Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

For any of you wondering why TSLA underperformed the market on Friday, take a look at a calendar, note that it end of week and an options expiration day, and it all makes sense. The NASDAQ gave TSLA market makers and hedge funds a gift Friday morning with a big dip right after opening. QQQ recovered and was trading in the green by 1pm. TSLA, on the other hand, kept trying to climb above 232 but kept being pushed down to 430. It was almost as if someone with lots of money didn't want TSLA to close above 430 on Friday. Imagine that! Friday was an excellent example of capping a dip recovery and guiding it to the desire closed price. Volume was once again light, a mere 21.5 million shares traded, so the manipulations are well within the reach of our friendly Wall Street pirates.

Looking at Friday's Max Pain chart (above) you can see that 450 had lots of call options expiring at that strike price, so a run to 450 on Friday needed to be avoided. Earlier in the week, 420 looked to be a great Max Pain finish for the option sellers, but take a look at the chart above after the market closed Friday. Puts actually outnumbered calls at 420, giving the option sellers little incentive to push down that far. The strike price 430 still had more calls than puts, however, and looking at this chart it makes a great deal of sense for TSLA to close a nickel below 430.

This weekend, electoral vote numbers gave Biden a victory. Considering the massive millions that Silicon Valley titans donated to Democratic candidates, many NASDAQ shareholders should be pleased with these results, and NASDAQ futures are up over 2% Sunday night. Monday could be fun. Trump has a number of court challenges to the voting underway at the moment, so he's clearly not throwing in the towel until his legal options are exhausted. Some state results, such as Pennsylvania could see a flip if the court challenge there goes his way. Still, considering TSLA's recovery from the below-400 pre-election dip, I wouldn't want to have played this expected election dip and now be sitting on the sidelines, wondering when I could get back in.

Looking at the tech chart, I have drawn a horizontal line at price 420 to illustrate why this price has tended to be near the center of the price swings over the past two months. My thinking is that with low volumes, option sellers are powerful enough to moderate the swings and keep the stock trading in as profitable a price range as possible. After years of "420" references, that number has become a lightning rod for the stock price in recent months, whether we like it or not. For example, notice in mid October how TSLA bumped up against the upper bollinger band in the 450ish range. This threat to the status quo was met with four days of (I believe) manufactured dip to get TSLA closer to the prices most advantageous to the big dog option sellers. TSLA will, of course, break out of this artificial trading range at some point when volume increases with more investors wishing to get in and more shorts heading for the exits. With Q4 still looking strong, I'd expect and upward break before year end. Still, the easiest way to lose money with TSLA is to get too confident with a certain timetable, and for this reason I continue to keep my TSLA investments in shares and leaps.

For the week, TSLA closed at 429.95, up 41.91 from last Friday's 388.04. Hoping you enjoyed your weekend.

Conditions:
* Dow down 67 (0.24%)
* NASDAQ up 4 (0.04%)
* TSLA 429.95, down 8.14 (1.86%)
* TSLA volume 21.5M shares
* Oil 37.14
* Percent of TSLA selling tagged to shorts: 38%
* IV 54.7

 

[Papafox]

TSLA chart above

QQQ chart above

Monday was a big day for the Dow, which closed up nearly 3% on news that Pfizer's Covid-19 vaccine showed better than 90% effectiveness in preventing coronavirus infections with symptoms. By market close, this news resulted in sector rebalancing to such an extent that the NASDAQ closed down 1.5%, nearly 4.5% off the Dow's performance. The reason for the rebalancing is, of course, that many NASDAQ tech stocks were doing fine with the pandemic and priced accordingly, but stocks of more mainstream companies that had been beaten down by the pandemic saw money rushing in to take advantage of their sale prices amid improved expectations.

Meanwhile, TSLA rose as high as 452 within the first 40 minutes of trading. This rapid climb without specific Tesla news or support from the NASDAQ left TSLA vulnerable for a profitable walkdown by the usual suspects. By the time QQQ started down from its second morning peak at 10:35am, TSLA had already been descending for 27 minutes as hedge funds likely short sold for a profitable cover at a lower price. One indication of TSLA's likely manipulation downward by short-selling and then covering lower was the quantity of trading in the 4:00pm minute: 1.4 million shares on a day with a mere 33 million total shares traded. The second aim of the pushdown was to prevent TSLA from rallying too much this week and harming profits from call options sold.

Looking at the max pain chart, although the official max pain number was 420 this morning, that strike price showed more puts than calls sold. Looking at 425 strike, the puts and calls were nearly even with a slightly larger number of calls, so option sellers would be inspired to see a Friday close below 425 but above 420.

* Word coming through the Tesla rumor mill suggests that the company might actually have the ability to deliver 1 million vehicles in 2021, primarily because of Shanghai Model Y production spinning up. This result, if it came true, would show a 100% increase in deliveries compared to 2020. Analysts are expecting far less growth, and the stock price would have to climb if such an eventuality came to pass. My point is that there are significant opportunities for price appreciation of TSLA in the coming year. Meanwhile, we're in month three of low volume, manipulated prices for the convenience of the options sellers. At some point, the value of TSLA becomes just too apparent for the manipulations to succeed, volume increases, and the stock price rises. Judging from Monday morning's explosive rise right after market open, the FOMO reaction can be very strong with TSLA, and when it finally has the momentum and volume to defeat the profitable walkdowns, TSLA has the ability to rise very, very quickly. The only problem is that we don't know if that day will be tomorrow and a couple months from now. For this reason, I HODL. Here's Rob Maurer's take on the news from China.

* Pfizer's early release of data from their trials suggests FDA emergency authorization for use of the vaccine is coming. This article from STAT says that third week in November is the earliest that Pfizer can apply for EUA while remaining consistent with an agreement that half the test subjects will have been involved in the test for at least two months at the time that the study data is officially released. Nonetheless, the market strongly suspects that approval for the vaccine is coming within the next couple months, and so we're far less likely to see a covid-inspired market panic with this news out there.

* Many of you have already viewed this recent video by ARK Invest's Cathie Wood. In it, Cathie paints a rosy picture of the economy in the short term. She says the feds are still very much on board with stimulating the economy during the pandemic. She also says that household wealth has been increasing during the pandemic, which suggests that this holiday season will be a strong one (it also suggests to me that people are more capable of buying a new vehicle).

Bottom line: there's enough positive developments with the coronavirus fight, the economy, and Tesla itself to suggest good things are likely in the coming quarter. I consider the manipulations that keep TSLA near 420 as a combination of noise and an opportunity to acquire more TSLA at a discount prior to Q4 results.

Looking at the tech chart, TSLA ended the day about a dollar below the 50 day moving average.

Conditions:
* Dow up 835 (2.95%)
* NASDAQ down 181(1.53%)
* TSLA 421.26, down 8.69 (2.02%)
* TSLA volume 33.7M shares
* Oil 39.84
* Percent of TSLA selling tagged to shorts: 37%
* IV 54.7

 

[Papafox]

TSLA chart above

QQQ chart above

My analysis of Tuesday's trading is short and sweet: this was day two of rebalancing after the very positive news of Pfizer's vaccine effectiveness and possible timetable for its release. Notice that the Dow was up nearly 1% today. Prior to this week, there were non-tech stocks out there that were doing very badly and most investors would not touch them with a 10 foot pole. Notice how oil jumped above $41/barrel today. Given the hope of a vaccine in the near future, however, these stocks that have suffered greatly during the pandemic looked relatively cheap, and that's where the buying has been this week. There's a real limit on how much these stocks can appreciate in the short run and still look attractive when compared to top tech stocks and TSLA.

Monday's trajectory for TSLA was downward as the day progressed. Tuesday's was upward after the initial dip and sideways in the afternoon. Wednesday morning may be day three of the rebalancing or it may be the recovery day for tech-like stocks. I think we're close. Nonetheless, TSLA keeps moving within the 450 to 400 range (with small excursions). In fact, we've seen that full range already covered in the first two days of this week's trading. Option sellers continue to make lots of money with TSLA. You likely won't get much warning when TSLA's breakout happens. One morning you look and the gap up will have begun.

Coronavirus Update
As I predicted, we wouldn't hear much news of significance about COVID-19 treatments until after the election. I will let you draw your own conclusions on the priorities of the U.S.'s departments in charge of safeguarding our health. Here we are, just a week later, and we've now heard that Pfizer's vaccine is showing greater than 90% effectiveness and today we learned that the FDA has granted Emergency Use Authorization to Eli Lilly's monoclonal antibody therapeutic. Bravo. Why hasn't Regeneron been approved, since the studies mention that test subjects taking the placebo showed more side effects of note than the Regeneron subjects? The tragedy of Coronavirus is not the number of people who catch it. The tragedy is the number of people who die from it. It's high time the FDA grant EUAs to safe monoclonal therapeutics. Vaccines need to clear a high bar because of the great numbers of healthy people who will be taking them, but the risk vs. benefit equation is entirely skewed in favor of monoclonal antibody therapeutics when they are administered to high risk individuals who test positive for Covid 19 and show symptoms. The market would respond favorably if sufficient numbers of effective monoclonal antibodies are approved for emergency use and we actually see the death charts showing a decline. The available doses are limited enough at the moment so that multiple monoclonal antibody approvals would be needed to cover the U.S. population that catches the virus and are in risk groups. Fingers crossed that the FDA brings forth more approvals soon.

News:
* Electrek reports that the 2021 Model 3 actually has an 82KWH battery in it, which was made possible by improved chemistry in cells produced by Panasonic. Note: the beauty here is that Tesla continues to pull away from the competition because of relentless pace of innovation. Competitors are still trying to catch the 2012 Tesla Model S in value.

Tuesday saw a jump upwards in percent of selling by shorts, to 45%

Looking at the tech chart, this afternoon the stock price crept up to within striking distance of the 50 day moving average and mid bollinger band.

Conditions:
* Dow up 263 (0.90%)
* NASDAQ down 160 (1.37%)
* TSLA 410.36, down 10.90 (2.59%)
* TSLA volume 30.3M shares
* Oil 41.87
* Percent of TSLA selling tagged to shorts: 45%
* IV 56.7

 

[Papafox]

TSLA chart above

QQQ chart above

Sheesh, someone really didn't want TSLA to run very high today. Notice the two deep Mandatory Morning Dips that were not mirrored in the QQQ chart. Notice the various deep micro-dips, followed by the stock price resuming its climb.

Another part of the picture for why TSLA underperformed the NASDAQ today is that today was a day that traders could make money because the previous two days of sector rebalancing had concluded and money was flowing back into the NASDAQ and tech stocks in particular. The manipulations of several weeks have stunted TSLA's growth on strong macro days, and so the traders take their buying elsewhere. This is a short term situation, fortunately, and when the market wakes up to the reality of what's ahead of TSLA in the not so distant future, buying will pick up and the option sellers will lose their easy manipulations. Wednesday's volume was particularly low, a mere 17.4 million shares. If you adjust that volume for the split, it's the equivalent of less than 3 million shares traded pre-split. Crazy low. The good news is that the low volume also means that TSLA investors aren't selling. This tenacity of the the investors suggests to me that when TSLA really does start moving higher, investors won't be in any hurry to sell and we could see some very nice price appreciation once volume of buying returns on good TSLA news.

In a nutshell, don't let the noise of the past couple months bother you. The bigger picture news is just starting to look exceptionally enticing. Recently, we spoke of a potential 100%+ increase in production and deliveries in 2021. On Wednesday, Rob Maurer started plugging Tesla's October China performance and concluded that the company should easily exceed 500,000 vehicles delivered in 2020. Add in some pretty amazing advances in Tesla's Full Self Driving software, and I am impressed enough with what's coming vs. what analysts are expecting so that I'll be picking up more leaps during the next week. Hey, if someone is working hard to give us a discount on the price of TSLA stock and leaps when news is looking so favorable, I'll take it. The one caveat is that Coronavirus lockdowns could potentially have some negative effect, but with positive developments on the treatment side, including Eli Lilly's monoclonal antibody treatment now possessing emergency use authorization, Pfizer's vaccine looking very effective from reports, and speculation that the Moderna vaccine may also be very effective because of similarities with Pfizer's, government officials may be less inclined to jump the gun on lockdowns.

Rob Maurer's bullish interpretation of October China data

Mischief underway today? The jump in percent of selling by shorts ran away from the 40s doldrums to 56% on Wednesday

Looking at the max pain chart (Max Pain at 417.50), the strike price 420 has more puts than calls right now and it looks like the big incentive for options sellers this week is to keep TSLA below 430, where the calls start to take over.

At present the stock price, the mid-bollinger band, and the 50 day moving average are all within about $4 of each other. Don't read too much into the downward bending 50 day moving average. If you count backwards 50 days, you're starting your counting around Sept. 22, when TSLA was heading down for a dip into the mid-300s. Once that dip is past the 50 day range, its downward pull will be removed from the computations.

Note to beginners about IV
IV gives you an idea of how much volatility is expected in the stock. Going back and looking at previous IV numbers for TSLA, the current 54.1 is quite low, indicating that options are carrying a lower premium to their prices than normal. Add in TSLA's price being on the low size of the 400-450 temporary trading range, then add in the positive news about Q4 and 2021, and I have decided to pull the trigger and buy a few more leaps.

Conditions:
* Dow down 23 (0.08%)
* NASDAQ up 233 (2.01%)
* TSLA 417.13, up 6.77 (1.65%)
* TSLA volume 17.4M shares
* Oil 41.50
* Percent of TSLA selling tagged to shorts: 56%
* IV 54.1

 

[Papafox]

TSLA chart above

QQQ chart above

Ho Hum, today was a negative day with the macros as the market worried about the latest coronavirus numbers. With a combination of therapeutics and at least one effective vaccine on the way in the near future, the market didn't get nearly as worked up as it would have without these recent additions to fight the virus.

Other tech stocks generally performed much better than TSLA today. TSLA's 2X multiplier on the way down was an exception, rather than the rule. Looking at the icicles descending from TSLA's daily chart and looking at the 55% percent of TSLA selling tagged to shorts, I'd say we were feeling the effects of downward manipulative pressure today.

We know the drill, however. If TSLA descends below 400 it is quickly bought up, and if it climbs above 450 some big dog manipulators kick it down a few notches. It' not a good time to be placing short-term bets. OTOH, it's a great time (in my opinion) for adding to your long-term bets. I bought one leap today and will do more buying this week or next. Low IV, low stock price relative to the short-term trading range, and expectations of strong performance ahead is a good recipe for success with reasonably conservative leaps. As always, surprises can greatly affect macros, so I place my bets with lots of room to recover from any of those surprises.

Since yesterday, strike prices around 420 have seen more call options purchased, which has made the calls more numerous than the puts at these prices. Thus, the option sellers have even more incentive now to shoot for a Friday close of less than 420.

Look at how thoroughly the upper and lower bollinger bands have been squeezing in with this constrained trading.

Conditions:
* Dow down 317 (1.08%)
* NASDAQ down 77 (0.65%)
* TSLA 411.76, down 5.37 (1.29%)
* TSLA volume 19.9M shares
* Oil 40.45
* Percent of TSLA selling tagged to shorts: 55%
* IV 55.7

 

[Papafox]

TSLA chart above

QQQ chart above

Both the Dow and NASDAQ were up on Friday, and yet a sector rebalancing was present. How's that? Looking at high flyer tech stocks such as Nvidia, AMD, and Apple, all were down Friday morning but we saw some recovery by close. NVDA closed down 1.19%, AMD down 0.50%, and AAPL up 0.04%. This was quite a contrast to QQQ (the top 100 NASDAQ stocks) up 0.88 and the NASDAQ up 1.02%.

What's interesting is that as TSLA was rising in the afternoon, along with other high flyers, it looks like we saw 20 minutes of capping between 3:20pm and 3:40pm. You say you saw that same plateau on the QQQ chart? Look at the timing and you'll see the QQQ plateau completed at 3:20pm. Someone had an incentive to keep TSLA from climbing too much on Friday, even though it was apparent that TSLA would close well below max pain.

Zooming out to the bigger picture, Q4 and 2021 still look strong, and so I haven't let the 400 to 450 temporary trading range bother me. Rather, I chose to buy a couple more in the money leaps Friday afternoon. Think long-term, not short.

News:
* One possible negative catalyst for TSLA on Friday were tweets from Elon talking about his two positive and two negative coronavirus tests. Tweets on Saturday suggested cold-like symptoms diminishing, which is a positive sign. If Elon continues feeling better, worries will likely be diminished by Monday's trading.

* This post by @Remster32 highlights various important points disclosed by Deutsche Bank after Martin Viecha attended a conference they hosted this week. Among positive developments:
* Operating margin target in the mid-term is low teens (previously, high single-digits is best that Tesla has done).
* Megapack order book filled out into 2023
* Tesla Energy expected to ship 3.3Gwh of storage this year, twice last year's numbers and expected to double again next year

Coronavirus Update:

The new cases in the U.S. continue to surge this past week. When the new cases rate tops 200K the market may have another negative reaction moment, but we saw last week's coronavirus down day rather constrained. I think the approaching vaccine(s) and monoclonal antibody therapeutics will help keep the market's reaction smaller than if these reasons for hope didn't exist.

Covid 19 deaths in the U.S. have started to trend upwards a few weeks behind the new cases surge, as expected. If the Eli Lilly monoclonal antibody doses can be judiciously administered early to those at most risk (immunocompromised individuals, people over 80, people with multiple risk factors, etc.) then we could indeed see a positive effect upon the daily death chart, and such an effect would likely be noticed by the market. BTW, the human tragedy that is Coronavirus is as much a tragedy in other countries as the U.S., but I concentrate on the U.S. in these posts simply because it's the country whose experience with the virus will most affect Tesla's stock price.

TSLA shorts were tagged with 53% of the selling on Friday, suggesting continued mischief underway. Notice the very significant jumps above 40% of trading that selling by shorts has taken in the past three months.

Looking at the tech chart since September, notice that the consolidation TSLA is in has been showing lower highs and higher lows, which is forming a wedge. The closer we get to the tip of that wedge, the closer we likely are to a break up or down. Most often the break is in the prevailing direction of the stock price (which this year has been UP). The wedge formation does make the growing Coronavirus numbers a possible downward catalyst on the stock price in the future. Let's hope that the therapeutics make a difference in death rate so that the market can remain calm until the vaccine(s) begin being distributed.

The good news is that even if there's a deeper coronavirus dip, at some point this winter or spring the vaccines squash the rise and then the good news of TSLA's remarkable performance becomes dominant. Bottom line, keep your investment horizon long enough to ride out any possible bumps.

For the week, TSLA closed at 408.50 down 21.45 from last Friday's 429.95. This past week we saw everything from 450+ to below 400. Don't get bucked off and hang on for the good stuff.

Conditions:
* Dow up 400 (1.37%)
* NASDAQ up 120 (1.02%)
* TSLA 408.50, down 3.26 (0.79%)
* TSLA volume 19.8M shares
* Oil 40.13
* Percent of TSLA selling tagged to shorts: 53%
* IV 56.8

 

[Papafox]

TSLA chart above

QQQ chart above

Anyone for S&P 500 inclusion? Congrats, longs! It was only a matter of time. Tuesday will be interesting, to say the least.

Summary of Monday's TSLA market trading: Not important

Other sources will better explain the quantity of buying that's coming. Volume will indeed increase dramatically as funds that emulate the S&P500 index will be forced to buy TSLA and an even greater number of funds that compare their performance to the S&P500 will buy as well. The index funds will be stocked up on TSLA shares by beginning of trading on Dec. 21, and since TSLA is big enough to become one of the index's top 10 companies, there's investigations on splitting the acquisition of TSLA stock into two tranches.

What I find so compelling about this upcoming S&P500 addition is that it is happening with the most teflon-coated, most resistant to fear investor group I have ever known. Various shocks and manipulations may cause the TSLA stock price to fall, but have you noticed how resistant current shareholders are to throwing in the towel and selling? Volume remains low on the downward roll as well as the upward. Imagine if TSLA's current crop of investors is disciplined enough when the stock price is rising to just say, "no, that's not good enough" and let the price just continue to rise. What I point out below is a chink in the armor, but one that can self-correct during the S&P500 inclusion process.

What has happened with TSLA trading over the past couple months and how I was wrong
This topic is relevant the the S&P500 inclusion, so please stick with me.

Some very large funds have seen their TSLA holdings increase in value 600% over the past year as TSLA rallied. Consider what this rapid price increase has done to the percent of a fund's value contained by its TSLA holdings. Let's say that other stocks were gaining in value too and TSLA value grew 500% over the past year as a portion of the fund. If TSLA previously consisted of 4% of the fund's value prior to the rally, that value contain in the fund's TSLA holdings then grew to 20% of the fund's total value. For most funds, that an uncomfortably high percentage of value in a single, volatile stock. Even a 2% holding of TSLA in a fund growing to 10% of the fund's value is too uncomfortable for fund managers, unless you're Cathie Woods. How to deal with this enormous appreciation? Trim TSLA shares, of course, and bring the percentage of holdings in TSLA to a more reasonable number. Looking at the CNN chart below, that's exactly what's been happening with the TSLA holdings of big funds over the past quarter.

Downward price pressure on TSLA that I attributed to manipulations by options sellers is more likely better attributed to trimming of TSLA shares by large funds. I was thrown off course by the low volume, but the low volume instead shows the discipline the fund managers were showing in their selling. You can see the massive number of shares being sold by fund managers in this image above, which is part of this CNN info page. When TSLA was rising toward 450, funds trimmed (sold) TSLA shares more aggressively. When TSLA fell too close to (or below) 400, retail buyers picked up TSLA. So, we've been gyrating between 450 and 400 with various parties doing the reasonable thing for their position and keeping the stock price bracketed between 400 and 450. All this selling by institutional investors has been a headwind for TSLA stock. The amazing thing is that retail has been so consistently ready to pick up more shares near 400 that the stock price didn't change all that much over the past two or three months.

Manipulations still occurred, of course, especially heading into Friday option close, but they took a back seat in the big picture of TSLA trading to the slow divesting of TSLA shares by big funds.

My guess is that the S&P500 committee anticipated the shares trimming by big fund managers that you see in the chart above. What the committee was not expecting, however, was the strong buying by retail in the vicinity of the $400 stock price. Over time it became apparent that S&P500 companies weren't going to get much better an opportunity to buy into TSLA than now, and so the S&P500 committee pulled the trigger and added TSLA.

How close to finished are the big institutional investors to completing the trimming of their TSLA shares? That's the million, er I mean billion dollar question. What we know is that there will be enough buying between now and Dec 21 to absorb any shares these funds still want to divest. When the sellers become scarce enough, the stock price has to go up. Also, with the headwind of stock trimming eliminated, the stock price is far more likely to climb on good news such as Q4 delivery numbers and 2021 growth. If you've loved the show so far, stick around, more good times lay ahead.

The Moderna Catalyst
The markets were up today because Moderna announced that their COVID 19 vaccine showed roughly a 94% ability to reduce instances of the virus with symptoms, compared to the placebo. That efficacy is spectacularly good. Moreover, the Moderna vaccine can even survive for 30 days in a refrigerator, if need be, making transport easier than the Pfizer vaccine. Between the two companies, 70 million vaccine doses (already pre-purchased by the U.S. government) should be made available to the country's most at risk individuals prior to the end of the year. Here's a Science Mag article on the topic.

Looking at the tech chart, the upper bollinger band is at 438 today and in after hours trading the stock price has exceeded 460. In this case, the news is so significant and volume to follow so great that the upper bb is not of particular consequence tomorrow, as it turns upward in an effort to climb and catch up with the rising stock price.

Conditions:
* Dow up 471 (1.60%)
* NASDAQ up 95 (0.80%)
* TSLA 408.09, down 0.41(0.10%)
* TSLA volume 28.8M shares
* Oil 41.56
* Percent of TSLA selling tagged to shorts: 40%
* IV 55.2

 

[Papafox]

TSLA chart above

QQQ chart above

I am traveling long distance today, and so this will be a quick post. TSLA's first day of trading after the S&P500 was underwhelming. With more than a month to acquire shares, many of the buyers of the index funds are waiting right now, and others were trying to avoid buying above the upper bollinger band.

Volume on Tuesday was about double the norm, but that's still small volume when you consider the percent of TSLA stock that must be acquired by the S&P500 index funds and likely will be acquired by funds hoping to beat the S&P500 performance. We're still over a month away from the date that the index officially adds TSLA, and I strongly suspect things just get more interesting the closer we get to that date.

Glad I did some buying last week. I'm definitely HODL now, ready to enjoy the festive holiday and S&P500 seasons. I really like the S&P500 tailwind through Dec 21, followed by Q4 P&D report first week of January, followed by the Q4 ER a few weeks later with likely the strongest earnings by far that TSLA has ever produced, and some indications of 2021 growth, which should surprise Wall Street in a big way. Whereas Q3 results were excellent, they weren't so high as to noticeably exceed expectations. If TSLA can deliver over 500K vehicles in 2020, I think we'll get the bump that evaded us after the Q3 ER.

Here's the most interesting chart of today's trading. As expected, retail investors didn't let the upper bollinger band thwart their enthusiasm to buy TSLA well above the upper bollinger band. Alas, as the day progressed, the stock price of TSLA kept slowly coming down and closed within 35 cents of the upper bb (which was at 441.96).

Coincidence? Nope. We mostly had big institutions trimming some of their excess TSLA shares, selling to big institutions that will need to pick up TSLA by Dec. 21. Those institutional buyers are rather pragmatic sorts and don't like buying above the upper bb. Meanwhile, the trimming institutional investors did like selling above the upper bollinger band.

One possible scenario is a rise of the bollinger bands through Dec 21. I suspect there's a lot of buyers watching other buyers and many of the S&P500 funds will be buying much closer to the effective date. I suspect the dance becomes more interesting as we get closer to Dec.21. Meanwhile my mental note for future reference says, "when institutions are selling to other institutions, bollinger bands are important." Caveat: if too much required buying is left until too short a time period before Dec. 21, careful buying within the bollinger bands will have to go out the window.

Conditions:
* Dow down 167 (0.56%)
* NASDAQ down 25 (0.21%)
* TSLA 441.61, up 33.52 (8.21%)
* TSLA volume 60.4M shares
* Oil 41.38
* Percent of selling tagged to TSLA shorts: 50%
* IV 63.6

 

[Papafox]

TSLA chart

QQQ chart above

OK, that's much better, TSLA! I certainly didn't expect this spike in the stock price today, and I suggest few did. The combination of funds with an oversupply of value in their TSLA holdings selling to entities betting on the S&P500 causing a rise in the value of TSLA was quite mild on Tuesday and might have been influenced by some judicious short-selling by big option sellers when it was needed.

Alas, the stock took off today and with a close above 486, it breaks TSLA out of the 400-450 short-term trading range.

Why so much stronger on Wednesday? One clue could be the 540 base case price target that Adam Jonas gave Tuesday night (best seen in this TMC post by @Remster32 ). A 54% of selling by shorts number suggests that perhaps hedge funds and market makers were massaging the trading Wednesday morning to dampen out any buying spikes, but with the Jonas upgrade out there, they couldn't hold the price down and it got away from them in the afternoon. Once the steamroller starts climbing, legitimate market makers need to delta-hedge buy in order to protect their sold calls, and that delta-hedge buying only adds fuel to the rally. It took a big macro dip near the end of market trading to put a dent in the steamroller's trajectory. Meanwhile, the combination of a quickly climbing TSLA stock price just a couple days after S&P500 announcement no doubt generated FOMO, which only added to the climb.

Lesson of the day? Big jumps up in stock price often surprise us with their timing. If you want to enjoy them, you need to be in the stock and not on the sidelines.

Today Iceman the 50 State Tesla dog and I flew back to Hawaii. Waiting for sufficient snow and then I return to the mainland. It's been a long day and so I am keeping this post brief.

Percent of selling by TSLA shorts increased from 50% on Tuesday to 54% on Wednesday, yet there were very few opportunities to make money with pushdowns today and this is not a reasonable time for shorts to be increasing their TSLA short position. Some manipulations by option sellers to try and contain the rally (and protect those 450-strike calls that expire Friday) may be the reason.

Today's climb left the upper bollinger band far behind. Nonetheless, we usually see the combination of a rapidly climbing upper bb plus changes in the stock price bring the stock price back within the bands after about 2 days. Note the relative increase in volume over Tuesday and especially over the past few weeks of trading.

With the IV above 70 now, you'll have to pay more to buy options. This is one reason why IV is a useful number. Last week's low IV numbers provided an inviting opportunity (along with the low stock price) for buyers of leap call options.

Conditions:
* Dow down 345 (1.16%)
* NASDAQ down 98 (0.82%)
* TSLA 486.64, up 45.03 (10.20%)
* TSLA volume 78.1M shares
* Oil 41.45
* Percent of selling tagged to TSLA shorts: 54%
* IV 70.7

 

[Papafox]

TSLA chart above

QQQ chart above

Congratulations, longs, TSLA chalked up a new ATH closing price of 499.27. The previous ATH close was on August 31, when TSLA closed at 498.32. The following trading day, TSLA toyed with 540 during pre-market trading but then lost ground that day.

On Thursday we saw a quickly-defeated mandatory morning dip and then lots of plateaus in the afternoon for a close less than $1 below 500. I suspect our friendly option sellers are doing their best to avoid paying out large sums of money on Friday close for 500-strike options.

Don't let Friday manipulations dissuade you from HODLing TSLA. There's more gains in store between now and December 21.

Although the official Max Pain number for Friday is 425, looking at this edited area of the chart from maximum-pain.com , you can see that it's not until 475 where the number of calls significantly exceeds the number of puts. The strike price 500 is the real story this week, however, with some 35,000 calls sold at that strike. Market makers and hedge funds had an incentive to get TSLA to close below 500 on Thursday and have an even bigger incentive to keep TSLA below 500 come Friday close.

Percent of TSLA selling by shorts continued to grow on Thursday, coming in at a hefty 57%. With adding to short positions making no sense as TSLA begins a climb toward the Dec 21 S&P500 listing, and with few opportunities to profitably short-sell and then cover lower same day, a good portion of the excess shorting could well be manipulations to keep TSLA below 500 for Friday's options expirations. A hefty 857,000 shares traded during the final minute suggests lots of covering of daily manipulative short selling.

Here's a six month tech chart to emphasize just how long the 2 1/2 month consolidation period was that just completed. Notice that although volume the last three days has been about double the volume in recent weeks, it is still short of the equivalent volume we saw for much of August and September trading.

Conditions:
* Dow up 45 (0.18%)
* NASDAQ up 103 (0.87%)
* TSLA 499.27, up 12.63 (2.60%)
* TSLA volume 61.6M shares
* Oil 41.61
* Percent of TSLA selling tagged to shorts: 57%
* IV 76.4

 

[Papafox]

TSLA chart above

QQQ chart above

I really, really hope you weren't surprised by Friday's manipulations to partially-salvage the week for option sellers. Although I see the majority of the past couple months of fluctuations between 400 and 450 as being funds with way too much Tesla value in them for their comfort selling at the high end of the range and mostly retail buying at the low end, that doesn't mean the manipulations have gone away.

This past week was one for lots of climbing, with S&P500 inclusion propelling the stock above 500 to a new intra-day ATH at one point. It's entirely reasonable for funds that thought they were too heavily loaded in TSLA value to take a break from trimming shares and ride the rising tide. They can always trim some at another date, especially with a ton of buying likely coming around Dec21.

Nonetheless, market makers and hedge funds who sold options would be particularly concerned about the 25K 500-strike call options that expired on Friday. Below that strike price, puts sold closely matched calls sold, down through 420 or so. Thus, the game this week was to keep TSLA below 500. If you look at Thursday's trading, QQQ continued to climb into close, but TSLA plateaued Thursday afternoon and then dipped in the final 45 minutes of trading. This was our clue that the usual suspects were going to be working the stock on Friday, and they did.

Friday morning we saw a short but deep mandatory morning dip (forming a very sharp icicle as the dip was quickly bought) and then we saw a deep late morning dip that lasted longer and looked more like an Oklahoma twister.

Consider the max pain chart for Friday. I tend to mostly disregard the max pain number and instead look for the price where the preponderance of call options gives way to more numerous put options as we look at lower and lower strike prices. In Friday's case, 500-strike was massively dominated by calls and 495 showed more calls than puts. By 490 the calls and puts were just about even, and by 480 the puts were definitely higher. If I knew nothing about the trading day, this chart would suggest that the market makers and hedge funds would push for a close around 490, if possible.

Taking a look at the TSLA trading chart above, you can see that from 2:20pm until 3:00pm, TSLA was rising (likely because we were seeing traders with views like mine buying in to take advantage of a possible Monday morning climb). Alas, the NASDAQ then dipped, which was partly a reason for a readjustment of the TSLA price and partly an opportunity for some short-selling to induce an over-reaction to the NASDAQ dip. In the end, TSLA closed 39 cents below the near perfect closing price for the week of 490. If you think this price action on Friday was purely coincidental or purely market driven, I have some beachfront property in Arizona I'd like to sell you.

Adding support to the manipulative Friday closing price theory was volume of less than 33 million shares, which made manipulations easier and less expensive. Further, percent of selling by shorts weighed in at a hefty 56% and an equally hefty 752K shares traded hands in the final minute of market trading, giving an opportunity for manipulative shorting to be closed by day end.

The percentage of selling by shorts remained unusually high at 56% on Friday, even though we saw net short covering this week and the prospects for getting skinned alive as a short-seller during this S&P500 countdown suggests there is no reason why shorts would be legitimately entering new positions and holding overnight. Ihor Dusaniwsky's company in this update pointed out that TSLA shorts lost another $4 billion this week.

In other news:
* California gives Tesla "essential workplace" exemption from new Covid 19 health orders
* Wedbush raises TSLA price target to $560, with $1000 bull case

Coronavirus update

Looking at the daily new cases chart, the big question is whether the past two days of data are just a fluke or whether there's actually some relief from the relentless climb of cases in the U.S. We won't know until more data comes in. Several states are tightening restrictions, which could lead to some relief, so either course is possible. I don't see any fear scenario on Monday unless new data comes in, however.

Daily deaths has not reached a number yet which would spook the market. If the Eli Lilly monoclonal antibody therapeutics are indeed being distributed around the country and given to the most at risk individuals early in their progression with the disease, then we could see some relief in the growth of this number.

Overall, the big question is when will the FDA grant Emergency Use Authorization to the Pfizer and Moderna vaccines. When EUAs are granted, the stock market will respond favorably because millions of doses are currently available, tens of millions will be available in the next few weeks, and the U.S. military is ready to quickly distribute the vaccines across the country. Fingers crossed that the FDA will do the right thing and begin the process of ending this pandemic. The type of vaccine approach taken by Pfizer and Moderna appears to be the overwhelming favorite at this point. The AstraZenca vaccine, developed with Oxford, used a more traditional approach to vaccines but is only showing about 70% effectiveness. With excellent safety so far, phenomenal 94+% effectiveness at preventing Covid19 with symptoms, growing evidence that these two vaccines are the best choice, and worsening COVID19 numbers as we proceed into winter, there's plenty of reasons for the FDA to act now.

Looking at the tech chart, the upper bollinger band and stock price are nearing each other, but a Monday rally could keep the stock price above the upper bb. S&P500 inclusion is such a big deal that I wouldn't be surprised to see my 2 days above the upper bb rule overriden for yet another day. I think much will depend upon volume. If volume is light, as on Friday, then manipulations could affect TSLA's price on Monday, but if volumes are on the heavy side, such as we saw for most of this week, then I would expect manipulations to be mostly overridden my market forces.

There are always factors that could cause short term swings up or down with always-possible international tensions and Covid 19 pandemic, but overall I see the vaccines and therapeutics as kicking Covid's ass this spring and enough positive news with Tesla that it can continue to run higher, perhaps considerably higher. The lesson we continue to learn with this stock is that its climbs are often unpredictable to time, as we once again saw this week. You have to be in to get the lift. Enjoying the ride.

For the week, TSLA closed at 489.61, up 81.11 from last Friday's 408.50. Hoping you had a great weekend!

Conditions:
* Dow down 220 (0.75%)
* NASDAQ down 50 (0.42%)
* TSLA 489.61, down 9.66 (1.93%)
* TSLA volume 32.9M shares
* Oil 42.58
* Percent of TSLA selling tagged to shorts: 56%
* IV 72.5

 

[Papafox]

TSLA chart above

QQQ chart above

Everyone in favor of yet another Magnificent Monday and a new closing ATH of 521.49, please raise your hand. Yep, I thought so. Congratulations longs, it's been quite a ride and it's not over yet.

An opening rally of many tech stocks took place this morning, but many of those stocks lost ground not long into trading as money left tech stocks en route to more mundane stocks that will benefit most from the coronavirus coming under control this spring as the vaccines are let loose upon it. The sector rebalancing we're seeing these days is Wall Street already taking that likely development into account.

Nonetheless, as tech stocks such as Nvidia and Apple fell, TSLA hung onto its strong gains today, suggesting that investors believe there's more upside ahead. For a gain of over $30, 50 million shares traded is rather light. Consider that overall in the market, high frequency trading accounts for about 52% of all trades. With a volatile stock such as TSLA, that percentage is almost certainly higher. Then there's the delta-hedge buying done by market makers. It too is a high number because an unusually high ration of options to shares exists with TSLA and on big up days there's lots of buying the MMs need to do.

Speaking of delta-hedging, I think we reached that critical mass by noon or so when the delta-hedge buying created a slow but steady demand for shares, keeping TSLA's price elevated into close. So, today's score is manipulators 0, market forces 1.

Here are my current thoughts concerning the price of TSLA and whether I will trim some shares at some point. When the previous leg of this rally lost steam around the first of September, it had exceeded the price targets of the majority of the most bullish analysts. Nonetheless, with 2nd half of 2020 looking so strong, there wasn't much to lose by riding out the peak and dip, then waiting for the stock to regain its sea legs. Now we have embarked upon another leg of the rally, the S&P500 leg. With bullish analysts giving base price targets in the 560 to 570 range, I'm not going to be too concerned while TSLA is below those numbers. After all, we have a very strong 2021 coming, and if one misses the top you can likely just ride out the bump and start up again sometime in 2021.

The crazy times will be if we see an actual squeeze, presumably on or shortly after Dec. 21. If the stock price rises above 700 I will be watching carefully and will likely try to trim some holdings before the dip side of the squeeze. So will a good portion of active traders, however, and the game becomes very interesting then. Let's see how things shake out.

Historically, we saw lots of manipulations during short weeks like Thanksgiving in past years, but I suspect this year may be different. For one, the number of active short-sellers is hugely down. They are a defeated lot, for the most part. For two, any discounts have a greater chance of being bought up this year before the dip gets deep because many traders have an eye on Dec. 21 S&P500 inclusion and will buy on a discount. There's room for TSLA to climb higher this week. Shenanigans during the short trading day of Friday is likely, maybe we'll even see a Wednesday afternoon low volume manipulative dip, but not something I'm fearful of this year. I think there are just too many traders like myself willing to buy a Friday dip this time around. Truly monumental manipulations require an element of concern by the longs, and I don't see that emotion in TLSA investors at the moment.

Looking at the tech chart, you can see that the stock price closed about $16 above the upper bollinger band, something I said on Friday that I wouldn't be surprised to see. Don't be surprised if there's another dip on this Friday, and by then the stock price and upper bb will be closer together. I'm not selling anything for the possibility of a dip, though, because I see more to lose than to gain. The trajectory of TSLA between now and Dec 21 should be upward.

Conditions:
* Dow up 328 (1.12%)
* NASDAQ up 26 (0.22%)
* TSLA 521.49, up 31.88 (6.51%)
* TSLA volume 50.3M shares
* Oil 43.63
* Percent of TSLA selling tagged to shorts: 54%
* IV 73.5

 

[FrankSG]

The crazy times will be if we see an actual squeeze, presumably on or shortly after Dec. 21.

Usually I don't have much to add to your excellent posts, but I'm not sure about this sentence. Looking at past inclusions, such as TWTR and FB, you'll see that peak volume, and therefore likely peak buying, happened on the last trading day before inclusion. FB happened on the same day only because it was included after market close instead of before market open.

All signs point towards peak buying occurring on the 18th, but the actual stock price peak, if any, could of course happen on a different day.

 

[Johan]

Usually I don't have much to add to your excellent posts, but I'm not sure about this sentence. Looking at past inclusions, such as TWTR and FB, you'll see that peak volume, and therefore likely peak buying, happened on the last trading day before inclusion. FB happened on the same day only because it was included after market close instead of before market open.

All signs point towards peak buying occurring on the 18th, but the actual stock price peak, if any, could of course happen on a different day.

Agree. Also, we have to keep in mind that the way the SP500 informed way ahead of time that TSLA would be included is unusual and will affect the dynamics. For all we know the peak stock price could be well in advance of Dec 21 st, also the peak volume could occur well in advance, seeing how the entire market has had a long heads up period.

 

[Right_Said_Fred]

Any other comments on S&P inclusion by others than Papafox can be posted in the main thread.

 

[Papafox]

Thank you @FrankSG for the input. You have researched this point more thoroughly than me and I will defer to your judgment regarding historical date for peaking of the stock price during S&P500 inclusion. Same for @Johan . Thanks Mods for allowing these posts to remain.

 

[Papafox]

TSLA chart above

QQQ chart above

Yet another ATH and a close in the upper 500s anyone? You gotta love TSLA when it is hot.

Comparing TSLA to the QQQ chart below it, you can see a prolonged weak portion of the morning with QQQ but TSLA hardly blinked an eye after its quick mandatory morning dip and went on to show strength (with some slacking during the final hour).

Volume was once again about double what we've been seeing during mid-November, creating a scenario difficult for manipulators to defeat. Looks like some option sellers tried, however. The strike price 550 is popular for this week, and if you look at the TSLA chart above, you'll see that between 11am and about 1:30pm TSLA appeared to be restrained in its effort to climb above 550. The percent of selling by shorts chart below show 57% of selling on Tuesday was tagged to TSLA shorts (remember that this number is always exaggerated because of batching of orders), and that 57% suggests lots of manipulative selling (to protect certain prices, I suspect). Once TSLA got above 550 it managed to reach 560, only to be pushed down in a rather typical downward push into close.

Wall street is optimistic, at present. The Dow cracking through 30,000 was an important milestone today. Oil is above 45. Coming Covid19 vaccines are certainly part of the reason for optimism.The strong macro performance on Tuesday prevented much manipulations of TSLA.

The max pain chart shows big spikes of nearly 14K calls sold at 550 and 600 Obviously, these would be the two targets that option sellers would most like to see TSLA close below on Friday.

TSLA shorts were tagged with 57% of TSLA selling on Tuesday, a high number suggesting that option sellers were working hard, trying to prevent TSLA from running too high on Tuesday.

We saw yet another strong day for TSLA today and the stock price closed more than $25 above the upper bollinger band.

What will Wednesday and Friday yield? I continue to believe we'll see manipulations surface on Friday and maybe even late on Wednesday (due to low volume as the big dog traders head to the Hamptons for their Thanksgiving celebrations). The high percentage of selling by shorts number makes be believe the option sellers are really trying to influence this Friday's closing price. Nonetheless, we've made so much money on Monday and Tuesday that an end of week dip shouldn't be a big deal.

Conditions:
* Dow up 455 (1.54%)
* NASDAQ up 156 (1.31%)
* TSLA 555.38, up 33.53 (6.43%)
* TSLA volume 53.7M shares
* Oil 45.16
* Percent of TSLA selling tagged to shorts: 57%
* IV 77.1

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday was another ATH day with the closing and intraday ATH both occurring at 4pm with the climb to 574. Congrats longs!

The big question for Friday is whether the option sellers are going to get any traction in trying to slow down this rally. It'll be a short day (market trading ends at 1pm). Option sellers did manage a close in the red last Friday, but it was of course completely undone shortly into Monday's trading.

Looking at this excerpt from the Max Pain chart, you can see that the 600-strike calls are the most plentiful that will expire on Friday. There are about 16K of them. Looking at the other price points, 550 is very popular but the manipulators lack the ability to press down that far, especially on a short trading day. My guess is they'll try a press down to any number ending in zero.

Wednesday we saw weakness in TSLA trading vs. QQQ through about 11am, which suggests there was an effort to dip the stock, but volume remained strong enough and with the NASDAQ rising throughout the afternoon, the pirates really didn't have much going for them. Friday's macro behavior could be different than Wednesday's, however, and it could be more likely to support a dip. If so, I suggest the same strategy as last Friday: don't sweat it, HODL on, and look for a stronger Monday.

In news:
* The S&P Committee will announce on Monday more details about the TSLA inclusion, including the possibility of splitting the add into two tranches.
* Barrons published an article that suggested the rising price of TSLA is going to require S&P500 funds to buy even larger numbers of TSLA stock during the inclusion. Rob Maurer of Tesla Daily does a good job here in debunking this myth. Rob pointed out that the value of the purchase is going to rise but the actual number of shares will not change significantly from the 115 million shares (corrected) that the index funds will have to pick up (about 15% of float).
* FSD videos, such as this one filmed in Sacramento, show us continued major improvements in Tesla full self driving. Tesla investors as a group are starting to look at the technology as more real now, and no longer just a hoped for addition years from now. When Wall Street makes this leap and begins assigning value to Tesla's FSD effort, the stock price will benefit.

Overall, I continue to HODL with the feeling that this S&P500 rally is still strong enough that I don't want to be on the sidelines looking in.

For the tech chart, I've put a 6 month chart up to give you an idea of the cadence between climbing and consolidating during the pre-S&P500 portion of the climb. You can see strong climbing interspersed with near level consolidating is the pattern. You can also see that the 2 1/2 month consolidation that began in early September was much longer than others, which sets up the resulting climb to perhaps be a big one. The stock price is currently about $20 above the upper bb, and speculators, who might be buying in now, don't seem to care.

Here's hoping that those of you in the U.S. enjoyed a relaxing Thanksgiving. All of us Tesla investors have much to be thankful for this year.

Conditions:
* Dow down 174 (0.58%)
* NASDAQ up 58 (0.48%)
* TSLA 574.00, up 18.62 (3.35%)
* TSLA volume 48.9M shares
* Oil 44.84
* Percent of TSLA selling tagged to shorts: 59%
* IV 76.0

 

[Papafox]

TSLA chart above

QQQ chart above

What a week it's been. On Friday, TSLA closed at 585.76, with every trading day this week setting new ATH intra-day and closing prices. TSLA flirted with 600 in late morning, but I'm getting ahead of myself.

Wondering why we didn't see a dip on Friday? First, check out the strength of the QQQ chart. There wasn't much help to the option sellers there. Then review the TMC investor main forum comments and you'll see multiple "if there's a dip today, I'm buying it" comments. The bottom line is that this S&P500 climb has been so relentless and last Friday's dip buyers were so thoroughly rewarded, that a manufactured dip is hard to pull off. We did see TSLA lose more ground on a percentage basis after 11am than QQQ did, but that's about the best that the market makers and hedge funds could pull off today.

Remember yesterday's Max Pain chart and the 16K mountain of 600-strike calls? You can bet that lots of effort was extended to keep TSLA below 600 on Friday. At 11:00am TSLA topped out at 598.40, and that was much too close for comfort in the eyes of the option sellers. So, keeping TSLA below 600 and pushing down about $13 from that high was about as much as the manipulators could pull off for the Friday close.

Monday after close we'll hear what the S&P500 committee has planned for TSLA's inclusion.

All indications that I can see is that TSLA is doing what we hoped it would do this quarter. We're now about 2/3rds done with the quarter. Troy right now is projecting that TSLA barely reaches its 500,000 deliveries in 2020, but Rob Maurer has put out noticeably higher numbers. Troy tends to raise his estimates as we get close to the quarter's end. This will be an interesting quarter to see how these two talented delivery guesstimators resolve (or don't resolve) their differences as the end of the quarter approaches.

Coronavirus Update

Pfizer beat Moderna in requesting Emergency Use Authorization for their Covid 19, so it looks like the Pfizer product will be first out of the gate. Last week the most common estimate of vaccine release was 2nd week in December, which might pan out. Pfizer has chartered United Airlines jets to fly the vaccine from Brussels to Chicago to start preparing it for distribution when the FDA gives the EUA. On Tuesday of next week a CDC panel will meet to consider who will have top priority for the vaccine, and on Dec. 10 the FDA will hold a public meeting regarding issuing an EUA for the Pfizer vaccine. When a EUA is granted, the market should rally. If problems pop up and an EUA needs to be postponed, the market will likely suffer. My guess is that we have good news coming in mid-December.

In the meantime, the New Cases chart for the U.S. shows a climb of somewhat lessening steepness. Any improvement in the slope of the New Cases and Daily Deaths charts will give the market some comfort as we await the vaccine's release.

With a keen eye for chart reading, Papafox has noticed a trend developing after the 16th. Any of the rest of you see it? /s Actually, what's so interesting about the S&P500 news climb is how linear it is. The upper bollinger band line does a good job of showing the slope of the climb and it's been pretty consistent as the upper bb averages out a lot of the day to day fluctuations of the stock price. The upper bollinger band continues its climb to reach the stock price, but on Friday TSLA remained more than $9 above the upper bb. As long as the stock keeps climbing so consistently, I'm HODLing.

For the week, TSLA closed at 585.76, up 96.15 from last Friday's 489.61. Add in last week's 81.11 climb and you have a 175.26 climb over the past two weeks. That's a 43% increase since S&P500 inclusion was announced. Reason to celebrate as well as to start wondering how high is too high. Wishing you all a great weekend!

In the chart below, notice that TSLA IV has jumped up to 85. The market expects volatility and options are getting expensive. If the IV remains so high on Monday I'll be selling some of my deep in the money leaps and buying stock with the proceeds. Note: I trade from an IRA and can switch between leaps and shares without tax consequences.

Conditions:
* Dow up 38 (0.13%)
* NASDAQ up 111 (0.92%)
* TSLA 585.76, up 11.76 (2.05%)
* TSLA volume 37.6M shares
* Oil 45.52
* Percent of TSLA selling tagged to shorts: 56%
* IV 85

 

[Papafox]

TSLA chart above

QQQ chart above

Monday began strong with greater than 600 pricing in pre-market and just after opening. Alas, TSLA trading turned negative, first with a NASDAQ (and QQQ) dip and then with S&P500 committee announcement jitters as the market anticipated the after hours announcement regarding how the committee was going to handle the TSLA addition. While QQQ was trading near neutral by close, TSLA was in a rather deep dive into closing as some de-risking was taking place, helped no doubt with some short-selling. A massive 2.1 million shares traded hands in the 4:00pm minute. When you consider the size of the dip into close and the size of the likely covering at 4:00pm, I'm inclined to believe there was lots of short-selling pushing the price down in the late afternoon, implying (incorrectly, it turns out) that someone knew something negative about the S&P500 committee decision that was coming a bit more than an hour after market close. Let me remind you that shorting a stock steeply down in late afternoon trading and then covering during the 4:00pm minute can be a very profitable manipulation.

Ultimately, the S&P committee decided to retain the original plan, which is for the S&P500 companies to do all their adding of TSLA ahead of the Dec 21, 2020, inclusion date. Market reaction was immediate and positive, with TSLA closing up for the day in after-hours trading, rather than down 18.

News:
* This Reuters article says that China has granted Tesla the right to produce Model Y at the Shanghai factory
Here's a link to @FrankSG 's extremely thorough research of the status of TSLA shareholders and how selling vs. buying will lead to "I'm quite confident that, barring crazy unexpected things, TSLA will stay above at least $600 for the foreseeable future, possibly even above $800."

Looking at the tech chart, at long last the linear movement upward broke today and allowed the stock price to fall $22 below the upper bollinger band. That dip was temporary, however, because in after-hours trading TSLA closed in the mid 590s, a few dollars above the upper bb still. With futures up Monday evening and strong performance of TSLA after hours, Tuesday could be a strong day for the stock.

Looking forward to Tuesday's trading.

Note: IV has now climbed to 93.4

Conditions:
* Dow down 272 (0.91%)
* NASDAQ down 7 (0.06%)
* TSLA 567.60, down 18.16 (3.10%)
* TSLA volume 58.7M shares
* Oil 45.09
* Percent of TSLA selling tagged to shorts: 56%
* IV 93.4