Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Tuesday could fairly be called "the curse of Nikola day" as NKLA stock dropped 15% upon expiration of the insider lockup period. This dip likely caused the many other EV makers to dip substantially too. Although stock pundits claim that Tesla emerged unscathed by the news, those of us who saw TSLA climb to the mid 590s in yesterday's after-hours trading expected to see the stock top 600 today. Oh well, we're saving a thrill for another day.

Volume was low Tuesday, at only 40.4 million shares traded.

In news:
* The New York Times reports that the UK has become the first Western Nation to approve a Covid 19 vaccine, namely the Pfizer vaccine. Expect this development to put pressure on the FDA to give EUA to the Pfizer vaccine sooner because of this pressure. As a reminder, the FDA will have a public hearing on the vaccine Dec. 10.
* Rob Maurer reports that during an interview, Elon Musk said that he was highly confident that Tesla will realize Level 5 autonomy for its FSD vehicles during a wide release in 2021.

Looking at the tech chart, you can see that Tuesday's movements put the stock price about $20 below the upper bollinger band but close enough so that the bollinger bands are all still climbing. With the upper bb at 605 now, breaking through the 600 barrier for the close becomes more doable.

Conditions:
* Dow up 185 (0.63%)
* NASDAQ up 156 (1.28%)
* TSLA 584.76, up 17.16 (3.02%)
* TSLA volume 40.4M shares
* Oil 44.52
* Percent of TSLA selling tagged to shorts: 56%
* IV 91.3

 

[Papafox]

TSLA chart above

NASDAQ chart above

Wednesday was one of those days when the stock price does a swan dive right after opening in a spectacular mandatory morning dip. The NASDAQ took a dip around the same time, but it's intensity was far less than TSLA, suggesting that the usual suspects were likely giving the dip extra help. In the past two days, well-known short-sellers have been bragging about reopening new TSLA positions and it makes sense for the reopening of those positions to be timed for maximum negative effect upon the stock price.

Remember that as big dog investment houses want to get into a stock they'll try their best to scare shareholders into selling. Prior to the S&P500 rally, TSLA shareholders were as tempered-steel a group as I've ever seen, unwilling to sell for the most part and generating a couple months of unusually low volume. Now that speculators have taken positions in TSLA with the hopes of making a quick buck by selling their shares to S&P500 funds as we get closer to Dec 21, there are lots of shares held by people who lack the understanding and conviction to hold. Thus, a scary MMD can indeed temporarily lower the stock price by convincing speculators to sell.

The day's big news was a major climb in after-hours trading that effectively erased the day's losses. Goldman-Sachs announced that it was changing its price target from 455 to 780 and upgrading TSLA from hold to buy. Here's part of the GS note. Goldman has been accumulating TSLA stock and during a recent check on shareholders, GS ranked #8 largest. Rest assured that an investment bank such as Goldman believes it has a way to make money from the upgrade, whether it is appreciation of its own holdings or it is trolling for a position selling a Tesla equity raise during the S&P500 addition of TSLA. We'll see. The market tends to notice Goldman Sachs and Morgan-Stanley price target changes, and so we could see positive trading on Thursday. Much depends upon whether the market buys the GS rationale for such a hefty price increase or suspects gamesmanship. The good news is that price targets in the high 700s could potentially help TSLA hold onto value after the S&P500 add is completed.

Coronavirus news:
* CVS will begin distributing the Eli Lilly monoclonal antibody bamlanivimab, which recently received an EUA. Doses are limited (only about 1,000 available) and they're only given out in 7 cities during the initial effort, so don't expect this news to move the market. Nonetheless, it's a positive step.

Looking at the tech chart, the detail I'm most interested in is the location of the upper bollinger band. It has now risen above 616, enabling TSLA to make a big move above 600 if the market gets enthusiastic enough. Rest assured that the option sellers would do their best to keep the stock price below 600 through Friday's close.

Conditions:
* Dow up 60 (1.20%)
* NASDAQ down 6 (down 0.05%)
* TSLA 568.82, down 15.94 (2.73%)
* TSLA volume 47.8M shares
* Oil 45.02
* Percent of TSLA selling tagged to shorts: 56%
* IV 85.4

 

[Papafox]

TSLA chart above

QQQ chart above

Congratulations longs, on Thursday TSLA reached a new closing ATH of 593.38. That elusive intra-day ATH of 607.80 still stands but likely not for long. The move was, of course in response to Wednesday's Goldman-Sachs price target increase from 455 to 780.

Part of the reason the QQQ chart looks so abrupt is because the total movement amounts were actually pretty tame, with the morning high of 308.78 being just 1.6% above the previous day's closing price.

The big question is whether TSLA will bust through 600 for Friday's close. Last Friday was a strong day despite the best efforts of the option sellers, and lightning might strike twice. We'll see.

In the news:
* Rob Maurer in Tesla Daily goes through his calculations and explains why Goldman Sach's price target of 780 may be too low.
* Short seller Jim Chanos has reduced his short position in TSLA

Looking at the tech chart, the upper bollinger band continues to rise and is above 630 on Thursday. The linear climb of TSLA has been broken and instead we're seeing a consolidation below 600 before the likely move higher as we get closer to the S&P500 addition date, which is but 11 trading days away.

Conditions:
* Dow up 86 (0.29%)
* NASDAQ up 28 (0.23%)
* TSLA 593.38, up 24.56 (4.32%)
* TSLA volume 40.9M shares
* Oil 46.33
* Percent of selling tagged to TSLA shorts: 55%
* IV 81.2

 

[Papafox]

TSLA chart above

NASDAQ chart above

Congratulations longs, we have another ATH closing of 599.04. As you recall, I was torn on whether the price would top 600 because the option seller's lost control of the stock price last Friday, but they had plenty of incentive to keep TSLA below 600 for this week's close (and I really expected them to try). They made it with a margin of 96 cents.

If you don't believe that TSLA typically gets manipulated on Fridays, consider that one minute after closing below 600 at 4:00pm, we saw TSLA trade after hours at 601.50. Volume of 29.4 million shares was light and made the manipulations just that much easier.

The day began with the now typical pre-open walkdown of the share price, followed by an immediate Mandator Morning Dip engineered to scare away traders. Despite the NASDAQ mostly rising throughout the day, TSLA instead experienced a game of whack-the-mole that nearly consumed the whole day. The idea was to never let TSLA reach 600 during the trading day because exceeding that price could generate even more buying.

What was most notable about the day was the climb from below 595 to 599 in the final 10 minutes of market trading. Why so big a jump? Part of the explanation is that the NASDAQ made a nice move higher during this time period (see above). In reality, that NASDAQ climb was tame compared to the TSLA climb, and I think once TSLA traders like me saw that the late afternoon attempt to push the stock price down had been defeated by macro forces, they started picking up shares in the hope that the upcoming week would produce short term profits.

@FrankSG in this post on Friday gave an explanation of Friday trading behavior due to pin risk, rather than manipulations. I'll try to wrap my brain around the concept and see how much sense it makes for TSLA. Frank may be right, however, my viewpoint that this is a manipulation has served my trading needs very well because the stock price is following the predictions one would make for option seller manipulations.

The max pain chart for this coming Friday shows lots of low strike prices where call options predominate. Clearly, Friday is more than a weekly expiration date. The big kahuna of strike prices is now 700, with over 11,000 calls. Notice how sparse the puts are for Friday. I wouldn't be surprised if market makers and hedge funds are almost universally delta-hedging 600 strike calls and the attention turns to the 700s.

Looking at the tech chart, you can see that this week was all about consolidating below 600. With the upper bb at 644, with the Goldman-Sachs 780 price target still fresh, and with Dec 18 (for S&P500 inclusion) only 10 trading days away, I expect 600 to fall this coming week, maybe by quite a large margin.

For the week, TSLA closed at 599.04, up 13.28 from last Friday's 585.76. Including the previous two weeks of climbing, that's a three week total of 188.54. Not too shabby. Hoping you had a great weekend!

Conditions:
* Dow up 248 (0.83%)
* NASDAQ up 37 (0.70%)
* TSLA 599.04, up 5.66 (0.95%)
* TSLA volume 29.4M shares
* Oil 46.10
* Percent of TSLA selling tagged to shorts: 55%
* IV 83.7

 

[Papafox]

TSLA chart above

QQQ chart above

'Twas another magnificent Monday with new intraday and closing All Time Highs. Congrats, longs!

Comparing the TSLA and QQQ charts, keep in mind that QQQ hardly changed half a percent during the day's trading. In contrast, TSLA climbed over 7%, eclipsing QQQ's performance by about 14X. Volume picked up to a heartier 56.3 million shares traded.

By 1pm the stock price looked pretty stable or at least capped just below 630. Alas, volume picked up as the stock began its afternoon climb (or perhaps causing the afternoon climb), FOMO set in, the delta-hedging accelerated, and it was off to the races.

@generalenthu does a nice job in this post on TMC explaining how low the volume is for a 40 point move and how it is barely enough for delta-hedging by the market makers. I'm thinking much of the afternoon climb was due to that delta-hedging, which generated more climbing, which required yet more delta-hedging. It's really hard to derail TSLA during one of these monster Monday climbs once it reaches a certain point on relatively low volume.

Friday's trading truly looked like the final day when the option sellers would be able to keep the stock price below 600. We've entered uncharted territory with this bigger than ever before S&P500 inclusion. Although the stock looked a little toppy a couple weeks ago when it first started to flirt with 600, the Goldman-Sachs 780 price target went a long ways toward changing the perceived price range where this stock should be trading in the near future.

News:
* Here's a link to a @Curt Renz post in the main TMC investors' thread where another TMC member highlights Gene Munster's main points such as a chance for TSLA price of 2500 within next three years and a link to that CNBC interview

The percent of selling by shorts chart shows that number dipping to 41%, a number we haven't seen in abundance since early November.

Coronavirus Update

During the past couple weeks, the new coronavirus cases in the U.S. gave a head fake, suggesting a possible top and then roared higher the next week. Bottom line: more time is needed to confirm any trend with the numbers. The Pfizer vaccine's day for public discussion will be Thursday, Dec 10. If the FDA grants Emergency Use Authorization, we could see a positive influence on Friday's trading, or whenever that decision is released.

Looking at the tech chart, you can see that despite the 7% climb today the upper bb remained comfortably above the stock price, giving today's rally the headroom it needed. The upper bollinger band is presently 663.70.

Conditions:
* Dow down 148 (0.49%)
* NASDAQ up 56 (0.45%)
* TSLA 641.76, up 42.72 (7.13%)
* TSLA volume 56.3M shares
* Oil 45.24
* Percent of TSLA selling tagged to shorts: 41%
* IV 87.0

 

[Papafox]

TSLA chart above

NASDAQ chart above

Early today speculations as to why Goldman-Sachs was being so generous with the TSLA price target were answered as Goldman was listed as one of the top salesmen for $5 billion of Tesla stock during the upcoming cap raise. Their $780 price target will make it easier for another arm of Goldman to capture one quarter of one percent of the sales revenues of TSLA's new stock as a commission.

The cap raise makes tremendous sense, with less than 1% dilution for TSLA shareholders but an increase of cash on hand for Tesla from $15B to $20B. Nonetheless, the stock price fell 3.5% shortly after open on high volume. Perhaps that fall was related to traders jumping ship because they didn't realize that the cap raise is a great deal for investors. The fearful might be giving a knee-jerk reaction because we saw TSLA fall quickly after the last cap raise announcement (in much different circumstances). It's also likely that the usual troublemakers were adding fuel to the fire in the hopes that the ambiguous nature of the cap raise news would be taken as a negative by the market. Thus we see the unusually deep Mandatory Morning Dip immediately after market open, which quickly gave way to a recovery (often a sign that the dip was a manipulation).

The new cap raise pretty much forces Moodys' hand and should lead to an upgrade (which will raise Tesla's stock price more than 1%).

A second piece of "negative" news was that a company J.B. Straubel is involved with, QuantumScape, announced impressive stats for a solid state battery it is working on. The reality is that even with some impressive improvements, it takes years to bring a new product to market, and of course there are typically drawbacks to the new technology (such as lower longevity). Nonetheless, such a news story might influence traders who aren't well-versed in the ways of Tesla.

Meanwhile, the NASDAQ was in negative territory until about noon but then climbed higher into the green for a close up about half a percent. Between the rising macros and the realization (and buying) by other investors who understood that the upcoming cap raise is a positive for Tesla, the stock bottomed out about noon and rose to close in the green.

TSLA showed strength in after-hours trading and often we see that after-hours strength carried over to the next day's opening.

Trend note: we saw plenty of days when there was sector rebalancing with the COVID 19 developments, which resulted in the Dow outperforming the NASDAQ. For several days now we've seen the NASDAQ regain its strength and outperform the Dow.

I'd expect some weak days here and there but overall a climb as we get closer to the actual buying of shares by S&P500 members. There's at least 120 million shares in need of purchase and the Tesla cap raise will make less than 8 million available, so there's little fear that the cap raise will soak up the buying by the S&P500 index funds. Moreover, Tesla and its 10 agents can sell the shares whenever it likes at market prices. It's quite possible that all the shares will be sold before the true index fund buying begins in earnest.

Looking at the tech chart, the upper bollinger band is climbing faster than the stock price, currently outpacing it by more than $30. Meanwhile, the strongest support in case of a big dip could well be the mid-bollinger band, and it has risen above 520 and shows an impressively steep climb angle.

Conditions:
* Dow up 104 (0.35%)
* NASDAQ up 63 (0.50%)
* TSLA 649.88, up 8.12 (1.27%)
* TSLA volume 61.8M shares
* Oil 45.71
* Percent of TSLA selling tagged to shorts: 38%
* IV 98.5

 

[Papafox]

TSLA chart above

QQQ chart above

Yup, it gets bumpy sometimes when you own TSLA. The NASDAQ had a bad day, losing nearly 2% and getting progressively worse as the day wore on. Even though the NASDAQ was trading red in pre-market trading, TSLA was green, suggesting that retail buyers were ready to take the stock above 650. Alas, as the day wore on, TSLA followed the NASDAQ down but dropped at about a 3.5X multiplier. In contrast, typical tech-like stocks traded at less than a 1.5X multiplier to the NASDAQ, which shows that TSLA clearly suffered a tougher day than its contemporaries.

I suggest that the combination of unwarranted jitters from Tesla's announced $5B cap raise plus a red and worsening NASDAQ day caused some of the S&P500 speculators to sell their shares and jump ship. Any time TSLA accumulates an abundance of new shareholders (I refrain from calling them "investors"), the market has a way of shaking their shares free for bigger dogs to acquire. One of the ways to do this is excessively deep dips, given the conditions, such as we saw today. Take a look at that super deep icicle that sprung up before 2pm on Wednesday. These selling spurts are great ways to send the traders packing, because they lack conviction in Tesla's mid-term future and are here solely for the short-term play.

Consider the following 3 squeeze scenarios

We really don't know if a classic squeeze will occur close to the Dec 21 S&P500 inclusion date, and it probably won't look as steep as this, but consider the image above. This is the image held by many speculators who have recently bought TSLA to sell to index funds. In this scenario, once the stock price tops out, the downside is rather steep and quick. Any trader who gets hoodwinked into believing we just crossed the peak and have begun heading down the backside is going to sell. In this scenario, TSLA ends up about the same price as when it started, low to mid 400s.

Consider squeeze two. This image is more representative of what many true investors feel is going to happen. TSLA may run up to 800 in the buying frenzy just before Dec 21, but on its way down the backside funds that benchmark to the S&P 500 start buying because they have gained an advantage over the index by buying late and on the backside of the curve. That buying ultimately stops the descent, and at a price considerably above the starting price.

Squeeze three involves a head fake. The stock price is rising and either traders afraid of their own shadows or an actual manipulation starts the stock price descending. Remember back on Feb 4, 2020, when TSLA was about 960 (pre-split) in price, enjoying a really strong trading day, and suddenly the bottom fell out of the stock near end of day as tons of selling dipped the stock? See this daily charts post to refresh your memory. That, my friends, was a manipulation, and I believe its purpose was to break the cycle of huge call option buying leading to heavy delta-hedging, leading to big price increases, leadings to the cycle repeating over and over again but getting hotter and with higher volume every day. Could a band of market makers and hedge funds engineer a head fake during the S&P500 run up that would cause investors to think they had hit the top of the squeeze and we were starting down the back side? Most certainly so. The big difference is that the February rally was buying building mostly on top of the result of other buying and speculating, but December's situation still requires index funds to acquire their shares for the Dec. 21 inclusion, and so at some point the buyers return and the dip reverts into a climb (and perhaps a very spirited climb if the inclusion date is close). You would kick yourself if you sold halfway down the headfake dip. OTOH, you'd do yourself no favor to be riding down the back side of the actual squeeze while thinking you're witnessing the head fake dip. Discretion is advised.

On a personal note, I am gifting TSLA shares to my nieces and nephew and spent the afternoon buying the dip for them as fast as I could move money into their accounts and coordinate the transactions. I look at today's TSLA stock action as a gift to one crazy (but fun) uncle.

News:
* In his Tesla Daily video, Rob Maurer examines information revealed by lowball price target analysts at J.P. Morgan. Basically, some 93% of funds that benchmark to the S&P500 have yet to acquire any TSLA. That's the equivalent of over 20% of TSLA's float. Although J.P. Morgan has a ridiculously low price target for TSLA and is badtalking the taking on of TSLA stock by benchmark funds (because it is greatly overvalued), the shear size of the potential buying associated with the S&P500 inclusion is mind boggling.
* SN8 SpaceX Starship flew today. A shortcoming resulted in a hard touchdown that destroyed the craft, but everything else about the flight went as planned strongly suggested that the concept will work. "Mars, here we come" said Elon after the flight. Check out the video (skip the first 80 or 90% of the video) and watch this amazing flight.

The max pain chart shows a clear dividing line between Puts and Calls, with Puts dominating below 620 strike and Calls dominating above that strike. You would think that big option sellers would be most pleased with a close about 620 on Friday.

Looking at the tech chart, the upper bollinger band continues its climb and is above 686 today. Take a look at the long red candle on December 1, which kicked off 5 days of consolidation below 600. Is today the red candle that kicks off a short consolidation below 650? Stay tuned.

Conditions:
* Dow down 105 (0.35%)
* NASDAQ down 244 (1.94%)
* TSLA 604.48, down 45.40 (6.99%)
* TSLA volume 71.3M shares
* Oil 45.62
* Percent of TSLA selling tagged to shorts: 39%
* IV 109.2

 

[Papafox]

TSLA chart above

QQQ chart above

Thursday started out looking mighty ugly for TSLA and then two things happened. First, the NASDAQ (and QQQ) made an abrupt climb into the green not long after market open. Then word came out that Tesla completed its $5 billion stock offering (in 1 day) and TSLA rallied. Even though the 8K was released late in the day, plenty of bankers would have known the raise was completed. Moreover, competition from Tesla's agents for selling shares went away, which of course was helpful for the stock price.

Although the shape of TSLA's daily chart resembles QQQ's keep in mind that during the opening dip, QQQ dropped 1% while TSLA dropped 6.2%. For close, QQQ was up a third of one percent while TSLA was up 3.7%. In other words, Tech stocks were far closer to QQQ than TSLA is low and highs, so although the TSLA and QQQ daily charts look similar, TSLA's lows and highs were significantly removed from those of the macros and typical tech stocks.

At one point not long after open, TSLA fell below 570, causing concerns of just how much of a dip was on tap. Those concerns were neutralized by the close at 627. Bottom line: dips happen, especially during cap raises. The main event, a buying event, lies ahead. I was buying at open for my continued Santa's list of nieces and nephews.

News:
* Stat reports that FDA advisory panel has endorsed the Pfizer coronavirus vaccine. Futures are down slightly, suggesting that the Pfizer news might already have been priced in

Looking at the tech chart, this week's dip and (hopefully) recovery places the week in much the same light as much of last week when TSLA was consolidating below 600. Volatility abounds at present, with the upper bollinger band exceeding 693 and

Conditions:
* Dow down 70 (0.23%)
* NASDAQ up 67 (0.54%)
* TSLA 627.07, up 22.59 (3.74%)
* TSLA volume 65.6M shares
* Oil 46.89
* Percent of TSLA selling tagged to shorts: 34%
* IV 104.2

 

[Papafox]

TSLA chart above

QQQ chart above

Friday's trading was a bit of a mystery in terms of whether a manipulation was underway. Evidence supporting manipulation includes:
* TSLA trading at excessively high multiple to NASDAQ
* TSLA took a big mid-day dip with NASDAQ but then didn't rise with the NASDAQ's rise, suggesting capping
* TSLA closed within a penny of a round strike price 610. I suppose pinning behavior could do this too, however, if you believe in pinning behavior
OTOH, some evidence suggests what we saw was not manipulation
* TSLA dipped lower after the close. If it was being aggressively pushed down, you would expect a climb after close with the pressure relieved
* Percent of selling by shorts was only 35%
* Market makers would have done best with a close around 620, but TSLA closed at 610, with a push downward into market close

Looking at the week as a whole, Monday and Tuesday brought us to nearly 650. Tesla's agents were apparently selling $5 billion worth of TSLA shares on Tuesday and Wednesday. Thursday should have been the rebound day but it started with a big dip (along with the NASDAQ) and Fact Checking, formerly of TMC fame, posted this 5 part Tweet to explain a perceived Thursday manipulation. Friday is typically a manipulation day but the expected 620 close ended up $10 lower.

If the majority of the S&P500 index fund buying occurs in the coming week (Friday the 18th is last chance to be fully loaded with TSLA before the TSLA is added on Monday the 21st) you would expect a pop. A recent survey of funds that compare their performance to the S&P500 showed 93% owned no TSLA, and a JP Morgan interview revealed that many if not most of the funds that use S&P500 as a benchmark plan to go equal weight on TSLA because they don't understand the stock. Thus, in theory, a whole lot of buying lies ahead in the near future.

What we don't know yet is how the recently acquired shares (many by speculators) are going to move into the hands of the index funds plus benchmark funds and how the stock price will behave. I tend to agree with Fact Checking that the big money on Wall Street knows ways to scare retail and speculators into giving up their shares at a discount when they really want to buy those shares. As Fact Checking put it, "Please be vigilant when investing. The dice are loaded."

So, what should be your fallback position if you don't need funds in the near future? This excellent youtube video with TSLA rockstars Dave Lee and Rob Maurer puts things in perspective. They both agree that recent breakthroughs with Full Self Driving and operational leverage (falling S,G,&A as well as falling R&D expenses as a percent of total expenses) should provide better results for Tesla than Wall Street is expecting in the coming year or two. My feeling is that as long as Tesla continues to execute so well, I don't mind riding into the S&P500 inclusion with heavy TSLA holdings, hoping to sell some if we see a real squeeze develop. Plan B would be to just hunker down after the inclusion if there's a dip and wait it out (as I have done with every other dip), realizing it might take a while to reach 650 again.

So, going into what may be the most volatile week of the inclusion (particularly the end of the week) expect anything from dips designed to scare the speculators to breathtaking climbs. If the benchmark funds mostly plan to acquire TSLA and have not yet done much acquiring, they may be thinking that index funds will pay a premium price for TSLA at the end of this week, there will be a dip, and they'll pick up shares at a discount to what the index funds paid. The problem is that if too many buyers are waiting for a dip to buy, as it appears the benchmark funds are doing, there might not be that much of a dip or at least not a very long dip, because as soon as there's an indication of a reversal, they might all try to buy the bottom at the same time. Maybe they're more patient than I assume, however. Never a dull moment with TSLA investing.

News:
* FDA authorizes Emergency Use Authority for Pfizer's Covid19 vaccine
* Hearing for Moderna's Covid19 vaccine will be held Dec. 17
* Tesla tells employees Models S and X production will shut down for 18 days

Coronavirus

New cases in the U.S. of coronavirus continue to rise, but the rate of increase is not so great as to overshadow the truly excellent news about one vaccine now granted emergency use authority and a second entering the spotlight this coming week.

Looking at the tech chart, you can see that this week was about testing 650, then falling on word of a cap raise, then recovering. The upper bollinger band is at 693 and climbing, but if there's a squeeze at end of week I doubt the buyers would be constrained by any bollinger bands.

For the week, TSLA closed at 609.99, up 10.95 from last Friday's 599.04. If you include gains of the previous 3 weeks, TSLA is up 199.49 in the past 4 weeks, about a 49% climb since S&P500 inclusion was announced. Breathtaking and scary, simultaneously. Hoping you had a great weekend.

Conditions:
* Dow up 48 (0.16%)
* NASDAQ down 28 (0.23%)
* TSLA 609.99, down 17.08 (2.72%)
* TSLA volume 48.5M shares
* Oil 46.84
* Percent of TSLA selling tagged to shorts: 35%
* IV 100.6

 

[Papafox]

TSLA chart above

QQQ chart above

Marvelous Monday once again, my friends? After shedding a fairly deep Mandatory Morning Dip that bottomed out about 10am and was unrelated to NASDAQ movements, TSLA got its mojo back and topped 640 numerous times during the day. The very definite sawtooth appearance of the TSLA climbs reveals repeating patterns taken by the algobots and suggest big buyers starting to outweigh retail and speculators. Particularly noticeable today was the seesawing of afternoon prices between 640 and 635. Clearly buyers ruled at 635 and sellers at 640.

With any luck the short term traders will have been cleaned out of their shares before the index and benchmark funds are done buying. I'd be just as curious to see how much TSLA the benchmark funds are picking up as the inclusion buying steps up to serious levels. Monday's volume of 51 million shares is still relatively tame.

The big question is where do we go from here? Gary Black (see below) thinks 650-690 with a 10-20% correction afterwards. We're all just guessing, however, because this addition to the S&P500 is unique in many ways. Black points out that these big ETFs disclose their holdings every night, we should be able to check on how much acquisition of TSLA is taking place at the big index funds each night. Note: further research suggests some big index funds such as Vanguard's might not report nightly. TMC's @Knightshade says S&P rules only allow index funds to acquire shares within +/- 3 days of inclusion date.

News:
* Regarding recent lockdowns, @Johann Koeber reports in this TMC post that his December 28 delivery in Germany is still on track, according to an email from Tesla
* Gene Munster of Loop Ventures reports on Tesla's significant (and profitable) software advantage over other automakers

TSLA shorts were tagged with a mere 31% of shorting today, one of the lowest levels seen in a long time.

Looking at the tech chart, to my eye it looks like TSLA is completing the "below 650" consolidation that followed early December's "below 600" consolidation. With any luck, TSLA will be cleared to climb above 650 on Tuesday.

Conditions:
* Dow down 185 (0.62%)
* NASDAQ up 62 (0.50%)
* TSLA 639.83, (4.89%)
* TSLA volume 51.1M shares
* Oil 46.81
* Percent of TSLA selling tagged to shorts: 31%
* IV 90.4

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday's trading was a bit of a mystery in that TSLA traded significantly lower than QQQ on no news of substance. The 11am dip of QQQ of less than 1% yielded some pretty sharp icicles, suggesting manipulations. Moreover, TSLA approaching the red/green line but never sticking its head above after 11am suggests manipulations, as well. Note that a hefty 1.6 million shares traded in the 4:00pm minute, an unusually high number, especially given that volume was light today at 44 million shares.

One of the best ways to understand what hasn't happened yet is to listen to this Rob Maurer/Tesla Daily video. Gary Black on Twitter alerted the TSLA community that various S&P500 funds list their holdings online. Rob took this knowledge and managed to check a couple of the biggest index funds. SPY still holds no TSLA but needs to pick up about 8 million shares, IVV has no Tesla on 14 December but needs to pick up about 5 million shares, and Vanguard's VOO as of 15 Dec shows no TSLA currently and will need to pick up about 4 million shares. Keep in mind that when we see TSLA volume at about 44 million shares, about half of that daily volume is just high frequency trading and not true accumulation. Bottom line: it looks like the index fund accumulation of TSLA has not really begun yet. That could start to change on Wednesday.

Playing devil's advocate, this post by @juanmedina show a "JP" response to Gary Black in which JP suggests that index funds have already cut deals with various market makers to supply them with shares.

Another explanation for Tuesday's negative trading relative to the macros is that Wednesday could in theory be the first day we actually see index funds acquiring TSLA shares. Tuesday, then, would be like the day before a Production and Delivery Report or an ER, and if there's been a big run up to the event, you see some of the speculators selling to lock in their gains.

A third explanation would be market maker manipulations to keep TSLA below the 700 (and maybe below the 650 strike prices come Friday so that they could cash in on big misses by the call buyers. Although the 700 strike calls were recently over 41K in number, the peak you see below for 700 is now at 32K, which shows a substantial number of calls have already been closed. Bottom line: with TSLA, never bet the farm on something big happening during a limited time frame. There's always a force out there trying to keep that from happening. I'll take some profit from a squeeze if it happens, but I'm not betting that it happens. My calls are all many months or years in the future for their expirations.

While anticipating any short term strategies with the coming S&P500 inclusion, bear in mind that Q4 continues to look very promising and 2021 even more so. Some of our spreadsheet wizards have been looking at over 800 million GAAP profit if Tesla can deliver 180,000 vehicles in Q4. So far, Troy is anticipating over 180,000 Q4 deliveries, which should make these numbers possible. Rob Maurer's numbers are quite a bit higher.

Looking at the tech chart, you can still see the apparent consolidation below 650 as we await the beginning of actual buying by S&P500 index funds.

Conditions:
* Dow up 338 (1.13%)
* NASDAQ up 155 (1.25%)
* TSLA 633.25, down 6.58 (1.03%)
* TSLA volume 44.3M shares
* Oil 47.53
* Percent of TSLA selling tagged to shorts: 38%
* IV 85.8, 64%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday was much the same as we've been seeing recently. Volume has been rather low, small dips in the macros lead to big TSLA dips (which could mean either manipulations, nervous inclusion speculators, or manipulations used to trigger the nervous inclusion speculators).

Reports so far are that the S&P500 index funds are not yet buying. Instead, we'll likely see the big move take place at the end of market trading on Friday, during the closing cross.

Not too familiar with how the closing cross works? Rob Maurer does a fine job giving us an explanation of how trading in dark pools works and the dance that takes place with matching buyers and sellers during the end of trading every day. It's pretty essential watching if you want to be prepared for the big event this week.

What I'm going to be looking for in particular with Friday's close will be indications of what percentage of shares the various big S&P500 funds will have acquired in the end of Friday matching of buyers with sellers. If index funds are still short on shares coming out of Friday's close, I'd expect upward price pressure to start the next week. The opposite would be true if all the index funds maxed out their needed shares on Friday.

On Wednesday we saw unusually low percentage of selling by shorts: 29%. We've seen other times when selling by shorts seemed to be going on in a big fashion and yet the percentage of selling by shorts number was low. In such cases consider the possibility that the selling by shorts was just moved over to non-FINRA exchanges so as to be off the radar.

Looking at the trading this past week, TSLA continues to be in a consolidation pattern as we await the big dance on Friday. The upper bollinger band is at 681 presently, mid bb at 582, and a nice intersection between the 50 day moving average and lower bb around 487 would be strong support if ever needed.

Conditions:
* Dow down 45 (0.15%)
* NASDAQ up 63 (0.50%)
* TSLA 622.77, down 10.48 (1.65%)
* TSLA volume 42.1M shares
* Oil 48.46
* Percent of TSLA selling tagged to shorts: 29%
* IV 83.2, 61%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA is now close enough to Friday's closing cross event that FOMO set in today, buyers bid the stock price up, and TSLA climbed to a new ATH close of 655.90. The big dance, where demand for 115 million shares will either be met, exceeded, or the parties come up short, will take place at end of day on Friday.

The closing cross of Thursday's trading included slightly over 1 million shares and as the stock price adjusted to accommodate would-be buyers without enough sellers, a nice increase took place. TMC member @Davidzhao365 provided 4 very useful screenshots of the closing cross in action in this post. It's worth a study.

Nonetheless, don't count on all the action happening late in the day.

In today's Tesla Daily video, Rob Maurer interviewed Richard Lee of Baird, whose position at the company makes him particularly knowledgeable about about the mechanisms of the market. Lee believes that we'll see the majority of the index fund buying satisfied during the closing cross during the final 5 minutes of trading, because this is when index funds like to buy to minimize their deviations from the norm.

There's not much talk right now about benchmark funds, but I assume most will be picking up TSLA when they think any dip has bottomed out. It'll be something that will have a positive effect on the stock price when it transpires.

News:
* In this Tweet by Sawyer Merritt, we see the explanation by Standard and Poors from BB- to BB and from Stable to Positive.
* A government advisory panel voted 20-0 to endorse the Moderna Covid19 vaccine, all but ensuring an Emergency Use Authorization by the FDA

Looking at the tech chart, the below-650 consolidation apparently completed today. I was expecting the stock price to remain just below 650 today (once I saw the rally underway), but the high volume closing cross propelled it above the consolidation barrier.


Conditions:
* Dow up 149 (0.49%)
* NASDAQ up 107 (0.84%)
* TSLA 655.90, up 33.13 (5.32%)
* TSLA volume 56.3M shares
* Oil 48.37
* Percent of TSLA selling tagged to shorts: 40%
* IV 84.2, 62%

 

[AudubonB]

Oh boy.
In anticipation of finding out how our learnèd scribe deciphers Today Of All Days action, I have purchased another barrel of popcorn.


Kernels.

 

[jbcarioca]

Oh boy.
In anticipation of finding out how our learnèd scribe deciphers Today Of All Days action, I have purchased another barrel of popcorn.


Kernels.

I just ate mine, considering that the reality was strange enough to justify the popcorn together with a large pastis.

 

[Papafox]

The post is coming in a few hours.

Good news to all. Starting tomorrow I will have assistance on the screenshots and data I produce daily. The commentary will still be mine. The idea is to get the posts out earlier.

 

[Papafox]

TSLA chart above

QQQ chart above

OK, here's my best shot at sorting out what happened on Friday. On Thursday we saw TSLA rise 5% as traders developed FOMO and started their last minute preparations for Friday's close. That rise continued for most of Friday as last-minute buying of TSLA continued.

From about 3:35pm to about 3:50pm, we saw a big push downward in the stock price. My interpretation of this weakness is that it was a manipulative push lower by the market makers who were seeking to protect sold calls while maybe simultaneously seeking to fineness the closing cross. Notice the large numbers of 650 and 700 strike calls in the max pain chart below. Notice the unusually high percentage of selling tagged to short-sellers: 57%

The maximum pain chart showed high quantities of calls at 650 and especially at 700 strikes

At 3:50pm, traders with access to the closing cross information got to see the significant imbalance for the closing cross, with more than 15 million shares greater demand by buyers than sellers were willing to part with at the market trading price. At this point there was no specific clearing prices mentioned, but the imbalance made it clear that a higher closing cross price would be needed to maximize the number of matches between sellers and buyers, and so the stock price very quickly jumped higher in order to anticipate the results of this imbalance.

Here's an image posted by @Davidzhao365 that reflects the closing cross situation at 3:56pm. Notice the imbalance of more than 15 million shares, and the clearing prices of over $700 that would yield higher paired shares.

I now switch to a screen shot of this post by @agastya to continue the progression:

So, as the closing price was adjusted, more matches were made until finally, with the 695 closing price, 12.4 million shares wanted by buyers could not be filled. Volume in after hours trading was high enough so that I suspect those final 12.4 million shares needed by the index funds were likely picked up Friday in after-hours trading.

If only about 60 million shares were paired in the closing cross, and the index funds needed about 115 million shares, why wasn't there a bigger imbalance? My guess is based upon the closing volume for the 4:00pm minute (shown in the top image) of 149 million shares traded that minute. I'm thinking we had pre-arranged trades in dark pools just waiting for the closing price cross to be announced, and once it was known these trades executed and gave the needed shares to some of the index funds. Clearly, there were buyers in the 4:00pm minute who weren't index funds, and I suspect these buyers were benchmark funds loading up on shares so that their Tesla holdings would closely match the S&P500 index fund holdings.

The majority of benchmark funds would still be seeking shares of TSLA, though, and according to JP Morgan, most plan to be equal weight on TSLA and acquire shares. Since the benchmark funds would like to beat the S&P500 index funds, not match its performance, these funds would like to get a price advantage on purchasing their TSLA shares. Since JP Morgan and others suggested that TSLA was overpriced, a good many benchmark funds are going to watch the TSLA stock price and buy when they think TSLA has bottomed out.

Short-sellers were tagged with a hefty 57% of TSLA selling on Friday, suggesting to me that we saw manipulative short-selling by market makers in preparation for the closing cross.

What about that jumpy trading in after-hours? I think the jumps up to 695 price were likely late prints.

Why did the stock price trade lower than 695 in after-hours? Price is a function of finding the equilibrium between sellers and buyers and with most of the index funds already satisfied once the closing cross took place, the number of buyers willing to pay top dollar for shares dropped significantly. Benchmark funds seeking to buy TSLA shares at prices below the closing cross price found their discounts. Those who waited longer managed to buy in the 670s.

You still have lots of buying likely to take place by the benchmark funds. They'll want the best prices in the coming week and will likely wait for any dip to bottom out. Once the stock price starts running higher, many will likely want to buy at some point. Thus, we have an unstable situation because of the benchmark funds where they're willing to sit back and let some of the inevitable dip occur (TSLA was up 70% since inclusion news) but once it has bottomed and starts to climb, they could be buying aggressively. The good news is that the early January P&D report is not far away, and at some point there will be incentive for the stock price to start climbing in anticipation of that support, and that climbing could trigger benchmark fund buying if it hasn't occurred earlier.

News:
* Moderna's Covid19 vaccine becomes 2nd to win FDA emergency use authorization
* Reuters- Tesla debuts in S&P after frantic Friday trading

Strange brokerage reporting behavior
* My Fidelity account still includes a massive mathematical error. A friend has seen a third of her TSLA calls disappear from her TDAmeritrade account, and errors are reported with E-Trade too. If you are experiencing weird errors in your brokerage account, realize that you have lots of company. These errors should be sorted out on Monday.

Looking at the tech chart, the closing cross took place within 31 cents of the upper bollinger band. The mid-bollinger band has climbed to 601 where it could provide some support if needed.

For the week, TSLA closed at 695.00, up 85.01 from last Friday's close of 609.99. If you add the previous 4 weeks of trading, TSLA is up 70% since S&P500 inclusion news. Hoping you had a great weekend!

Conditions:
* Dow down 124 (0.41%)
* NASDAQ down 9 (0.07%)
* TSLA 695, up 39.10 (5.96%)
* TSLA volume 222.1M shares
* Oil 47.04
* Percent of TSLA selling tagged to shorts: 57%
* IV 77.7, 54%

 

[Papafox]

TSLA chart above

QQQ chart above

To nobody's great surprise TSLA took a dip today as retail investors who had not participated in Friday's closing cross took profits with the S&P500 inclusion, now effectively completed. A good portion of benchmark funds have yet to acquire their TSLA shares and are likely waiting for more of a dip. That said, only 7.5 trading days remains until the Q4 Production and Delivery Report, and if you guess that the bidding up of the stock price will begin at least 3 days ahead of the P&D Report, that leaves only 4.5 trading days for the dip to complete.

Naturally, Reuters on Monday circulated a story that Apple is planning to produce an EV by 2024 with a new level of superior battery. The story came from a source with great veracity, "two people familiar with the effort said, asking not to be named because Apple’s plans are not public."

A suggestion? Don't sell your hard-earned TSLA shares to the bastards when they are clearly trying to pry them from your hands. A bunch of benchmark funds need to buy shares prior to Q4's good news.

Meanwhile, in non-vaporware news:
* Troy continues to believe that Tesla has a 65% chance of exceeding 500K deliveries in 2020, which requires more than 181,000 deliveries in Q4. Rob Maurer's computations are even more optimistic.
* Analyst Dan Ives of Wedbush raised his base case TSLA price target from $560 to $715 Monday, and his bull case scenario is $1000
* JMP Securities analyst Joseph Osha increased his TSLA target from $516 to $788

Monday in the TMC main investor's thread, @FrankSG offered Part 3 of his very thorough research into the dynamics of Friday's TSLA trading. Check it out at: Tesla's S&P 500 Inclusion Part 3: The Final Chapter

The Max Pain chart shows 15,000 calls with 630-strike and nearly 30,000 calls with 700 strike expiring on Friday. Guess where the market makers would like to see the stock gravitate towards by the end of our short trading day on Thursday?

Looking at Ihor Dusaniwsky's chart showing short interest, you can see it's been rising slightly in December

Might mischief be afoot on Monday? With percent of selling by shorts up again, this time to 60%, I'd say "most probably"

Looking at the tech chart since July, the overall trajectory of the rally has been enthusiastic climbs, broken by sometimes lengthy consolidation periods.

Conditions:
* Dow up 37 (0.12%)
* NASDAQ down 13 (0.10%)
* TSLA 649.86, down 4 5.14 (6.49%)
* TSLA volume 56.0M shares
* Oil 47.74
* Percent of TSLA selling tagged to shorts: 60%
* IV 73.0, 43%

 

[Papafox]

TSLA chart above

QQQ chart above

We should entitle Tuesday's trading "Attack of the Apple EV Rumor" as this story gained some traction in the morning hours before fading later in the afternoon. What we saw was the media shoveling the FUD out at a prodigious rate, taking advantage of the quite normal stock price sag after a remarkable 70% rally:
* A second stinker in a row from Reuters, this one proclaiming, "Tesla Pulls S&P 500 Lower for Second Day in Index"
* Bloomberg capitalized on a bearish exclamation of Adam Jonas because of the Apple interest in EVs and the article even included a graph of Tesla's valuation dip after the $695 inclusion but suggests the dip is being caused by word of Apple's plans
* Fortune did a copycat version of the Bloomberg article
* Even Motley Fool got into the act with this article entitled "Tesla stock just cost average investors $7.4 billion". Nothing deceptive with that language, right??

Along comes Elon, who engaged in the Apple EV discussion and reveals that Tim Cook blew it because he could have bought Tesla during the Model 3 trouble time for a tenth of what the company is now worth. This revelation took over the media hype machine and the FUD lost its bite.

Despite the FUD attack, TSLA weathered the storm fairly well today, dipping more than 5% in late morning but recovering to a mere 1.46% dip on close. During the final minute of trading, 2.6 million shares traded hands, which is about 5 times higher than is common. Obviously, some big dog funds are swapping shares still.

This updated version of the maximum pain chart shows over 20K calls at 630 strike expiring Thursday. Considering that Thursday is only a half-day of trading and likely at low volume, I'm guessing the usual suspects push TSLA below 630 for the close that day.

The counterweight to the FUD attack and holiday manipulations is that Tesla's execution in Q4 has been very good from what our indicators suggest, and deliveries somewhere between Troy's 182Kish prediction and Rob Maurer's 200Kish prediction would positively jolt Wall Street and bring buyers back. Can't wait to see the results. Now that Goldman has been joined by 4 other analysts with $700+ price targets for the stock, $695 doesn't look so hefty any more.

Should Tesla deliver the needed deliveries for Q4 as January begins, it'll be fun to see the reaction from the sidelined benchmark funds as the stock price runs higher. Consider the setup: 115 million shares just purchased by index funds and none will be sold if the stock drops, and substantial number of shares likely to be bought by benchmark funds once they decide TSLA has bottomed out and is ready for a real climb.

Looking at the tech chart, notice how Friday's big gains topped out near the upper bollinger band and how Tuesday's dip bottomed out right at the mid- bollinger band.

Conditions:
* Dow down 201 (0.67%)
* NASDAQ up 65 (0.51%)
* TSLA 640.34, down 9.52 (1.46%)
* TSLA volume 51.14M shares
* Oil 47.02
* Percent of TSLA selling tagged to shorts: 58%
* IV 69.3, 31%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA surprised me in a positive way on Wednesday as it managed to eak out nearly a 1% gain on a day when the NASDAQ closed down. Taking a wide-angle view of the week, Monday was a curiosity to see if any additional buying would provide some buoyancy against retail profit-taking (it didn't and TSLA dipped 6.5%). Tuesday was a really important day for us longs because the bounce off the mid-bollinger band just before noon set a bottom for the post-inclusion trading this week.

For Wednesday, trading benefited from that Tuesday bounce off the bottom, and even though the usual suspects set up a sharp icicle of a Mandatory Morning Dip shortly after market open, the market wasn't ready to panic, investors bought the dip, TSLA headed higher quickly, FOMO arose, and we climbed into the green, where TSLA stayed throughout the day. Volume was a mere 33.2M shares.

For Thursday, unless there's incredibly positive TSLA news, trading for the short day will likely be about where the market makers want TSLA to finish the week. A short trading day and likely low volume should give them the edge they need. Look at the max pain chart below. The 630 strike calls have been decreasing since Tuesday, 650 and 660 strike calls have been growing, and there's just a ton of money to be made by option sellers if the stock price closes just below 630. All of those bets above 700 were wagers made in the hopes that a real squeeze occurred in the S&P500 inclusion.

See commentary above for Maximum Pain chart

Looking at the tech chart, notice how the dip bounced off the mid-bollinger band for a second day in a row. The rising mid-bb is a positive for us longs if it continues to deflect the dips.

In the chart below, notice how low the IV is, suggesting big moves by the stock are not likely in the near run and options should be cheap. OTOH if an unexpected catalyst starts the stock price heading higher, FOMO by benchmark funds trying to get in under 695 could generate more volatility than the market expects. Unfortunately, I think the market makers will be on alert Thursday, making sure no substantial upward excursions that could excite the buyers occur.

Conditions:
* Dow up 114 (0.38%)
* NASDAQ down 37 (0.29%)
* SPY (for S&P500) up 1.46 (0.40%)
* TSLA 645.98, up 5.64 (0.88%)
* TSLA volume 33.2M shares
* Oil 48.12
* Percent of TSLA selling tagged to shorts: 58%
* IV 63.2, 16%

Mod: edited numbers in the 400's to be 600's, clearly typos, as pointed out by @Tim S. --ggr