:
* PG&E and Tesla break ground on enormous energy project
* Barron's (quoting Gary Black) Tesla may be 'mind boggling cheap' at $1500
Looking at Ihor Dusaniwsky's latest chart, with S&P500 inclusion coming, shorts continue to cover.
Looking at the tech chart, you can see that TSLA is staying above the mid bollinger band, so that it could close at 1500 on Friday and still be above the band. Notice in the volume bars how often large runs higher followed positive days with low volume.
Conditions:
* Dow up 160 (0.61%)
* NASDAQ up 141 (1.35%)
* TSLA 1499.11, up 22.62 (1.53%)
* TSLA volume 9.4M shares
* Oil 41.27
* Percent of TSLA selling tagged to shorts: 37%
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Papa, thanks for this very interesting post! The 10Q was recently posted and did not include a capital raise, so this would seem to point to a raise tied to S&P inclusion as Gary Black mentions is to "add liquidity" but has the secondary effect of shareholder dilution. However, the net is that Tesla may be able to wipe out some of it's debt.
I wasn't really expecting a capital raise from Tesla, either, but Wednesday's trading sure looked like GS and MS were involved.
We may get a chance on Thursday to see what kind of influences are working on Tesla's price. Nasdaq futures are this evening down about 1%, so chances are we'll see an off day for the market on Thursday. Will Tesla hang tough, will it dip 1%, or will it dip at a much higher multiple? I don't know the answer, but what happens will help clarify who was behind TSLA's unusual trading on Wednesday.
Got it. Will keep and eye out. Pre-market is negative so far but on very small volume.
TSLA chart above
QQQ chart above
So... the plot thickens. Today we saw lots of icicles in TSLA trading, suggesting price manipulations. Moreover, we saw no less than six instances of whack-the-mole as TSLA dared to stick its head into the green on a day when someone really wanted to keep it around 1500. What I find most interesting is that in after-hours trading when Facebook, Amazon, Apple, and Google all beat on earnings, QQQ and the rest of NASDAQ tech companies ran higher on expectations of tomorrow's NASDAQ bump, but the manipulators managed to keep TSLA down or about even until just a few minutes before the 6pm chart cut off (TSLA did manage a 1% gain when nobody was looking between 6pm and 8pm).
Volume at 7.6 million shares today was particularly low. That volume to me suggests few investors are selling as S&P500 speculation rises but someone is clearly capping the stock price to keep TSLA near 1500.
I continue to believe that someone other than the usual hedge funds and market makers is doing this capping of TSLA. Whereas the usual suspects like to do dips into market open, a big mandatory morning dip and a dip into close, these manipulators do more of a full-court press. The capping in after-hours trading when every NASDAQ tech stock was rising was really something special, sort of whipped cream with a cherry on top. As for the pushdown into close in the final minutes, I suggest this was a way to keep the manipulations from appearing too flagrant. Two days of closing with a dollar of 1500 would be hard to miss, even by an SEC that apparently needs a seeing eye dog. With TSLA right now, it's always easier to ease off and allow it to rise than it is to try to get the stock price back under control when it makes a strong run upwards.
Notice the trajectory of the QQQ trading today. A low start and then a transition into the green about noon is a perfect setup for TSLA to launch into a nice climb. It fits one of the patterns. Instead, we saw a push lower with several selling flurries to keep TSLA in the red and discourage a rally.
Because of the continued differences in style of manipulations, I continue to suggest that maybe some type of capital raise is coming and the seller investment banks are getting TSLA price settled near 1500 before the announcement is made and price is set.
Looking at the tech chart, the mid bollinger band stands at 1478, and so the distance between the stock price and the mid-bollinger band continues to shrink. This continued stability in the stock price is causing the upper and lower bollinger bands to head toward the mid, thus providing some dampening effect if a large stock movement erupts.
The good news for us longs is that this manipulated plateau at 1500 continues to cement TSLA's position about halfway between 1000 and 2000 and sets TSLA up for another nice climb when the timing is right. The price 1500 is starting to feel low to many investors, which is a good thing. The unwillingness of investors to sell many shares (low volume) at this artificial price point also bodes well for future rises in the stock price.
Conditions:
* Dow down 226 (0.85%)
* NASDAQ up 45 (0.43%)
* TSLA 1487.49, down 11.62 (0.78%)
* TSLA volume 7.6M shares
* Oil 40.26
* Percent of TSLA selling tagged to shorts: 37%
TSLA chart above
QQQ chart above
As the week progressed, I noticed a much heavier hand of manipulation than normal with TSLA stock price. It was reminiscent of the Goldman and Morgan Stanley cap raises for TSLA when their traders held TSLA steady for days as the salesmen lined up buyers. When TSLA traded at a pegged 1500 for two days in a row, I had a deja-vu experience. Alas, Friday's trading proved the manipulators had an entirely different aim in mind, so please forgive me for suggesting a cap raise. Instead, I think we were seeing upward pressure on TSLA and capping at 1500 until just minutes before close on Thursday, when the downward push began.
What we saw on Friday is very similar to recent manipulations. When the NASDAQ is heading down, TSLA heads down too, but at a greatly exaggerated multiple.When the NASDAQ (or QQQ) bottoms out and starts climbing, TSLA is capped. Check out that 2pm until close cap of TSLA, it's a real classic example. No bad news justified TSLA's weak trading as the week progressed. Instead, we saw investors pretty much just hanging onto their shares with volume a mere 12.3 million shares on Friday and easy pickings for manipulators, particularly in the afternoon hours when so much of the mischief takes place.
Fortunately, when such manipulations are underway, you can typically just wait them out. We likely have S&P500 inclusion coming soon, Battery Day will dazzle in September, and Q3 will set records. The revenues Tesla will generate with four vehicle factories producing will amaze the skeptics.Stick around for the fun.
So, why did the manipulators push hard on Friday to take TSLA down into the low 1400s? Looking at the chart above, the call spikes between 1500 and 1430 don't look that big. Think again. Once call buyers figured out that the market makers and hedge funds were targeting investors who bought calls with even hundred strike prices (1400, 1500, etc.), they began diversifying their strike prices to make themselves less of a sitting duck. I believe Friday's close was a successful attempt to go after the odd-strike buyers and teach them a lesson. How many calls expired this Friday with strikes below 1500 but above or equal to 1430? Let's take a look:
Strike Quantity of calls
1495 553
1490 734
1480 442
1470 382
1465 304
1460 2852
1450 944
1440 382
1430 1134
Total 7727
That's an equivalent of more than 700,000 shares that managed to see a move from in the money to out of the money plus a permanent haircut of some $56 apiece or a reward to the options sellers of over $39 million for just those calls. If the manipulators were successful at covering before end of day, their strategy of selling high (opening short positions in morning) and buying low (covering those shorts in the afternoon) the manipulation would be profitable in and of itself, never mind the bonus from changes in values of call options.
The safe return of Astronauts Doug and Bob on Sunday could possibly give a boost to TSLA on Monday. The launch of these astronauts to the ISS brought a nice climb to trading on Monday, June 1, after a Saturday launch. Back then, TSLA had been trading in the low 800s (back in the olden days, 2 months ago) for three weeks before breaking out on Monday and climbing to nearly 900. Hard to imagine this was only two months ago.
Looking at the tech chart, one of the most noticeable changes has been the radical tightening of both the upper and lower bollinger bands. Also notice that Friday's trading was the first time since April when the stock closed noticeably below the mid-bollinger band. Such a close might signal an effort of manipulators to push lower on Monday in an effort to artificially generate concern among technical traders, so be aware.
For the week, TSLA closed at 1430.76, up 13.76 from last Friday's 1417.00. All four of the previous Mondays have shown strong openings. In three of the four, TSLA closed up more than 120. In one, TSLA began strong, but falling macros (along with some manipulation) allowed a close slightly in the red. Will it be Monster Monday IV or Manipulation Monday? A monster Monday could overpower the manipulations but a weak Monday could lead to more of the same. Stay tuned and have a great weekend.
Conditions:
* Dow up 115 (0.44%)
* NASDAQ up 157 (1.49%)
* TSLA 1430.76, down 56.73 (3.81%)
* TSLA volume 12.3M shares
* Oil 40.27
* Percent of TSLA selling tagged to shorts: 41%
TSLA chart above
QQQ chart above
Welcome to Moderation Monday. A $54 climb shouldn't normally be something to sneeze at, but with $120 and above climbs on Monster Mondays the norm lately, today's $54 climb felt somehow milktoast, especially in light of what you know who has in mind for the stock later this week. Today's trading showed attempts to climb through 1500 that were all foiled by the cap. A pushdown leading into 2pm happened without any news or macro dip, thus continuing the capping and afternoon pushdown scheme of the past few weeks. A climb of $54 on volume of only 8.8M shares is impressive, but it also suggests a low volume environment that is easy to manipulate.
To be fair to the pirates engineering TSLA's trading patterns, let's take a moment and consider the possibility of explaining these trading patterns through a large stakeholder deciding to trim shares. It's possible, right?
* Weekly patterns- A large investor doesn't sell lightly on Mondays and then increase the selling as the week progresses.
* Daily patterns- A large investor doesn't defend a price such as 1500 by selling as heavily as necessary when the stock price approaches it from below. Rather, they might moderate their selling and allow the stock price to creep higher, draw in more buyers, and thus pave the way for selling shares at an even higher price. Further, a large investor doesn't emphasize late afternoon for trimming shares and artificially depress the stock price going into close when the same selling could take place during brisk trading morning hours without extracting such a toll in the stock price.
Bottom line: the most plausible explanation continues to be that hedge funds are profiting by tempting call buyers to place their bets on Mondays as the stock price soars, ensuring those weekly call options fail to pay off by depressing the stock price come Friday, and profiting by pushing down the stock price in the afternoons with short-selling and then covering at a lower price later in the afternoon. It's a profitable enterprise, there is no SEC minding the store, and so it continues until S&P500 inclusion or other substantially positive news breaks the pattern and the plateau gives way to a hefty climb, as we've seen throughout the 2020 rally.
Coronavirus update
The chart immediately below suggests that the second wave that the United States has been suffering through has peaked and is in decline. The Florida chart below it is representative of states such as Texas, Florida, and California which were in the news a couple weeks ago but have now peaked and are in decline. As I mentioned months ago, some states will see the virus get away from them, they'll need to readjust their rules, and they will once again get the virus heading lower, which is exactly what we're seeing. My biggest hope right now is that we see positive results with the various antibody therapeutics that could greatly lessen the number of deaths from those who are hospitalized with the virus, until vaccines arrive at year end or early in 2021. Several of those therapeutics are in Phase 3 human trials now, and we could hear good word about the trials at any time. Unlike vaccines, where a bad vaccine can have significant negative consequences on the population as a whole if it is released too early, therapeutics based upon lab-grown antibodies could initially be primarily used for the most seriously ill patients in hospitals. For these patients, the risk vs. reward ratio of using the therapeutics could be exceedingly high, and consequently I would not be surprised to see these therapeutics released much earlier than vaccines for combating active COVID 19 cases.
Looking at the tech chart, today's rally brought TSLA closer to, but not above (at closing) the mid-bollinger band, which stands at 1495. Another plateau has formed in the vicinity of 1500 and it'll be interesting to see how long that plateau exists before being disrupted in a major way.
Regarding strategies, I know a few traders who are selling some shares at peak Monday prices and then rebuying on Friday. The main issue with this plan is that if the S&P500 inclusion is announced for TSLA, or other positive news comes forward, those practicing this trade would see a smaller gain if the stock price appreciates significantly.
Conditions:
* Dow up 236 (0.89%)
* NASDAQ up 158 (1.47%)
* TSLA 1485.00, up 54.24 (3.79%)
* TSLA volume 8.8M shares
* Oil 40.74
* Percent of TSLA selling tagged to shorts: 37%
TSLA chart above
QQQ chart above
Ho hum, another sleepy day with low volume of 8.4 million shares traded while we await word on S&P500 inclusion. Comparing the two charts above, at first glance it would look like QQQ was more volatile than TSLA until you look at the actual numbers. QQQ range from high to low was only about 0.75% today while TSLA's range was closer to 4%. Although there exists a correlation between TSLA's movement's and the NASDAQ's, the 5X multiplier of TSLA is ridiculous and suggests more manipulations than actual response to macros.
On days such as today it's best to remember that most of these movements are just noise and manipulations. What we need to continue monitoring is Tesla's growth trajectory, profitability, and competition. This is a time to play the long game. As others have said, should Tesla reach full self driving before anyone else, the company quickly becomes valued hugely higher than it is right now. In the meantime, understanding how fast automotive is growing and starting to factor in Tesla Energy growth should create substantial stock price growth over the next few years. A consolidation in the 1500 area is very healthy after such a remarkable climb in the past year. It really helps to cement the idea that profit taking after the sizeable run higher is pretty much complete. We want people to start thinking 1500 is bargain priced and we're slowly getting there.
In recent news:
* While replying to a Tweet request, Elon said it's likely Tesla will one day make a scaled down version of the Cybertruck. Although he was referring to a European version of the truck, the same truck would of course be offered in North America, as well.
* Recently Tesla board chairman Robin Denholm cashed in on millions of dollars worth of TSLA options. Since she set up the transaction back in May, it would be unwise to believe her reason is because of recent events at the company. Instead, taking out some money before the uncertainties of a U.S. election and going into another winter with COVID 19 seems a more likely explanation.
* Elon recently Tweeted that Tesla will be eyeing a third U.S. gigafactory after the completion of the Austin and Berlin factories.
* Starship flies today! Photo by Trevor Mahlmann photos.tmahlmann.com/Rockets/SpaceX/Starship-Hopper/i-68HCNL5/A… While the arrival of astronauts Doug and Bob wasn't as spectacular as a launch, perhaps the networks will give some air time to this crazy flying grain silo. Bravo to the SpaceX team!
At the very end of after-hours trading TSLA saw an upward spike
Looking at the tech chart, the climb of the mid bollinger band appears to have shallowed considerably, allowing TSLA to ride near the mid-bb rather than falling farther behind. Even with a $2 climb today, TSLA closed about $15 below the mid-bollinger band today.
Conditions:
* Dow up 164 (0.62%)
* NASDAQ up 38 (0.35%)
* TSLA 1487.00, up 2.00 (0.13%)
* TSLA volume 8.4M shares
* Oil 41.57
* Percent of TSLA selling tagged to shorts: 37%
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Chart of TSLA above
Chart of QQQ above (Note: The NASDAQ closed up only about half a percent today. Gyrations on QQQ chart are not close to scale with TSLA's movements)
Ah, cherished hedge funds,
Bold pirates of Wall Street tidewaters,
How doth thee whack our mole?
Let me count the ways.
Looks like 24 transitions across the red/green line today folks, during a day that consisted entirely of an ongoing game of whack-the-mole. The chances of something of note happening during market hours today, good or bad, appeared so remote with this endless game of clobber the tunneling rodent that a mere 4.9 million shares traded today. Let me remind you of the purpose of this tactic. If TSLA runs too high above the red/green line, investors and traders take notice and FOMO sets in. Others start buying because there must be some good reason for this bump. With TSLA's volatility, a rise above 1600 is not out of the question, and such a rise would scuttle the plans of the pirates, er... I mean the hedge funds. Thus, the hedge funds, which have sold call options expiring this Friday and other Fridays as well, take out an insurance policy of sorts and sell when TSLA shows too much strength all of a sudden. They rebuy when the threat is neutralized and end the day neutral regarding their short exposure. With any luck, they're selling high (in the green) and covering low (in the red), thus realizing a return for their day-trading efforts.
Sooner or later something will happen: good news, bad news, good macros, bad, S&P500 news, etc. Until that happens, though, TSLA is becalmed in the horse latitudes of the stock market
Something is going to happen, however. Within 4 weeks we'll be getting close enough to battery day so that the stock price of TSLA should be drifting upwards. Not much more than a week later we're almost certain to see some melt-up before the biggest Production and Deliveries Report this company has ever produced. Then there's the strongest ER we may have ever seen, on the horizon.
Meanwhile, as the stock trades horizontally, investors start feeling the spring is tightening and we're getting closer to the next rally. Simultaneously, the cost of options has been dropping, making option bets more affordable and encouraging speculation about the next rise. All those new options require more delta-hedging as the stock rises and the whole scenario heats up once again.
With this said, if the movers and shakers at the S&P500 are paying attention, a delay of a few weeks in adding TSLA to the list could exacerbate the problem of funds trying to pick up TSLA because in September they'll be competing with battery day and Q3 results speculators.
News:
Tesmanian reports about the sighting of a giant Model Y casting machine spotted at the Fremont factory
Looking at this Friday's max pain chart, notice the huge number of 200-strike puts out there. I would be surprised if even 1% of these buyers actually think TSLA could end up there this week. Instead, I believe that this low strike Put option allows call buyers to reduce the possibility of margin calls because there is some theoretical limit on losses that week. There's over 4K 1500-strike calls and nearly 6K 1600-strike calls, so the hedge funds will be working to keep these bets out of the money.
Looking at the tech chart, I include two plateaus so you can be reminded what can happen when the stock price breaks higher. Notice the continued narrowing of the upper and lower bollinger bands. Notice how the mid-bollinger band has decreased to a very shallow climb with TSLA hugging it closely.
Conditions:
* Dow up 373 (1.39%)
* NASDAQ up 57 (0.52%)
* TSLA 1485.02, down 1.98 (0.13%)
* TSLA volume 4.9M shares
* Oil 42.15
* Percent of TSLA selling tagged to shorts: 36%
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Chart of TSLA above
Chart of QQQ above
For the previous two days, the Dow has been outperforming the NASDAQ, but today that trend reversed and the NASDAQ as expressed by the QQQ chart above rose strongly from noon to close in a setup that normally allows TSLA to run higher as well. Alas, today was another low volume day (5.9M shares) and so the manipulators had an easier time with their job.
What we saw in TSLA was rather level trading until about 3pm when the job of capping TSLA got away from the manipulators and TSLA shot higher in a frisky fashion. The rising NASDAQ was just too much for the manipulators to be able to hold TSLA level. Think of it as a spring being tightened, and around 3pm it sprung and TSLA shot higher.
Normally, such a development on a day with constantly rising NASDAQ would lead to a spirited TSLA climb until market close. Today TSLA topped out about 1517 and once the downward push got going with LOTS of help by manipulators, it developed momentum and allowed TSLA to close below 1490. I attribute the successful pushdown after 3pm to:
* traders having become used to the narrow trading ranges that are being imposed upon TSLA. Consequently, they're spring loaded to sell when TSLA has peaked, and their selling helps the manipulators do their business
* Last week I mentioned that the manipulators working TSLA are the A team, much more adept manipulators than we normally see. Watching the trading today I maintain that view. Anything less than an aggressive move around 3pm would have likely led to a nice climb for TSLA. In other words, TSLA entered one of the most successful patterns for a successful climb and yet it was defeated. Again, I suggest the low volume was a major factor here in allowing some hedge fund manipulators to keep TSLA where they wanted, but the quality of the manipulation is very good all the same.
Considering how successful the manipulators have been at making TSLA stable these past few weeks, another possibility may exist regarding the incentive. Right now, I anticipate that we'll see at least a few days of rising stock price before the S&P500 announcement as funds get word of the coming change and start buying before it becomes public. Now I'm thinking there's an alternate scenario. If those funds instead start buying call options when the stock is this stable and calls are more affordable, this might be the entry point funds use to get their TSLA shares. I'd be careful about selling call options right now because if the buying is an S&P500 fund, you're likely not getting those shares back, and that's fine by them. Let's see if this idea hold up under scrutiny over the next few days.
Looking at the tech chart, you can see how amazingly level TSLA has been trading this past week. Is it typical manipulations to maximize profits for the options sellers come Friday, or is it something else? The real conflict would come if hedge funds are selling call options and would negatively be affected by funds using call options to secure their TSLA shares ahead of S&P500 inclusion. Looking for clues.
Conditions:
* Dow up 185 (0.68%)
* NASDAQ up 110 (1.00%)
* TSLA 1489.58, up 4.56 (0.31%)
* TSLA volume 5.9M shares
* Oil 41.99
* Percent of TSLA selling tagged to shorts: 38%
TSLA chart above
QQQ chart above
As we've seen over the last several weeks, Fridays are typically a down day for the stock as the option sellers take advantage of the low volume (8.8M shares) to push lower. With the NASDAQ down nearly 1% on Friday, the dips worked out to be a perfect environment for tweaking TSLA's price. Going into open, TSLA was trading up despite QQQ's red, and TSLA even traded above 1500 in pre-market and just $1 below 1500 at open. Overall, sentiment was positive for TSLA but this was, after all, a Friday.
The big dip in QQQ and TSLA a bit after 2pm showed nearly 2% dip for QQQ and nearly 5% dip for TSLA, so we saw about a 2.5X multiplier on that dip. OTOH, at close we saw TSLA down about 2.5% and QQQ down about 1.15%, so the multiplier softened to about 2.2X after the dip recovery. In contrast, many tech stocks were in the 1-1.5X multiplier range on Friday.
Check out the tech chart at the bottom of this post and you'll see the reliable Friday dips. The narrow trading range and the Friday dips has caused traders to be gunshy and they take profits at any sign of rally weakness, with Thursday's 3pm climb and dip being a great example. It's possible that this narrowing trading range and success in defeating Thursday afternoon's rally might limit Monday's rise, even more than the previous Monday's rise. What we need is real news to provide the catalyst for a real rally. It's coming as Battery Day and 3Q P&D report come out in September and first week of October. For a summary of what's likely coming on Battery Day, if you drink enough coffee to digest the speed of the words coming your way, check out Hyperchange's video on the subject. I suspect people counting ships and estimating numbers of Teslas heading to Europe will start getting bullish as they also add in the Shanghai output and some pretty impressive numbers will pop out in those spreadsheets.
The thing about S&P500 addition is that the longer S&P waits, the more dramatic the buying might be as we get closer to the end of Q3 catalysts and traders become less worried about a dip right after the S&P500 rise. A bunch of closely spaced catalysts at end of quarter would be a setup for a mighty strong rally. So, keep that possibility in mind as we await word about S&P500 inclusion. Sometimes a wait can be a good thing.
Coronavirus
One potentially huge positive step in fighting COVID 19 could be the abundant availability of quick diagnostic tests. Many of them use spit rather than a disagreeable nasal swab and some can provide results within minutes. Back in April, the National Institute of Health launched a project called RADx, which stands for Rapid Acceleration of Diagnostics. NIH has determined the frontrunners in rapid testing and has been providing funding. Here's a summary of what's going on. Quick, inexpensive testing, especially on-site testing, could safely expand air travel to destinations such as Hawaii as well as allow seriously deep testing to attack cluster outbreaks before they progress too far. Also, quick diagnostics could allow outpatient treatments (antibody therapeutics, potential HCQ + zinc, etc.) that do best early on and thereby significantly decrease the amount of hospitalizations and deaths.
TSLA shorts were tagged with 44% of selling today. That's a noticeable bump up from the recent norm and suggests someone was working really hard on influencing TSLA's price on Friday.
Looking at the tech chart, you can see the trend right now is gravitating toward the mid bollinger band with runs higher on Mondays and dips on Fridays.
For the week, TSLA closed at 1452.71 up 21.95 from last Friday's 1430.76. For any short-sellers who might be reading this post, my message to you is: tick, tick tick. Have a great weekend.
PS: Just for fun you might want to check out this video of someone building a miniature cybertruck with rocket on it out of cardboard, filling it up with matchheads and then lighting the fuse to watch and see how it does on their track. Good fun.
Conditions:
* Dow up 47 (0.17%)
* NASDAQ down 97 (0.87%)
* TSLA 1452.71, down 36.87 (2.48%)
* TSLA volume 8.8M shares
* Oil 41.22
* Percent of TSLA selling tagged to shorts: 44%
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The weekend has seen some interesting developments:
Tesla Daily breaks down the numbers for S&P500 inclusion
Rob Maurer put lots of time into sorting through the data to reach some conclusions regarding S&P500 inclusion, both in terms of typical delay between qualifying event and announcement as well as typical stock price reactions to inclusion. He also looked at day of the week when announcements came and dispelled some rumors. For example, we knew that Monday was a good day, but we learned Tuesday is lower and then the frequency builds as the week progresses. The biggest takeaway I have from his research is that it's quite common for the announcement of inclusion to take place 30 or more days after qualifying event but multiple months of delay are not common.
I've edited this post to clarify a point bought up by @CLK350 . The chart by Rob Maurer below shows that 57 of 71 inclusions took place within 60 days. My point is that although it's common for the inclusion process to stretch 30 days or more, it's unusual for the inclusion process to stretch out more than two months and things are pretty much concluded before 3 months time.
Very encouraging and inexpensive saliva-based COVID 19 test highlighted
Low cost (under $2) saliva COVID 19 test looks sensitive enough and sent to FDA in mid-July
Here's a MedX article about the product, which is being developed with the help of Yale researchers
Proposed advantages of the test kits include:
* low cost
* no need for other supply chain items which suggests quick ramping of availability
* significant sensitivity
Such a product, if as good as it is suggested, approved by FDA with emergency authority, and made readily available at super-affordable prices, could quickly transform the landscape of COVID 19 prevention even before vaccines and effective therapeutics are introduced
Tesla Daily breaks down the numbers for S&P500 inclusion
Rob Maurer put lots of time into sorting through the data to reach some conclusions regarding S&P500 inclusion, both in terms of typical delay between qualifying event and announcement as well as typical stock price reactions to inclusion. He also looked at day of the week when announcements came and dispelled some rumors. For example, we knew that Monday was a good day, but we learned Tuesday is lower and then the frequency builds as the week progresses. The biggest takeaway I have from his research is that it's quite common for the announcement of inclusion to take place 30 or more days after qualifying event but multiple months of delay are not common.
I've edited this post to clarify a point bought up by @CLK350 . The chart by Rob Maurer below shows that 57 of 71 inclusions took place within 60 days. My point is that although it's common for the inclusion process to stretch 30 days or more, it's unusual for the inclusion process to stretch out more than two months and things are pretty much concluded before 3 months time.
Very encouraging and inexpensive saliva-based COVID 19 test highlighted
Low cost (under $2) saliva COVID 19 test looks sensitive enough and sent to FDA in mid-July
Here's a MedX article about the product, which is being developed with the help of Yale researchers
Proposed advantages of the test kits include:
* low cost
* no need for other supply chain items which suggests quick ramping of availability
* significant sensitivity
Such a product, if as good as it is suggested, approved by FDA with emergency authority, and made readily available at super-affordable prices, could quickly transform the landscape of COVID 19 prevention even before vaccines and effective therapeutics are introduced
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TSLA chart above
QQQ chart above
The previous three Mondays had been quite positive TSLA days as well as NASDAQ days. Today we had an opportunity to watch TSLA trade on a Monday with negative NASDAQ performance (although Dow was up). Not too surprisingly, TSLA mimicked many of QQQ's movements, but at about a 2.7 X multiple. This multiple applied to both the deep dip around 11am and TSLA's high point on the early afternoon recovery, about 1:15pm. That's pretty much where the similarities ended. TSLA then traded noticeably worse than QQQ for the remainder of the day and closed with a 5X multiple to QQQ. No bad news was apparent to cause this usual afternoon weakness. Either there's some manipulations going on here during low volume afternoon trading or there's some truly unexplained reason why TSLA usually underperforms the macros in the afternoon. I strongly suspect the former. Check out the two charts above and I think you'll agree.
As they say, what we're seeing right now in daily trading is "the noise." There are manipulations being input to influence Friday's closing price, but in the long term, TSLA's performance will rule the stock price. A bevy of RORO ships are continuing to whisk thousands of Model 3s to Europe this quarter, and although Troy has revised his quarterly delivery numbers from 145K to 141K, I know ship trackers who believe he's going to have to revise upward (like he usually does) as the quarter end draws near.
Coronavirus Update
Since coronavirus trends influence the macros and they in turn influence TSLA's stock price, it's prudent to stay up to date with the latest developments in the COVID 19 battle.
* NIH says two monoclonal antibody studies are now recruiting for Phase 3 trials
* Second wave in the U.S. continues to decline from peak (see below)
We saw weakness in macros when news stories pointed out the worsening 2nd wave of covid cases in the U.S. Looking at the chart above, particularly at the 7 day moving average in blue, you can see that the 2nd wave is coming under control. That's not to say we won't see a third wave at some point, but for now the U.S. situation is improving. Why? If you look on worldometer.com and check out the 20 worse COVID 19 states, you'll see that only two of them, Georgia and Indiana, are showing difficulties with getting this recent wave into a reasonable decline.
You realize that with each state taking a different approach to the virus and some reaching a critical point much earlier than others, the United States will have a new cases curve that would be closer to that of 50 countries blended together than as a single country with a unified approach.
As an example of a state that is presently seeing COVID 19 running away, I offer my home state of Hawaii, below.
One advantage Hawaii had early on over other states is that it is a series of islands that can be much more easily protected from infected visitors from other states. In May, Hawaii had several zero new cases days and looked like it was going to knock COVID 19 out completely. Hawaii must have been doing a great job with testing and tracing, right? Apparently not. In an article in the Honolulu Staradvertiser (www.staradvertiser.com) today, we learned that a surprise inspection of the Department of Health revealed only 10 workers and 2 supervisors on duty as the virus was running away. Moreover, the state's epidemiologist Sarah Park recently made statements that suggest that she's not much of an advocate for tracing. It shows in the low number of tracers currently working, the 5 or more days of delay between notification of a possible COVID case and the arrival of a tracer, the 4 days typical wait time for tests to come back from the lab, and the overworking (up to 190 cases) for some of the few tracers currently employed. The bottom line is that the epidemiologist needs to be fired and replaced quickly, more testing is vitally needed as well as a decent number of tracers. Hawaii lucked out in the early days of the virus with low numbers that were easily handled, but once the virus hit the generally low income and high density of housing Pacific Islanders (from other island chains, making up 4% of Oahu's population but accounting for 30% of new cases) the virus ran away from the health department.
Hawaii will regroup, it will get competent people in place and the virus will be controlled again, but it illustrates the problem with the U.S. numbers and why the curve doesn't look like the traditional bell curves of other countries. States like Hawaii need a surge in cases to highlight the shortcomings. This is much the reason why we saw surges in the south later than in the Northeast. A surge was necessary to get the states operating efficiently to combat the virus, and the southern states started their surges later.
Also, the Hawaii story illustrates the immense need for the FDA to give emergency authority for the low cost, fast result saliva tests. If these were available now, the situation of testing and tracing in Hawaii could be turned around quickly. This is one thing the U.S. government could do right away to immensely change the battle for the better.
Looking at the tech chart, you can see TSLA bounced off the lower bollinger band today. We see the 50 day moving average rising to provide some support, but for now TSLA continues to see its price mostly influence by macros and afternoon manipulations.
Conditions:
* Dow up 358 (1.30%)
* NASDAQ down 43 (0.39%)
* TSLA 1418.57, down 34.14 (2.35%)
* TSLA volume 7.4M shares
* Oil 41.94
* Percent of TSLA selling tagged to shorts: 41%
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