Papafox's Daily TSLA Trading Charts

[Off Shore]

@Papafox, like you I rely on the old.nasdaq.com site's graph because it's clear and includes a simultaneous view of [some version of] the volume. Old NASDAQ says it's going away soon, and I was wondering if you have an exit strategy to another graph.

Thanks, for this and for all you do.

 

[Papafox]

@Papafox, like you I rely on the old.nasdaq.com site's graph because it's clear and includes a simultaneous view of [some version of] the volume. Old NASDAQ says it's going away soon, and I was wondering if you have an exit strategy to another graph.

Thanks, for this and for all you do.

@Off Shore , I'm trying to decide upon the best replacement. Initially I would use the market hours charts for NASDAQ and TSLA from my iphone, but I'm really open for suggestions regarding daily charts that show pre-market and after-hours trading as well. If anyone has a suggestion, please send me a PM. Thanks!

 

[Tom Denbo]

Try Webull. I use the Android app with no account. Works great.

 

[Papafox]

TSLA chart above

QQQ chart above

How to explain Friday's trading? Quite simply, it was a Friday and the usual subjects did what they usually do to make their options sold less painful than they would have been otherwise. TSLA was strong in pre-market and through opening, hitting an intraday ATH of over 2317 just 8 minutes after market open. From there, it was a gradual pushdown until about half an hour before close when traders started buying to load up for Monday and the hedge funds couldn't hold TSLA below 2200, like they had wished. Notice how QQQ started rebounding nicely after 1:30pm. TSLA momentarily raised its head above ground about 2pm and felt the Whack! of the whack a mole mallet. Whereas TSLA should have risen with QQQ, it instead declined as the usual suspects worked to minimize the losses on their call option sales for the week.

The important consideration right now is contemplating how TSLA will trade after the split. As a general rule, stocks do better in the long run after a split and TSLA should be no exception.

In the short run, you have small retail buyers who do not have access to fractional shares and feel priced out of TSLA. That situation changes on Monday after the 5 for 1 split. More importantly, in my mind, is the effect of the split on options trading. It's not uncommon for more than double the existing volume of TSLA shares for that day to trade in the options market. Just as TSLA has had a significantly higher percentage of shares shorted compared to other stocks, TSLA also has a unusually high percentage of value traded in options each day. Volatility is the reason why so many TSLA options trade. The kind of conservative 2 year leap calls I used to buy for $10,000 were priced at about $50,000 last week, placing such trades out of reach for most retail investors. Now they're becoming possible again and I think the call option buying by retail investors and the resulting delta-hedging by market makers and hedge funds (the honest ones) will be important forces in further appreciation of TSLA.

The biggest negative I see about Monday trading would be if macros dipped and gave the hedge funds an opportunity to push the stock down quickly in the morning to scare investors. They would do so because of the novelty of the situation of seeing TSLA trading in the 400s again. FUD released on Monday would complement their efforts. Fortunately, futures are up Sunday night as I write this post, and so they may not have the desired help from macros.

Looking at the tech chart, you can see daily trading that has touched the upper bollinger band three days in a row. The upper bb stands at 2337 as we approach Monday, so there's room for some additional running high if conditions are right.

For the week, TSLA closed at 2213.40, up 163.42 from the previous Friday's 2049.98. Add in the most recent two weeks of gains and the three week total stands at 760.69 climb. Not too shabby. Hope you had a great weekend!

Conditions:
* Dow up 162 (0.57%)
* NASDAQ up 70 (0.61%)
* TSLA 2213.40, down 25.35 (1.13%)
* TSLA volume 20.1M shares
* Oil 43.12
* Percent of TSLA selling tagged to shorts: 58%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA over 500 (2500 pre-split price) in after-hours trading, anyone? Monster Monday V, please take a bow.

Volume was a monsterous 118.4 million shares today. Surprised? Divide that number by 5 and you get 23.7 million, which is the type of volume you'd normally expect on such a strong day. With traders and investors holding five times as many TSLA shares and options in their accounts as they did on Friday, no wonder that volume was so high. It took this volume to process the dollar value of trading that we'd expect.

Looking at the trading charts, you can see that QQQ was losing its gains in pre-market trading as market opening approached, and so was TSLA. This was not a case of news prompting investors to expect a big run higher today. Alas, the NASDAQ managed a strong climb nearly into close, and this set the table for TSLA also enjoying a strong day.

Notice the depth of the 11am QQQ dip. TSLA hardly missed a beat, it was so focused on other matters. I continue to believe that one of the driving factors today was more affordable quality options becoming available again after the split. As traders bought call options, market makers and legitimate hedge funds went to work delta-hedging the options they had sold, and the delta-hedging pushed the stock price higher. As the stock price rose, more delta-hedging was needed on existing sold call options, which of course prompted the stock price to continue rising. Such a situation with delta-hedging sustaining the rally suggests that the market makers might have to continue buying after the closing bell, and the TSLA chart above confirms this behavior.

Meanwhile, AAPL also began post-split trading on Monday. It's gains of 3.39% during market trading suggests a positive but not TSLA-explosive benefit of the split.

In the news:
Analysts raise TSLA price targets

Today's upsurge brings the focus upon short term trading vs long term trading of TSLA. Short term, TSLA is approaching price targets of some (but not all) of the most bullish analysts, and so one might assume that some profit-taking is not far away. On the other hand, investors with longer time horizons can look at the fundamentals of the company and conclude that there's big growth still coming in the years ahead. Moreover, with the timetable of S&P500 inclusion unclear, the stock could receive an unexpected catalyst at any time. Thus, we'll likely see some differences in trading approaches between bulls with shorter time horizons and those with longer going forward. To support long-term bullishness, Mayur Thaker tweeted the following graph on Friday. It contrasts the growth of TSLA stock price vs. growth of EBITDA, which is a more reasonable metric for financial performance than profit because it excludes items such as stock-based compensation and depreciation.

Looking at EBITDA for Tesla, you can see it has been growing faster than the stock price, which suggests more room for the stock price to appreciate in the future.

Overall, many of us were expecting a nice bump from the first day of TSLA trading after the split, and we weren't disappointed. Congrats, longs!

TSLA shorts were tagged with 39% of selling today, a much earlier return to the 40ish % selling after the recent bump upwards.

Looking at the tech chart, today's massive climb puts TSLA less than $8 above the upper bollinger band, suggesting that TSLA will be back within the band in the next couple of days.

Conditions:
* Dow down 224 (0.78%)
* NASDAQ up 80 (0.68%)
* TSLA 498.32, up 55.64 (12.57%)
* TSLA volume 118.4M shares
* Oil 42.89
* Percent of TSLA selling tagged to shorts: 39%

 

[Papafox]

TSLA chart above

QQQ chart above

On Tuesday the market responded to word of a Tesla capital raise of up to $5 billion. Whereas the stock was trading near $540 in Frankfurt and in early pre-market trading, we saw a dip that settled at about the $480 price level. Volume was a bit lower than Monday's, some 90 million shares vs Monday's 118 million.

One possible explanation for the dip would be that with the NASDAQ running strong on Tuesday (up 1.39% on a steady climb), any pushdown in pre-market and during the Mandatory Morning Dip would signal to traders that you're not going to be making the kind of money with TSLA today as you would elsewhere, and so we likely saw some traders leaving for greener pastures. Naturally, the pushdown and MMD likely involved the usual suspects.

Looking at the planned cap raise, Tesla has obviously tweaked the plan to provide some additional liquidity during the S&P500 inclusion. This is an unusual cap raise in that Tesla pretty much controls the pricing and the rate of selling, which will be good for us investors. The sum of $5 billion is a drop in the bucket compared to the level of buying likely to take place with the inclusion, however, so I don't think the cap raise will prevent the stock price from running higher. What it does is 1) gives Tesla lots of additional capital with a mere 1.1% dilution and 2) signals to the S&P decision makers that Tesla has taken steps to make it easier for funds to add TSLA after inclusion is announced. Informed sources have recently speculated that TSLA 's inclusion will be announced either later this week or next week. Gary Black thinks that S&P will want the split to settle a bit before inclusion but he suspects S&P wants to give the funds plenty of time to load up before battery day (and so a next week timetable). The weakness we saw on Tuesday should be reversed when inclusion goes public and funds begin to buy. Speaking of Gary Black:

Something not mentioned in the main forum today is the role of the Goldman and Morgan Stanley trading desks in managing Tesla's stock price during the cap raise. In normal cap raises at a pre-defined price, we've seen how rock steady these trading desks have been able to hold TSLA. What we need to do now is try to figure out what, if any, interventions these pro traders are doing to make the stock offering a success. For example, TSLA didn't dip too far below 480 today or spend too much time below that number. Is the stock receiving some assistance whenever one of the quick deep selling sprees sends it lower? Perhaps Wednesday will give us a better idea.

Looking at the tech chart, the upper bollinger band stands at 504, which makes upward movement of TSLA a more attractive option for big dog buyers, who prefer to buy at prices below the upper bb. Also notice that the volume indications in the tech chart have been revised to reflect the split. Thus, yesterday and today's volume was not out of the ordinary in terms of value of funds traded. Get used to 100 million shares volume as a pretty big day and less than 30 million shares volume is a light volume day.

Conditions:
* Dow up 216 (0.76%)
* NASDAQ up 164 (1.39%)
* TSLA 475.05, down 23.27 (4.67%)
* TSLA volume 90.1M shares
* Oil 43.17
* Percent of TSLA selling tagged to shorts: 36%

 

[FrankSG]

Something not mentioned in the main forum today is the role of the Goldman and Morgan Stanley trading desks in managing Tesla's stock price during the cap raise. In normal cap raises at a pre-defined price, we've seen how rock steady these trading desks have been able to hold TSLA. What we need to do now is try to figure out what, if any, interventions these pro traders are doing to make the stock offering a success. For example, TSLA didn't dip too far below 480 today or spend too much time below that number. Is the stock receiving some assistance whenever one of the quick deep selling sprees sends it lower? Perhaps Wednesday will give us a better idea.

I know this thread is mostly reserved for your excellent analyses, but I'd like to add a little thought to this.

The announcement mentioned that the selling brokerage houses will each get a 0.5% commission. I assume that rather than tell the brokers to sell a certain $ amount on certain days, Tesla will tell them to sell a certain number of shares on certain days, perhaps with a minimum selling price attached. This way the selling brokers are incentivized to sell at the highest possible price to maximize their commission.

EDIT: Just found out that this is exactly how it works according to the official prospectus.

We will designate the maximum amount of common stock to be sold through the sales agents on a daily basis or otherwise as we and the sales agents agree and the minimum price per share at which such common stock may be sold. Subject to the terms and conditions of the equity distribution agreement, the sales agents will use their reasonable efforts consistent with their normal sales and trading practices to sell on our behalf all of the designated shares of common stock. We may instruct the sales agents not to sell any common stock if the sales cannot be effected at or above the price designated by us in any such instruction. We or any sales agent, with respect to itself only, may suspend the offering of our common stock by notifying the other party.

 

[Papafox]

TSLA chart above

NASDAQ chart above

Wednesday was a positive macro day yet again, with the Dow up over 1.5% and NASDAQ up nearly 1%. TSLA traded positively in pre-market trading. So, what happened?

Part of the answer resides with market makers. @Artful Dodger pointed out in this TMC post today that over 7% of FIRNA selling by shorts today was naked shorting. Clearly, there were efforts by the market makers to put downward pressure on TSLA today. The only pseudo bad news was that Baillie Gifford significantly trimmed back their TSLA holdings. The truth of the matter is that TSLA appreciated so greatly that it reached 25% of BG's value in the fund, which was way too high and Baillie Gifford HAD TO trim. That's not exactly a problem in confidence. Nonetheless, some investors get swayed by the headlines and so there could have been a small amount of downward pressure there.

Mostly what we saw today was TSLA mimicking the movements of the NASDAQ this morning, but at ridiculous multiples. For example, when the NASDAQ dipped at 11:30am and then quickly recovered, its bottom was less than 1% below the previous day's closing price while TSLA dipped 14% before recovering. These super deep dips are only possible with a little help as the manipulators short-sell to accelerate the dip, a technique I call a dip on steroids.

Keep in mind that the manipulators don't do the heavy lifting in such a dip. They merely accelerate it as needed. As the dip progresses, stop-loss triggers set by new (and naive) TSLA investors get triggered and organizations buy those shares at discount prices. Algobots get fooled by the drop and join in the selling. Weak longs get worried and sell. The manipulators try to cover toward the bottom of the dip and realize a profit from the manipulation. Moreover, if those same manipulators have sold calls that expire on Friday, the decrease in TSLA's stock price makes those sales more profitable.

Getting back to the trading chart, though, the 11:30am dip exceeded the SEC's 10% drop threshold and the alternative uptick rule kicked in for the rest of the trading day and for Thursday's trading as well. This rule makes it more difficult to push the stock price lower through short-selling, but it does not prevent capping. It is capping that we saw with TSLA throughout most of the day as the NASDAQ continued to climb all afternoon and into close while TSLA barely budged higher as the afternoon progressed.

As @FrankSG pointed out, this capital raise that Tesla has set up is not at a fixed price. Moreover, if Tesla alots a certain number of shares to a brokerage to sell on any given day, there is an incentive to maximize the profit by selling at the high end of the trading range that day. I was curious if the big trading desks of Goldman and Morgan Stanley would do any preemptive measures to support the TSLA stock price before S&P500 inclusion is announced, but I saw no evidence of such measures today, which makes sense given the uncertainties of the date at which an announcement will come forth.

One possibility for today's weakness could be an idea floated in the main investor's thread, which is that many investors did not receive their additional shares to trade (and sell) until today. Thus we may have seen an unusually strong Monday because of ability to buy but not to sell by some market participants, and the flip side of that arrangement was that the selling was stronger today than otherwise would have occurred.

News:
* Bank of America raises TSLA price target from $350 to $550
* Baillie Gifford trims TSLA shares

Notice over 30K 500-strike options set to expire on Friday. Any hedge funds that sold at this strike but haven't been delta-hedging sufficiently want to keep TSLA below 500 at close on Friday. The big disruption would be announcement of S&P inclusion, which could jolt the stock price upwards, and so the effort is to give plenty of wiggle room below 500.

Looking at the tech chart, I want you to notice the trading candles of the days that marketed a local high. Notice that often these trading days were extremely positive, dare I say overheated. This is one of the reasons why I mentioned the short term vs. long term crossroads on Monday because even though the long term looks very positive for TSLA, the trading that day marked a possible local high. Local highs in the past year have seldom led to deep dips, though. You can see the deep coronadip that bottomed out in March, but most of the local highs of this past 12 months have led to setbacks which then are erased in days or weeks. There are, however, limits to how high the current rally can go in 2020 when you consider the most optimistic estimates of TSLA growth and margins in the coming years. Unless one starts factoring in significant autonomous driving revenues, each $100 of value at this time becomes harder and harder to justify. Perhaps news at battery day will be so mind-blowing that investors can see a path for significantly higher valuations. In the meantime, realize that in the $550-600 price range we're really crowding the price targets of optimistic analysts.

Conditions:
* Dow up 455 (1.59%)
* NASDAQ up 117 (0.98%)
* TSLA 447.37, down 27.68 (5.83%)
* TSLA volume 96.2M shares
* Oil 41.61
* Percent of TSLA selling tagged to shorts: 30%

 

[Papafox]

Probably one of the best explanations I've seen about what's going on with the TSLA stock price is from this tweet by @jpr007 . His view is that much of the stock price increase lately has been hedge funds buying in to profit from a squeeze when S&P500 inclusion is announced. When Tesla announced their $5B cap raise, they were signalling the hedge funds that Tesla will not allow a bad squeeze to take place. The $5 billion of stock is a small amount compared to what may be needed, but TSLA could easily increase this amount, as needed. Some of the smarter hedge funds are reading the writing on the wall now and are reducing their positions in TSLA after big profits. Those reductions are behind much of the price declines of the past two days.

 

[Papafox]

TSLA chart above

QQQ chart above

As the day progressed, I came to believe that JPR007's explanation for TSLA weakness this week was likely on target. He theorized that hedge funds had bought TSLA shares heavily during the past couple weeks with the aim of squeezing the index funds when Tesla inclusion necessitated that they buy great quantities of TSLA shares.

Looking at the evidence, TSLA reversed from strong climb to descent right after Tesla announced the $5 billion cap raise. It wasn't a gentle transition, it was more of a whiplash change. The NASDAQ was up nearly 1.4% on Tuesday, so the whiplash change from strong rally to descent didn't originate in macros. While many Tesla investors were especially vulnerable for profit-taking after such a massive climb, a catalyst was needed to reverse the momentum and that catalyst was hedge funds reacting to the news that Tesla was going to offer a cap raise in such a fashion that it could manage the supply of shares during the S&P500 inclusion buying. That's less than 1% of the market cap, and so the market reaction was certainly not tied to the raise's dilution effect. Rather, the hedge funds realized that Tesla was on to them and would keep the super-squeeze from happening (by adding additional cap raises as needed during the inclusion buying). Some of the funds started divesting of TSLA shares to realize gains from the run up, and as the stock price started sliding, other funds joined in the selling. On Wednesday, the drop exceeded 10% at one point and initiated the alternative uptick rule for short-selling for the remainder of the day and for Thursday.

This morning TSLA dropped considerably in pre-market trading, likely due to a growing number of retail investors fearing a deeper dip, but initial trading was benign during market hours. In fact, TSLA was climbing for the first 45 minutes of market trading, suggesting the worst of the price decline might be over. Alas, today the broader markets tumbled, with the NASDAQ falling nearly 5%. This tumble led to losses not only for TSLA but for other tech companies as well. The ironic thing is that TSLA's pre-market weakness could have been one of the factors that led the technical stocks lower. You then find the absurd situation where technical stocks are declining because of bad macros and the macros are declining because of declining tech stocks. No matter, the damage was done and TSLA closed down 9% with an additional dip in after-hours trading. Look at stocks such as NVIDIA and you will see similar market hours and after hours performance.

If you refer to the maximum pain chart in yesterday's post, you'll see that TSLA is now well into the puts price range and there's little incentive for market makers to try pushing TSLA lower. Moreover, at 3:02pm on Thursday TSLA hit a 10% decline and triggered the alternative uptick rule for Friday. Consequently, mischief by the hedge funds would be more difficult. Volume was lighter today than on Wednesday, which is a positive. What TSLA needs to do is to find a bottom and then it can begin a recovery. The price of TSLA is attractive enough now to bring in new buyers, but many are unwilling to catch falling knives, and so they wait. At some price, the discount on TSLA shares this close to S&P500 inclusion becomes great enough so that sellers become fewer, potential buyers multiply, and the stock price begins to recover as investors anticipate the S&P500 inclusion buying. Macros play a role, of course, so fingers crossed for Friday.

On days such as today, it's best to remember that Tesla is growing at a 50% annual clip (at least right now) and manufacturing efficiencies will continue to make margin improvements possible. As long as Tesla stays on track with production, deliveries, and creating products that buyers want, the upward pressure on the stock price will eventually prevail.

News:
* Tesla deliveries in Germany during August exceed all previous monthly records for Tesla deliveries in that country. We're not even to the final month of the quarter yet.
* Troy Teslike is predicting 140K deliveries in Q3 and 194K in Q4. Troy did very well last quarter and tends to increase his estimate as the end of the quarter approaches.

The starship hopper did another short flight today, showing that Elon hasn't lost his touch with innovating at a far greater speed than the competition.

Looking at the tech chart, you can see that the mid-bollinger band resides at 385, which may provide some support.

Conditions:
* Dow down 808 (2.78%)
* NASDAQ down 598 (4.96%)
* TSLA 407.00, down 40.37 (9.02%)
* TSLA volume 83.7M shares
* Oil 41.00
* Percent of TSLA selling tagged to shorts: 33%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday's trading included a big multiplier at times compared to QQQ's trading, but overall TSLA managed to show strength in the afternoon and closed up while the indexes and virtually all other tech stocks closed down. On Thursday I pointed out that TSLA appeared ready to bottom out, and then the NASDAQ and other indexes took a swan dive and pulled TSLA down. On Friday, TSLA strongly suggested it had bottomed out, given the current news.

Alas, in after hours trading, the S&P's committee announced three additions to the S&P500 that were insignificant companies compared to Tesla, and we saw a dip to about 390. I suspect it'll take another trading day for TSLA to bottom out now that the imminent S&P500 inclusion is no longer perceived as imminent any more. Keep in mind, though, that the S&P committee has been known to do multiple additions after the initial rebalancing announcement, and Tesla could be added at any time, including the coming week. My personal belief is that the S&P committee was concerned there might be some gaming of the inclusion, and they have delayed TSLA's inclusion so as to be less predictable.

Keep in mind that long term, it doesn't really matter whether inclusion is announced last Friday, this coming week, or even next quarter. We'll get a price bump out of inclusion whenever it comes. The important thing is to maintain an investment timetable so that you capture that bump when it materializes.

Looking at the tech chart, you can see that although TSLA traded at times below the mid bollinger band, the opening and closing prices remained above the mid-bb.

For the week, TSLA closed at 418.32, down 24.36 from last Friday's 442.68 (adjusted for split). That's only a dip of about 5.5% for the week. The roller coaster has been quite thrilling this week, a real 5-ticket ride. For those of you who feel dismayed that you didn't do a bit of selling when TSLA was at 500, keep in mind that many of us felt that way when TSLA shot up to 960 back in early February. Correct that price for the split and it peaked at 192 post-split value. With benefit of hindsight, 192 doesn't look so high any more and you're lucky you held onto your shares. TSLA will grow about 50% in the coming year. It's value will continue to increase but with lots of roller coaster climbs and plunges along the way. I'm hoping you all enjoyed your weekend.

Conditions:
* Dow down 159 (0.56%)
* NASDAQ down 145 (1.27%)
* TSLA 418.32, up 11.32 (2.78%)
* TSLA volume 110.3M shares
* Oil 39.02 (on 9/7)
* Percent of TSLA selling tagged to shorts: 33%

 

[Papafox]

TSLA chart above

QQQ chart above

After the S&P committee held off including Tesla in the S&P500 additions on Friday evening, we expected another down day before TSLA bottomed out, but few expected one this ugly. Most of us have ridden in this rodeo before, however, and with the future prospects for Tesla so enticing, at some point the stock price becomes just too attractive and the descent turns into a climb. Some perspectives:

* @Curt Renz reminded us in the main investor forum that "A typical Fibonacci retracement would be to 61.8% of an all-time high. For Tesla that would be down to about $310. That has been reached in after-hours trading. It might mark an important bottom, as the after-hours price is now rising. But after-hours can be flaky. Let’s see if the potential bottom holds tomorrow. If it does, that could be quite encouraging."
I have seen a bounce off that Fibonacci retracement before during a previous TSLA plunge and it nailed the bottom. Fingers crossed.

* @SunCatcher , after viewing this video by Rob Maurer about Tuesday's TSLA trading action, provided this quote from the video: "Rob Maurer: "Even though Tesla is down 34% from its peak last Monday; it's still... and I think this is really important context to remember, is up 13.5 % from a month ago today, 284% year to date, and 612% from one year ago."

* My personal expectations are that once the NASDAQ takes a break from its swan dive, buyers will return and those who have been playing the dip will begin to rebuy. On Thursday and Friday of last week, TSLA looked ready for finding a bottom, but Thursday's macro dip was too great to allow it and Friday evening's news about S&P500 inclusion set today up for more of a fall. Should the market give TSLA a break on Wednesday, I suspect we have a good chance of finding that bottom and starting the climb back up. Once that climb begins, the onslaught of negative media (that we saw today) starts to fade, and the negative push of delta-hedging by market makers becomes a positive push as they react instead to a climb.

After days such as today, it's best to keep the bigger picture in mind. As Tesla the company continues to grow rapidly and as EBITDA and profit numbers grow, the stock will respond positively.

The chart above is from statista.com and shows TSLA deliveries on a quarterly basis. Our retail delivery gurus are expecting about 140K deliveries in the current quarter, which, as you can see, exceeds the previous record set in Q4 2019 by a sizeable margin. Now consider that in Q4 we could see over 190K deliveries. Try adding these columns to the graph above and you get an idea of just how strong the second half of 2020 is shaping up to be, despite a pandemic.

In this 8K, Tesla announces that it has completed raising $5 billion through a stock sale. This is good news because the sale was completed before the deep dip on Tuesday. This extra capital raised at stock prices above $400 will result in low dilution and lots of cash for future growth, perhaps cash for projects brought to our attention on battery day. As usual, Tesla is making all the right moves to profitably expand Tesla at a quick pace and not worrying too much about the stock price, which will take care of itself.

Looking at the tech chart, you can see the 50 day moving average provided some support during market hours but not in after-hours trading. Nonetheless, we might see some support there if the opening market trading on Wednesday is above 330. Picture the 61.8% Fibonacci retracement at about 310 and then there's the lower bollinger band at 281 to round out possible support levels for Wednesday, if they are needed. Notice that when TSLA broke below the mid-bollinger band around August 10, the stock managed to always close above the lower bollinger band.

Conditions:
* Dow down 632 (2.25%)
* NASDAQ down 465 (4.11%)
* TSLA 330.21, down 88.11 (21.06%)
* TSLA volume 115.5M shares
* Oil 36.54
* Percent of TSLA selling tagged to shorts: 34%

 

[Curt Renz]

...
* @Curt Renz reminded us in the main investor forum that "A typical Fibonacci retracement would be to 61.8% of an all-time high. For Tesla that would be down to about $310. That has been reached in after-hours trading. It might mark an important bottom, as the after-hours price is now rising. But after-hours can be flaky. Let’s see if the potential bottom holds tomorrow. If it does, that could be quite encouraging."
I have seen a bounce off that Fibonacci retracement before during a previous TSLA plunge and it nailed the bottom. Fingers crossed.
...
Picture the 61.8% Fibonacci retracement at about 310 and then there's the lower bollinger band at 281 to round out possible support levels for Wednesday, if they are needed
...

In case may calculation wasn't clear to anyone, $310 is 61.8% of the Tesla all-time intra-day high of $502, i.e. a drop of 38.2%.

 

[Papafox]

TSLA chart above

QQQ chart above

The macros smiled upon TSLA investors on Wednesday. By running strongly positive, they set the stage for TSLA to define a bottom to this quick slide. Despite QQQ rising pretty steadily through 1pm, TSLA took a dip until about 11:30am before starting a slow climb, then a not so slow climb into close. This post by @generalenthu might provide an answer to TSLA's late-morning slump. Generalenthu suggests that because of the deep dip on Tuesday and perhaps not enough volume to properly delta-hedge by selling Tesla shares yesterday, the market makers might have to sell more TSLA this morning in order to achieve delta-neutrality. That selling might account for the slow decline until 11:30am. After that time, market makers were now hedged, and as they relaxed the selling TSLA started to climb, which required market makers to start buying TSLA to remain delta-hedged and that buying helped propel the stock higher in the afternoon.

We saw over 1.7 million shares of TSLA trade in one minute at market open. The market makers would have been in selling mode in that minute.

Another characteristic of Wednesday's TSLA trading was relatively low volume of "only" 79 million shares. I think part of the reason for the lower volume was due to investors

Looking at the technical chart, notice the very aggressive climb of the lower bollinger band toward the (blue) 50 day moving average. Once the two are co-located, they could provide nice support if needed.

Part of the reason for the recent deep dip of TSLA was that after such a historically high and rapid climb, investors worried about how much of recent gains would disappear before buyers stopped the fall. TSLA simply hasn't spent much time at these great heights. Fortunately, big dog institutional investors buying $5 billion of TSLA while it was trading in the 400s suggests these prices are reasonable for TSLA and not some artificially inflated value brought on by a split and anticipation of S&P500 inclusion. Wednesday's bounce in the 330s will help define the low end of a future trading range.

Conditions:
* Dow up 440 (1.60%)
* NASDAQ up 294 (2.71%)
* TSLA 366.28, up 36.07 (10.92%)
* TSLA volume 79.5M shares
* Oil 37.99
* Percent of TSLA selling tagged to shorts: 37%

 

[Papafox]

TSLA chart above

QQQ chart above

As we last left off, on Wednesday the macros went solidly green and TSLA undid half of the previous day's losses by gaining nearly 11%. Thus, we carried nice momentum into Thursday's TSLA trading, with building prices as market open approached. By 10:38am TSLA was trading withing $1.50 of $400.

Alas, the macros fell on Thursday, with the NASDAQ closing down nearly 2%. TSLA managed to outperform QQQ and the NASDAQ by a wide margin, and ended the day up 1.38%, for an outperform of the NASDAQ by more than 3%. One can only imagine where TSLA could have traded on Thursday if the macros remained strong.

Today's strong performance on Thursday was an important confirmation that (unless something major happens) Tesla has found its bottom and is reclaiming lost territory. My theory on why Tesla fell so low after the S&P500 announcement involves the entirely new stock prices that TSLA had reached. Not since the coronadip of March (when TSLA hit a split-adjusted low of less than $75) had TSLA experienced a serious plunge. After such an enormous climb, just how low could TSLA go? The answer turned out to be about $330 and kissing the 50 day moving average during market hours and more like $310 and bouncing off the Fibonacci retracement during after-hours trading. With the fear of the unknown conquered, buyers returned to TSLA and for the past two days TSLA has significantly outperformed the macros.

For Friday, the biggest problem is that it's a Friday and we all know what mischief can happen on that day of the week. On the other hand, we're likely carrying momentum into Friday's trading, and if Friday's prices are affected by manipulations, a fair number of traders are likely to buy in late in the afternoon in anticipation of the possibility of another Marvelous or Monster Monday.

Max pain was 380 on Thursday night. Notice that on this current chart from maximum-pain.com that we see a significant number of option strikes at each $10 point now, with smaller investments at each $5 increment.

Looking at the tech chart, there's lots of headroom for a strong climb if good news comes our way. Check out each dip on this chart. The sag in late June involved a bounce off the mid-bollinger band. The quick dip around July 24th involved the mid-bb coming to the rescue again as support. When the stock eventually dropped below the mid-bb in early August, the lower bollinger band managed to arrest the dip. Now we've seen a bounce off the 50 day moving average and the Fibonacci retracement this week.

Looking forward to Friday's trading!

Conditions:
* Dow down 406 (1.46%)
* NASDAQ down 222 (1.99%)
* TSLA 371.34, up 5.06 (1.38%)
* TSLA volume 84.9M shares
* Oil 37.20
* Percent of TSLA selling tagged to shorts: 37%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday's good news is that it outperformed the NASDAQ again, this time by about 1%. If you consider that there were probably some typical Friday options expiration manipulations thrown in, then it looks like TSLA retains a pronounced propensity to outperform the NASDAQ. What we need now is a positive NASDAQ day, and I suspect TSLA will be ready to reclaim more lost ground.

A second force that should propel TSLA upward is the approach of battery day, which on Monday will only be 9 days away. Whether Battery Day exceeds or falls shorts of expectations remains an unknown, but you can typically see a run up in the stock price to the event in anticipation.

To further stoke the fires of speculation, this weekend Elon Tweeted "Many exciting things will be unveiled on Battery Day 9/22 ️". If problems had developed and the full plan was not coming together, I suspect he wouldn't make this Tweet out of the blue.

TSLA investor Mayur Thaker in this Tweet suggests the potential for truly substantial announcement if the various projects combine to yield longer-lasting, less expensive batteries.

TSLA 1 month chart above

NASDAQ 1 month chart above

Consider the monthly charts for TSLA (top) and the NASDAQ (bottom). From peak to present day, TSLA has lost about 26% and the NASDAQ is down about 10%. Normally, I'd say TSLA falling at a 2X multiple to the NASDAQ is reasonable, but since TSLA was climbing strongly at the time of the S&P500 non-selection, I'd say the S&P500 non-inclusion accounts for considerably more than 6% of TSLA's dip, given the momentum heading into the non-announcement.

I continue to believe that the S&P committee has made a decision to hold off announcing inclusion of both Zoom and Tesla for two reasons. First, they didn't want to be too predictable about announcement date and encourage speculation (and an artificially elevated stock price). Secondly, tech-like stocks have been falling considerably lately, and the index will look like a better performer compared to other indexes if Zoom and Tesla are added after the Tech dip has bottomed out, and not before. If Tesla and Zoom are added near the bottom of the tech dip, their likely strong performances afterwards will help the S&P500 recover lost territory. I also think that the S&P Committee is aware that battery day in 10 days could be a catalyst for TSLA, so there's reason to add TSLA within the next ten days. Let's see what happens.

Looking at historical data (see below), I was curious of the past ten Mondays how many were up days and what was the average gain?
0.68+0.60+1-0.39+1.47+1.67+2.51-2.13+2.21+1.2=8.82 8.82/10=0.882

It turns out that 8 out of the past 10 Mondays were positive and when all 10 Mondays were averaged together we saw an average gain of 0.882% per Monday.

I bring up this issue of Mondays because I've long talked about strong Mondays with TSLA trading, and I realized that in the past couple of months an important component of those strong Mondays was strong NASDAQ performance on Mondays. There's data to support buying on Friday afternoons and selling on Monday morning highs with both Tesla and (at least for the past 10 weeks) for the NASDAQ. Bear in mind that a climbing NASDAQ is going to yield more positive Mondays than a descending NASDAQ (as we've seen in September).

Back in springtime, I discontinued any trading over the weekend because all too often we'd see a spike in coronvirus cases over the weekend, which would lead to a negative Monday on the broader markets. Fortunately, the United States is presently still in a descending new cases pattern, which bodes well for this week's trading (see chart below). Pay particular attention to the blue line, which is a 7 day average.

Looking at the tech chart, you can see TSLA is more than halfway back up to the mid-bollinger band. With a strong day of trading and a close above 400, TSLA could rise above the mid-bb in a single strong day.

So, looking at TSLA's propensity right now to trade higher than the NASDAQ, the approach of Battery Day, the tendency of the NASDAQ to trade higher on Mondays recently, and futures showing up for the NASDAQ on Sunday evening, I'm looking forward to Monday's TSLA trading.

For the week, TSLA closed at 372.72, down 45.60 from last Friday's 418.32. As you remember, the fall from 500 was precipitated by Tesla's announcement of a $5B stock sale, and Tuesday's enormous dip was the result of the non-announcement of any Tesla inclusion in the S&P500. The remainder of the past week was the beginning of the recovery from that Tuesday dip. Momentum has shifted to the positive direction. Hoping you had a great weekend.

Conditions:
* Dow up 131 (0.48%)
* NASDAQ down 66 (0.60%)
* TSLA 372.72, up 1.38 (0.37%)
* TSLA volume 60.7M shares
* Oil 37.39
* Percent of TSLA selling tagged to shorts: 37%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA above 420 after hours on Monster Monday VI, anyone? Congratulations longs, today all the planets aligned (like they looked ready to do Sunday night) and we enjoyed a market hours climb of over 12.5% with more added on in after-hours trading. We even enjoyed a deep mandatory morning dip right after open to give any of you with excess change in your pockets a chance to pick up more shares.

So, why such a strong TSLA climb in the afternoon when QQQ (and NASDAQ) was weakish? One likely big component of the climb was the low volume of 83M shares (corresponding to just 16.6M shares pre-split). Once the morning's big gains took place, market makers spent the rest of the day and into after-hours trading trying to catch up on their delta-hedging. Some of the delta-hedging from today's monster rise may even spill into Tuesday morning's trading, and that would of course be a positive for the stock price. The combination of low volume and a 12.5% price increase suggests longs not very willing to sell and lots of price rise needed for buyers to get in.

Regarding S&P500 inclusion, today just undid the dip caused by the non-announcement of Tesla's inclusion. If the committee over at S&P is paying attention, they'll realize that the longer they wait to add TSLA, the more expensive it will get for the funds that need to include TSLA.

The news pundits are crediting a Goldman note about downloads of the Tesla app as the reason for today's strong performance of TSLA, but I of course believe it was a combination of the items I listed yesterday, including Elon's Tweet about "many exciting things to be unveiled" on Battery Day.

Looking at the tech chart, TSLA has ascended above the mid-bollinger band once again. This dip below the mid-bb is reminiscent of the early August dip down to the lower bb that took 3 days before TSLA returned to a position between the mid and upper bbs. Congrats to longs who didn't flinch and held through the S&P none-announcement dip.

Anyway, congrats my friends. Today was one to remember.

Conditions:
* Dow up 328 (1.18%)
* NASDAQ up 203 (1.87%)
* TSLA 419.62, up 46.90 (12.58%)
* TSLA volume 83.0M shares
* Oil 37.29
* Percent of TSLA selling tagged to shorts: 37%

 

[Papafox]

TSLA chart above

QQQ chart above

Anyone for TSLA hovering near 450? Today's 7% climb brings us back to within about 10% of market-trading hours ATH. My overall feeling is that when TSLA hit 540 in pre-market trading in early September, the stock's rapid climb had brought it to the upper outpost of market acceptance. Such an overshoot set TSLA up for a big profit-taking dip when word of Tesla's equity raise and then the S&P500 non-inclusion came out. Of course TSLA overshot a reasonable market price on the way down, and the past five days of climbing has brought us back to a more reasonable trading price. This is why bollinger bands can be helpful in predicting when the stock price has gone too far in one direction or the other.

My expectations are that we seldom see 6 or more positive days in a row (today is day 5), so I think TSLA will likely glide a bit with the macros and simmer down a bit. That would be a good thing, actually, because too high a price going into battery day would be a setup for a sell the event reaction. I'd be happy to see 450 going into battery day. Dips after an event are pretty common with TSLA, but every now and then an event will surprise to the high side, and battery day does suggest this possibility.

The good news is that not much more than 10 days after battery day comes the Q3 Production and Delivery report (should be the highest numbers we've ever seen), followed by the Q3 ER (again, should be the best ER of all time). Thus, there's really not much time for a dip to remain before the next catalyst provides upward pressure on the stock price again.

Speaking of Q3, Troy raised his estimate of Q3 deliveries from 140K to 144K today. Meanwhile, in this Tesla Daily video, Rob Maurer says that FactSet consensus of Tesla Q3 deliveries on Sept. 2 was 144K. One conclusion could be that analysts for the big concerns are getting more bullish and thinking more like retail investors this quarter. That optimism could be an explanation for the strength we've seen in TSLA this week, but it also suggests that Wall Street will be less surprised by an excellent Q3 P&D report and earnings report. I think the earnings report could surprise to the high side because of Tesla likely to at long last start showing income from "Net Operating Loss Carryforward", which requires that the company be confident that they'll be profitable going forward. TMC member @The Accountant explained the concept back in January in this post. At the time, the value of that tax asset was $1.8 billion.

As @Lycanthrope pointed out in the main investor's thread today, Friday's options expiration is a quarterly expiration, which is why the quantity of expiring low puts and calls is so great. Nonetheless, you can see from the chart that there are lots of call options at 450, 480, and 500. I'd expect to see the usual suspects start working to protect these expiring call options as the week progresses.

Looking at the tech chart, you can see that today's close puts TSLA squarely within its usual comfort spot of below the upper bollinger band and above the mid bollinger band.

Conditions:
* Dow up 2 (0.01%)
* NASDAQ up 134 (1.21%)
* TSLA 449.76, up 30.14 (7.18%)
* TSLA volume 97.3M shares
* Oil 38.44
* Percent of TSLA selling tagged to shorts: 38%

 

[Papafox]

TSLA chart above

QQQ chart above

On Wednesday the NASDAQ backed off from its big climbs on Monday and Tuesday, and TSLA, after 5 positive trading days in a row, took a breather from climbing, as well. No real surprises. With the NASDAQ down 1.25% for the day, TSLA's decline of 1.78% was pretty tame, especially considering that many tech stocks were down 2-3% today.

The deepish pre-market dips of TSLA vs. QQQ could have been manipulations by hedge funds taking out a little insurance that TSLA doesn't climb above 450 by Friday. The deep dip of TSLA at 7am-ish and the series of dips around market open look like manufactured dips that greatly exceeded the 7am NASDAQ dip and the slow decline of the NASDAQ into market open. After 5 days of climbing, part of the jumpiness of the stock price could also be attributed to traders who were a bit quick on the trigger as they anticipated an end to the five days in a row of climbing.

TSLA volume was somewhat light at 72M shares. I suspect that we'll see additional drifting with the NASDAQ this week but I don't expect to see exaggerated dips of TSLA vs. the NASDAQ, primarily because investors are holding for battery day, just one week away. Don't be surprised to see a drift up in the stock price next week prior to battery day.

I look at the next five days of trading primarily from the standpoint of positioning for battery day, which might squelch some of the volatility we'd otherwise see.

Looking at the tech chart, TSLA continues to be comfortably within the mid to upper bollinger band range

Conditions:
* Dow up 37 (0.13%)
* NASDAQ down 140 (1.25%)
* TSLA 441.76, down 8.00 (1.78%)
* TSLA volume 72.6M shares
* Oil 39.56
* Percent of TSLA selling tagged to shorts: 38%

 

[MP3Mike]

I look at the next five days of trading primarily from the standpoint of positioning for battery day, which might squelch some of the volatility we'd otherwise see.

Why does it seem that a lot of people think battery day is Wednesday? It is actually Tuesday, 9/22, so there are only 4, including today, trading days left before the battery day event.