TSLA chart above QQQ chart above (note: price movements look large, due to scale, but actually NASDAQ was down only 0.12% and QQQ down 0.6%) Yawn, the battle for 850 continues. The option sellers produced some really nice icicles during their Mandatory Morning Dip, but it has to be frustrating for them that the dips keep getting bought up. The story for this week so far is not so much what we're seeing but what we're not seeing. Monday's dip in the bad old days would have been extended as investors grow defensive, but instead we're seeing a consolidation near 850 which suits the option sellers and helps cement the recent climbs. Tesla's announcement of Jan 27, 2021, for the Q4 Earnings Report is a positive development and gets the clock ticking so that any traders hoping for a bump will be picking up shares prior to that date. News: * Dan Ives of Wedbush has raised his TSLA price target to $950 and has "bull case" price target to $1250. @Remster32 posted the Wedbush note here * Rumor mill continues to heat up regarding Model S & X refresh in Q1 Looking at the tech chart, the upper bollinger band is less than $7 below 900 while the stock price continues its 850ish horizontal march of consolidation. The nice thing about a horizontal consolidation after a big climb is that it validates the previous climb and gives analysts a chance to set price targets above the current price. Notice the daily declining volume levels from Friday's high. Conditions: * Dow down 69 (0.22%) * NASDAQ down 16 (0.12%) * SPY down 1 (0.35%) * TSLA 845.00, down 9.41 (1.10%) * TSLA volume 30.8M shares * Oil 53.67 * Percent of TSLA selling tagged to shorts: 57% * IV 84.9, 61%
I'm buying near 820 today. Option sellers have arranged to offer TSLA shares and leaps in a blue light special this afternoon. I'll take it.
TSLA chart above QQQ chart above Staying true to form, the usual suspects engineered a pushdown of TSLA beginning about 2pm on Friday. This one was more powerful than usual, even for an options-close Friday, and TSLA at one point dipped below 820 before slowly recovering in the final hour. I assume the manipulators had plenty of short shares to cover after such a performance and we saw more than a million shares trade hands in the 4:00pm minute. @generalenthu pointed out here how this monthly options expiration was especially potent, with the equivalent of 35-40 million shares worth of leaps and other options expiring on Friday. Such a huge expiration gave plenty of downward pressure on the stock going into close. One of the effects of a Friday afternoon strong pushdown is that it inspires call option traders with expiring in the money options to start selling their calls to maximize the returns. Meanwhile, the market makers are buying these options back and no longer need to maintain the same level of delta hedging, so they sell shares (or short shares) in order to unwind no longer needed hedging. This selling puts downward pressure on the stock. Regular investors see the stock price decreasing and weak longs might be inclined to sell, or their stop loss numbers get hit, triggering selling. Thus downward pressure on a Friday afternoon begets more downward pressure. Up to a point... Notice the slow upward movement of TSLA in the final hour of trading. This is when enough traders such as myself say, "Baloney!" and start buying the dip to take advantage of an expected run higher early next week. You can also expect some of that buying was from benchmark fund managers who figured that the price had bottomed out and it was time to buy. In this post from last Tuesday, I pointed out that 820, 850, and 900 were the few strike prices where call options dominated in a big way before the higher strike prices became all calls. I speculated that the option sellers would push for below 850 by Friday, but I underestimated their tenacity with so many options about to expire, and they did indeed try for 820. By the time Friday close arrived, however, few of the original 820s still remained as the 2pm forced dip really got the covering going big time. In the news: * Electrek posted Tesla's video on the new 4860 cell production line. Elsewhere on the internet, Dave Lee remarked about the phrase "million miles" at spot 0:19 in the video. * Reuters reports that Tesla has begun deliveries of its Shanghai-built Model Ys * In the latest Models S & X refresh rumors, Electrek reports that Tesla is liquidating Model S and X inventory as refresh nears For nearly a month, TSLA has been seeing about 60% of selling tagged to shorts, but that number plunged to 38% today. Does this mean that the big dogs who are running manipulations and high frequency trading backed way off on their mischief Friday? Not a chance, because if you look at the really strong pushdown beginning around the usual time (2pm) and ending an hour later, you will realize someone had to do heavy shorting to pull off this steep TSLA drop on no news and very mild macro dip. More likely, the market makers and other option sellers have moved their short-selling to non-FINRA exchanges where the quantity of their shorting is kept secret. Looking at the tech chart, Friday's afternoon pushdown still allowed the upper bollinger band to exceed 900 and the mid bb to keep climbing through nearly 740, setting TSLA up nicely should its Jan 27 Earnings Report in little more than a week prove to be a good one. For the week, TSLA closed at 826.16, down 53.86 from last Friday's 880.02. I suspect we'll be regaining lost ground as we move closer to the ER. Looking forward to the week ahead. Hoping you all had great weekends. Conditions: * Dow down 177 (0.57%) * NASDAQ down 114 (0.87%) * SPY down 3 (0.73%) * TSLA 826.16, down 18.84 (2.23%) * TSLA volume 38.2M shares * Oil 52.07 * Percent of TSLA selling tagged to shorts: 38% * IV 84.9, 61%
TSLA chart above QQQ chart above To no one's great surprise, Tuesday's $15 climb reversed Friday's $15 options close manipulated descent, and we're once again back in the consolidation track just below 850. Some of these repeating patterns are indeed tradable. TSLA was trading high in pre-market, but I suspect some manipulation from the usual suspects between 11am and 2pm, where TSLA stayed pretty much level while the NASDAQ continued on a constant climb. As so often happens in such a situation, the manipulators lost control of their slow push toward 835 and TSLA broke into a strong climb to make up for lost time. Another pushdown came forth and TSLA still managed to shrug it off as well and regain the Friday losses. Two remarkable details: * Volume was unusually low at 25.4M. * Opening minute volume at 9:30am was unusually high at over 600K shares traded that first minute News: * Tesmanian says Gigafactory Shanghai aims to produce 523K vehicles in 2021 Percent of selling tagged to TSLA shorts ran up to 56% on Tuesday, bringing it back in line with the previous month's trading Meanwhile, in the tech chart, the very definite consolidation just below 850 is evident. In my opinion, this is not a bad place to be until we get closer to the 4th quarter Earnings Report. This whole rally of the past year has been a series of climbs and consolidations. Conditions: * Dow up 116 (0.38%) * NASDAQ up 199 (1.53%) * SPY up 3 (0.79%) * TSLA 844.55, up 18.39 (2.23%) * TSLA volume 25.4M shares * Oil 53.02 * Percent of TSLA selling tagged to shorts: 56% * IV 76.3, 48%
TSLA chart above QQQ chart above Let me get this straight. A particularly EV friendly president who believes in reining in carbon emissions by moving to clean power was sworn in today. The NASDAQ (and QQQ) marched smoothly upward all day and gained nearly 2%. Two big analysts gave high (and record high) price targets to TSLA, and yet TSLA had a really slothful day. Pundits who try to explain the stock's performance without mentioning manipulations are stumped. That's where I come in. Options sellers manipulated the "sugar" out of TSLA today. With TSLA pushing 860 in pre-market trading, and NASDAQ futures riding high, we saw strong selling in the first hour of TSLA trading that pushed the stock price down into the red. This was a preemptive strike to send a message to traders that TSLA is not where they're going to make their money today and to take those funds elsewhere. Notice the stalagmites growing out of that downward push as buyers kept buying the dips. This is a really strong indication that by simply slowing the selling pace a seller could derive more revenue. Bottom line: the selling wasn't primarily coming from honest investors. Around noon we began the first of two plateaus (can you say "capping" with slightly negative slopes to them. As the NASDAQ kept rising, pressure increased on TSLA to break free of the capping and around 2pm we saw a nice hour-long rally. Again, we reached a plateau at 855 which then changed into a descent until TSLA closed at the option-sellers preferred 850 price. The two big price target increases came from Deutsche Bank and from Colin Rusch at Oppenheimer. Deutsche Bank raised its price target to 890 and Rusch pretty much doubled Oppenheimer's target to $1036. @Remster32 posted a screenshot of the note, which finally gives some recognition to FSD coming revenue. Rusch is the number 12 rated analyst on Wall Street and carries a good deal of weight, so you would expect upward pressure from these two upgrades. We also received confirmation from various European countries that TSLA has cut some Model 3 prices. The most often quoted reason for these price cuts has been changes in the exchange rate (U.S. dollar becoming less valuable). Another way of looking at the exchange rate is that the Euro has been getting more valuable relative to the dollar, so that Tesla has been making more dollars on the sale of each Model 3 in Europe and could afford to trim the prices. Europe has been one of 2020's least strong markets, and part of the reason is that Europe-based competitors such as VW didn't have tariffs to buck. Another, and possibly stronger, reason is that buyers know that Berlin will come online in 2021 and vehicles produced there will become relatively cheaper as tariffs are avoided. For European buyers waiting for a Model Y from Berlin, a current Model 3 with tariffs added looks less desirable. Now Tesla might tempt some of those waiting to buy. When I trimmed some shares near 880 last week, TSLA had only Morgan Stanley's 810 price target plus a lone 900 price target from a lesser firm to buoy the stock. It wasn't enough. Now that TSLA has been consolidating near 850, many more price targets have come along in the 900s and one above 1000. These analysts upgrades will likely eventually lead to the 850 forced consolidation being broken and TSLA climbing again, macros and news permitting. I have been adding back sold shares and calls. The most negative aspect of S&P 500 inclusion is that with 15% of float shares in the hands of index funds and at least a similar amount (or more) in the hands of benchmark funds, the effective float has decreased noticeably. This decrease in float has resulted in a decrease of daily trading volume, which makes manipulations easier. The amount of options traded has not necessarily decreased because of inclusion, and so the importance of options in affecting the stock price has increased after inclusion. The net result is that manipulators have an easier time manipulating and more incentive to do so than before. Looking at the max pain chart, everything above about a 820 strike price is green, so an upward breakout of TSLA could be costly for the options sellers, particularly if the stock price exceeds those tall peaks near 900. For this reason, expect the usual suspects to be busy with their defensive manipulations this week. Sooner or later, though, the dam is likely to break, TSLA will head higher, volume will pick up, and the manipulators will be in a pickle again. After dipping on Friday, the percent of selling by TSLA shorts number is back in the 55-60% region on Tuesday and Wednesday Looking at the tech chart, note the upper bollinger band is at 923. What's that red serpent emerging at the bottom of the chart? It's the 200 day moving average. We haven't seen that snake in ages! Notice the amazingly horizontal movement of TSLA during the past 7 trading sessions. Conincidence? No way, this is what the option traders are setting up. Perhaps the most interesting feature of the tech chart is the volume indications. The 7 horizontal days have given buyers less reason to jump on board and sellers less reason to sell. The resulting lower volume makes the stock easier to manipulate. Sooner or later, the pirates lose control and up she goes. Conditions: * Dow up 258 (0.83%) * NASDAQ up 260 (1.97%) * SPY up 5 (1.38%) * TSLA 850.45, up 5.90 (0.70%) * TSLA volume 25.7M shares * Oil 53.24 * Percent of TSLA selling tagged to shorts: 56% * IV 74.0, 43%
TSLA chart above QQQ chart above Thursday was yet another day in the continuing saga of "option sellers don't want TSLA closing above 850 on Friday". In last week's episode, the usual suspects had incentive to push for 820 and did so, only to see the pushdown unwound on Monday. Looking below at the max pain chart, you can see this week a clean divide between puts dominating (below 840) and calls dominating (850 and above). Why do I suspect manipulations today? * NASDAQ up but TSLA down on no news * TSLA trading positively pre-market (often a barometer of retail investor sentiment) but dips soon after open * The classic midwestern super tornado that bottomed out on the TSLA chart at 10:39am is a classic manipulation sign because it recovered just as quickly as it was manufactured * Volume of a mere 20M shares made TSLA manipulations easier * 4:00pm volume of over 1 million shares in the closing minute suggests some serious covering after manipulative shorting Notice how clean the cutoff is between puts dominating and calls dominating in this Friday's max pain chart Looking at the tech chart, the 850ish trading is so level it could be used as a straightedge. Not natural The Q4 Earnings Report is Wednesday of next week. Models S & X refresh can't stay hidden much longer. Tick, tick, tick. Conditions: * Dow down 12 (0.04%) * NASDAQ up 74 (0.55%) * SPY up 0 (0.09%) * TSLA 844.99, down 5.46 (0.64%) * TSLA volume 20.5M shares * Oil 53.01 * Percent of TSLA selling tagged to shorts: 55% * IV 73.5, 41%
TSLA chart above QQQ chart above Friday completed week two in the horizontal consolidation designed to enrichen the option sellers. Some big price target increases have come along during these two weeks, but the usual suspects have managed to leverage the very low volume to their advantage and keep TSLA below 850 for the Friday closes. As @Todd Burch pointed out in this post, the deep morning dip and low for the day had been bottoming out at either 10:45am or 10:30am for the past 4 trading sessions. Coincidence? Nah! Moving into the afternoon hours, it looks like there was a concerted effort between 2pm and 3pm to keep TSLA below 840 for the close, but the final half hour of Friday trading is always a wild card with traders buying in to set up for Monday's opening and manipulators buying to close their day-trading shorting efforts. We saw over 500K shares trade hands at 4:00pm, 227K shares traded in after hours at 4:02pm, and a whopping 828K shares at 4:05pm. Wednesday will be the Q4 Earnings Report. Coincidentally, Jan 27 will also be the day that Biden reveals his Climate Change policy, so there's a chance of bonus good news for Tesla. In particular, I look forward to hearing guidance for 2021 because I think the analysts are guessing low. Overall, I'm optimistic about the ER. Coronavirus Update Looking at the new cases in the U.S. chart, this is the first week when I can say that we may have peaked for this year's flu season. In any event, the market should not worry about these numbers this week. Looking at Friday's max pain chart, the option sellers pretty much nailed the true max pain price once again. By "true" max pain point, I mean the point where lower strike prices favor puts and high strike prices favor calls. We had a very clear break this week. Looking at the tech chart, notice that TSLA barely reached 20M volume on Friday, making manipulations easy. I suspect the coming week, with Wednesday's Earning Report will be a friskier time, both in terms of price changes and volume increases. The trend so far during this year-long rally has been upward movement broken with consolidation periods. There's room to climb this week with a good ER and a good presidential address about energy policy (also on Jan 27). The upper bollinger band now stands at 933. In case there's a downward movement, the mid bollinger band has now climbed to 776 and should act as support, if needed. For the week, TSLA closed at 846.64, up 20.48 from last Friday's 826.16 and up 1.64 from the previous week's Thursday close (before we saw the manipulated Friday dip). In other words, the horizontal consolidation continues. It has proven extremely lucrative for the option sellers and has given the analysts time to upgrade their price targets. Hoping you all enjoyed good weekends. Looking forward to the week ahead. Conditions: * Dow down 179 (0.57%) * NASDAQ up 12 (0.09%) * SPY down 1 (0.35%) * TSLA 846.64, up 1.65 (0.20%) * TSLA volume 20.1M shares * Oil 51.98 * Percent of TSLA selling tagged to shorts: 56% * IV 73.0, 40%
TSLA chart above QQQ chart above Congratulations longs on a new intraday and closing ATH! More importantly, the assault on 900 has begun. In the past, crossing an X00 number typically has taken several attempts. On Monday, the price bounced off 900 as you'd expect, but sooner or later it will be breached. Monday was important because we broke free of the two week 850 consolidation, at last. You know those Friday afternoon buyers who are picking up TSLA in the closing hour or two? Take a look at that vertical ascent to 900 after opening and you'll understand why they do it. This kind of price action is the payoff (note: it doesn't work all the time). Unfortunately, TSLA came down almost as fast as it went up. U.S. senators got into an arm-wrestling contest today, which alarmed the market and brought everything down (see QQQ chart). When things improved, the broader market recovered part of its dip and it looked like the market makers were going to keep TSLA at 870 until close. Alas, volume picked up going into close and TSLA popped through 880. With volume of nearly 40 million shares traded today, the option sellers met their match and lost control of the price going into the close. What's interesting about the macro dip was that it coincided with the recent timing of the TSLA Mandatory Morning Dips that @Todd Burch has been pointing out, giving the dip double the horsepower of a normal MMD. TSLA bottomed out at 11:07am on Monday. News: * Electrec reports that the president intends to transition the 645K federal vehicle fleet to EVs * CNBC reports on 5 ways that Biden can help Tesla, GM, and other U.S. automakers sell more EVs Looking at the max pain chart, option sellers don't want TSLA above 900 or 1000 by Friday. They'd be nuts to not delta-hedge in an ER week, however. When volume picks up, they lose control of the stock price. Looking at the tech chart, the upper bollinger band is at 933 now, which gives LOTS of headroom for a good response to the ER. Volume of nearly 40 million shares on Monday reversed the trend toward lower and lower volume as investors patiently refrained from selling as they await the ER. Conditions: * Dow down 37 (0.12%) * NASDAQ up 93 (0.69%) * SPY up 2 (0.43%) * TSLA 880.80, up 34.16 (4.03%) * TSLA volume 39.3M shares * Oil 52.79 * Percent of TSLA selling tagged to shorts: 51% * IV 81.5, 55%
TSLA chart above QQQ chart above Welcome to the day before Tesla Earnings Report day. Volume fell back into the doldrums again, giving the manipulators lots of opportunities to keep TSLA under their thumb for at least one more day this week. In recent trading sessions, a fellow could set his watch by TSLA's Mandatory Morning Dip, and Tuesday was no exception with the steep dip from pre-market and opening levels (over 895 at 9:31am) occurring about 10:20am today. If you check the QQQ chart, you will see there's no dip to justify the TSLA MMD, and I'd really love to hear someone who doesn't believe in manipulations explain why every trading day we're seeing a significant dip between 9:15am and 9:45am. TSLA spent a fair amount of time above 890 but in the final hour of trading the usual suspects pushed TSLA down for the close, even though QQQ does not show a similar dip. Notice on the QQQ chart that the index rose significantly after hours. I believe this was in response to a Microsoft beat during its ER. Investors are stirred up in a positive way leading into ER day, and NASDAQ future are up Tuesday night. Overall, you can see that retail investors are willing to bid TSLA up in pre-market hours during recent sessions and that there's a very clear manipulative effort to minimize the climb through the 10:30am-ish MMDs and afternoon pushdowns into close. The good news is that when volume rises, the manipulations fall apart and TSLA climbs. The constant manipulations suggest that the stock wants to rise but is artificially being held back. This is an attractive scenario to be seeing as we move into the Earnings Report. Ultimately, TSLA's performance after the ER is made public depends upon the content of that ER. For perspective on the ER, Rob Maurer has put together a line by line analysis here. He too is bullish about this ER. Analysts originally were looking at about $1.00/share non-GAAP profits, but those estimates have near drifted above $1.10/share. Rob's guess is $1.35 and @The Accountant arrived at $1.22/share in this January 5, 2021, TMC post. Moreover, Elon's estimates for 2021 could cause a stir. He's likely going to give a suitably high vehicle delivery number (800K?) while still sandbagging a bit, I would guess. The side show today was the GME short squeeze, which is drawing lots of attention as investors who dislike the shorts have been buying to extend the squeeze to unexpectedly lofty heights. Looking at the tech chart, Tuesday was the second day when the two week 850 horizontal consolidation has been broken with a climb. Hasta la vista 850. The upper bollinger band now resides at nearly 944 while the mid bollinger band approaches 800. Best wishes to all during Wednesday's Earnings Report and Conference Call. Conditions: * Dow down 23 (0.07%) * NASDAQ down 10 (0.07%) * SPY down 1 (0.16%) * TSLA 883.79, up 2.29 (0.26%) * TSLA volume 23.1M shares * Oil 52.72 * Percent of TSLA selling tagged to shorts: 57% * IV 78.6, 52%
TSLA chart above QQQ chart above This afternoon the NASDAQ was in turmoil as shorts started feeling the heat in more stocks than just GME. AMC took a huge jump up and even American Airlines was up 10% in response to above normal shorting activity. One possible explanation for weakness in strong NASDAQ stocks was that hedge funds might have been doing some trimming of their long positions in such stocks to be able to afford extracting themselves from various short positions. Naturally, the SEC and various other parties were more concerned about the fate of the pirates (I mean short sellers) than small retail longs. Elon was more than happy to throw Twitter kindling under the fire below the shorts. The two sides of the debate can best be viewed in this exchange between CNBC's Scott Wapner and Chamath Palihapitiya Chamath Palihapitiya Roasts CNBC Anchor For Shilling For Hedge Funds Over People Investing In GameStop Stocks - Digg TSLA felt the heat from the NASDAQ dip but actually closed down less than the NASDAQ at 4pm (2.14% vs. 2.61%). Unfortunately, the ER results showed weaker than expected profits for TSLA, which led to an additional dip to about 806 before bouncing around and closing higher. The bottom in after-hours trading (about 806) was very close to the mid-bollinger band. TSLA posted non-GAAP earnings of about $0.80/share, noticeably below the expected profits of $1.00/share, which had grown in recent days to more than $1.11/share. Zach explained the weaker than expected profits as resulting (for GAAP) from unusually high exercising of options (a byproduct of the enormous rise in the stock price), heavier R&D spending, Models S&X production line reconfiguration, spinning up the solar energy business to greater size, temporary increases in costs due to supply chain issues during pandemic, and other such issues. He mentioned that TSLA is on track to continue growing automotive margins but that such issues affected the performance this quarter. In other words, these are mostly one-time costs associated with expansion, improving the products, and the pandemic. The company is on track to continue its 50%+ expansion with enviable margins. It's noteworthy that as investors digested the Earnings Report, TSLA continued to rise for most of the next two hours, suggesting that the report bodes well for the year ahead. Some important points: * In 2022, Tesla plans to create 100 GWh of batteries and have the capacity in place to generate up to 200 GWh * Models S&X will see refreshed versions begin delivery in February. The S Plaid edition will do 0-60 in less than 2 seconds. Noticeably absent (perhaps waiting for 4620 cells) is the 500 mile range S * Annual growth is forecast to be 50% for the foreseeable future, with a stated chance that 2021 could do better * Of particular interest to me was talk of Fremont's battery factory ramping up and Drew answering a question that the 4680 cells are on track and that the Dry Battery Electrode (DBE) process has shown continuing progress and is also on track. More than any other issue (since Tesla is battery cell constrained) success with DBE in particular and the 4680 cells in general is the biggest challenge of pulling off a successful 2021 and beyond. Considering the low volume of trading in after-hours, I would say that retail investors are generally forgiving to the earnings miss. We'll get our chance to see how the big dog investors respond tomorrow. There's little incentive for the market makers to push TSLA much below 840 this week. So, our march to 900 takes a break for a dip, but we will resume the effort soon enough. Looking at the tech chart, the dip you see in TSLA during market hours was a result of the macro dip in the final two hours of market trading, not the ER results. On Thursday morning, expect the after-hours dip of TSLA to create the usual gap-down to start the day. Should macros get sick again, we may benefit from support at the mid-bollinger band, which currently resides at 809. Conditions: * Dow down 634 (2.05%) * NASDAQ down 355 (2.61%) * SPY down 9 (2.44%) * TSLA 864.16, down 18.93 (2.14%) * TSLA volume 27.3M shares * Oil 52.85 * Percent of TSLA selling tagged to shorts: 57% * IV 81.0, 54%
TSLA chart above QQQ chart above TSLA began the market trading day significantly gapped down from Wednesday's close. Alas, we saw the usual 10:15-10:45am pushdown (which actually happened a few minutes before 10am). The stock recovered to the mid 840s but a descending NASDAQ eventually puled TSLA lower for the close. Taking a broader look at Wednesday's and Thursday's trading, we saw the stock price range from nearly 900 to below 800. That type of volatility, particularly following an Earnings Report which itself contained elements of both good and bad, left the price susceptible to manipulations, and I think it's not surprising it spent much of the day near 840. If you have recently looked at the max pain options charts, you would see that 840 is in that sweet spot where lower strike prices are puts and higher strike prices are calls. It's the sweet spot for the option sellers yet again. Add low volume of only 26 million shares and this was a stock that could be steered. News: * Tesmanian reports that Deutsche Bank raised its price target on TSLA from 890 to 900 and reiterated buy Looking at the tech chart, you can see that the stock price dipped through the mid-bollinger band today but closed a tad above it. I'm going to give mid-bb points for the save. With the futures looking nasty going into Friday's open, I won't hold my breath on remaining above the mid-bb on Friday. Conditions: * Dow up 300 (0.99%) * NASDAQ up 67 (0.50%) * SPY up 3 (0.86%) * TSLA 835.43, down 28.73 (3.32%) * TSLA volume 26.4M shares * Oil 52.19 * Percent of TSLA selling tagged to shorts: 59% * IV 66.5, 22%
TSLA chart above QQQ chart above The Gamestop revolt by retail investors continued on Friday, creating enough concern by the affected parties that it knocked macros down about 2%. TSLA's 5% and $42 dip was way out of proportion to similar stocks. With a mere 35 million TSLA shares trading hands (for this large of dip) the translation is not that investors were trying to get out of the stock so much as someone was determined to see TSLA close lower on Friday. Looking at max pain option data, the market makers aren't likely to have been inspired to push down below 800. Instead, I suspect we had hedge funds trying to make money with a manufactured dip and receive the bonus of pulling the S&P500 down a bit with it (and thereby pressuring the retail investors buying heavily shorted stocks that they still have positions in). In particular, look at the heavy selling sprees at times such as 12:40ish and at the prolong (apparent) capping after 2:30pm. News: * Marketwatch says Argus Research just raised it's TSLA price target to $1010 * Alex Potter of Piper Sandler raise his firm's TSLA price target to $1200, creating at least three price targets over $1000 now Coronavirus Update Daily new cases continue their downward trajectory this week Meanwhile, daily deaths in the U.S., which typically lag daily new cases by 2 or 3 weeks, have shown signs of peaking now Looking at the tech chart, the mid-bollinger (as expected) was not able to keep TSLA from falling below it on Friday. Fortunately, these charts of full of examples of a one-day excursion, followed by a return to the norm. With any luck, TSLA will be north of the mid-bb on Monday, possibly by a large margin. For the week, TSLA closed at 793.53, down 53.11 from last Friday's 846.64. It looks to me as though this was a nonsense dip of sort. Retail investors managed to spank the hedge funds in GME this week, but the market is not coming unglued and so Friday's macro dip was likely more of a head fake than actual precursor to a serious macro dip, IMO. Similarly, with TSLA losing 5% when the NASDAQ only lost 2%, I suspect shorts such as hedge funds (rather than market makers) were doing their best with TSLA to pull down this volatile S&P500 stock in the hopes of maximizing macro red on Friday. They also know how to make money with such a pushdown by selling high, buying low, then repeating. When TSLA turns higher, expect some S&P500 benchmark funds who haven't yet loaded up to jump in, which should help propel TSLA higher. The coming week could be fun. Hoping you had a good weekend. Conditions: * Dow down 621 (2.03%) * NASDAQ down 266 (2.00%) * SPY down 7 (1.98%) * TSLA 793.53, down 41.90 (5.02%) * TSLA volume 35.0M shares * Oil 52.17 * Percent of TSLA selling tagged to shorts: 57% * IV 71.7, 34%
TSLA chart above QQQ chart above On Monday the macros and TSLA both reversed their Friday losses, and then some. The NASDAQ lost 2% on Friday but climbed 2.55% on Monday, and TSLA lost 5% on Friday but climbed 5.83% on Monday. Volume was relatively low at 25.4 million shares on Monday. In many ways, the weakness for the macros on Friday was a head fake as a media source friendly to the hedge funds suggested that the Game Stop situation might be the first step toward a much larger market meltdown. Such fearmongering had its effect, which was to depress the market so that other heavily shorted stocks such as AMC would go down (which they mostly did). On Monday, investors called "Bullsugar", saw that their favorite stocks were on sell at a 5% discount, and shrugged off the fearmongering. TSLA regained its Friday losses. Something positive is happening with TSLA at the moment, though, that the Friday dip and Monday pop don't capture. Alex Potter's recent $1200 price target was predicated on higher growth rates for TSLA than most analysts have been using. Elon's stated 50% annual growth rate for years to come would significantly elevate current price targets of most analysts if they started taking these growth rates seriously. Now the idea of taking higher growth rates seriously is catching on. Adam Jonas of Morgan Stanley just raised his TSLA price target from $810 to $880 (see this Sawyer Merritt Tweet) with higher growth included (but nothing approaching 50% CAGR). As other analysts comprehend the tremendous growth that is planned for Tesla, other price target increases will follow. Note that no one is using 50% growth yet. It'll take longer for Tesla's reality to be absorbed by the analysts. TMC member @Prunesquallor posted this gem of a Tweet by Tesla Facts which shows a timeline graph of analyst price targets for TSLA vs. the recent stock performance. What we're seeing is that because of the knee-jerk reaction to a lower than expected profit in Q4 (despite really strong guidance for the years ahead) the stock price of TSLA decreased, but as analysts digest the meat of the earnings report and conference call, price targets are going up, substantially. At some point in the not so distant future, you would expect the stock price to respond to the much higher price targets. Market makers succeeded for two weeks in holding TSLA level at 850, but as the earnings report approached, TSLA broke away and was ready to run through 900 but for the lower profit numbers. That run through 900 still looks to be in our not so distant future, given the strength of these new price targets. Tick, tick, tick. TSLA shorts were tagged with 42% of TSLA selling on Monday, a noticeable drop from last week. In truth, I often see drops on days when shorting seems to be increased rather than decreased. Perhaps the explanation is that shorts may move to non-FINRA sources (which are not reported in these numbers) on days when extra heavy shorting is needed. Looking at the tech chart, as TSLA climbs back toward the 850 level, IV (Implied Volatility) has dropped very low, and you can see the upper and lower bollinger bands bending inward as a result. Notice that TSLA closed $10 above the mid bollinger band, and so once again the mid-bb is available as support, if needed. Conditions: * Dow up 229 (0.76%) * NASDAQ up 333 (2.55%) * SPY up 6 (1.61%) * TSLA 839.81, up 46.28 (5.83%) * TSLA volume 25.4M shares * Oil 53.67 * Percent of TSLA selling tagged to shorts: 42% * IV 64.5, 17%
TSLA chart above QQQ chart above 870-880 again, anyone? With the flurry of recent TSLA price target increases, a recovery of the share price with these positive macros was the likely outcome. Looking back at the past three days of volatile training, on Friday, TSLA fell with a 2.5X multiplier to the NASDAQ's performance. On Monday, TSLA regained Friday's losses with a positive multiplier of 2.3X compared to the NASDAQ, and rose at a 2.5X multiplier to NASDAQ on Tuesday. Futures are showing up for Wednesday, so I'm hoping for 2.5X vs. NASDAQ. The upper bollinger band is at 912, recent price target upgrades continue to provide upward pull on TSLA, and news has been generally favorable as analysts realize the potential for 2021 and 2022 implied by the ER discussions. Regarding the various price target increases, Adam Jonas's 810 to 880 looks like the work of a genius, but I'm instead inclined to believe that a) he saw TSLA about to rebound and 880 would be an easy point to reach quickly, given the strength of recent price target upgrades, and b) the upgrades by certain analysts tend to move the market and Jonas's 880 price target, following other recent price target increases, likely had some influence on Tuesday's trading (but not TOO much, as the 2.5X multiplier of TSLA is right where you'd expect it to be). Looking at the max pain chart, the market makers will be trying to keep TSLA below 900 on Friday to prevent those 15K shares from going into the money. TSLA shorts were tagged with 38% of TSLA shorting on Wednesday. Looking at the tech chart, TSLA now is little above the 850 price we've seen it gravitating to for the past three weeks. This is the reason why the upper and lower bollinger bands have been bending inward the past few days. Another consequence of returning to this relatively narrow price range is that IV has dropped to very low levels, making options less expensive. Personally, I wouldn't be surprised to see TSLA close not far below 900 this week and then make another assault on 900 next week. Conditions: * Dow up 476 (1.57%) * NASDAQ up 209 (1.56%) * SPY up 5 (1.41%) * TSLA 872.79, up 32.98 (3.93%) * TSLA volume 24.4M shares * Oil 54.76 * Percent of TSLA selling tagged to shorts: 38% * IV 62.7, 10%
TSLA chart above QQQ chart above Today was a day with low macro volatility as the QQQ chart above shows barely 1% change between highs and lows for the day. Meanwhile, the NASDAQ closed flat. TSLA volume was a mere 18.3 million shares. My best guess is that the low volume allowed the option sellers to successfully manipulate TSLA today down to true max pain location, which appears to be somewhere near 850 (below that strike, puts dominate, and above it the calls dominate. The stock price could even drift to 840 and still be pretty much max-pain neutral, and so the option sellers would feel comfortable there, as well. Many of you may have seen my attempt in the main TMC thread to predict TSLA's closing price today, based primarily upon three days of TSLA following the NASDAQ at a 2.3 to 2.5 X multiple. Alas, once TSLA dipped to its low at about 10:30am, the option sellers went to work and kept it low until about noon, when TSLA rose higher. From there we saw a series of linear descents, broken with occasional short runs upward as TSLA was marched dutifully back to its most advantageous position for the options sellers. What did I learn from this exercise of trying to predict the day's closing price? I learned that once the volume falls low enough and option sellers have an incentive to manipulate the price, they likely will. The kind of slight of hand we see on Thursdays and Fridays is certainly not restricted to those days. Wednesday's trading means nothing in the long-term appreciation of TSLA. It is a reminder, however, that sometimes you just have to wait patiently, even when upgraded price targets are coming left and right, before TSLA scampers upward to 900 and beyond. In News: * Electrek says Panasonic will be producing 4680 cells for Tesla at the Nevada Gigafactory, starting in Q2. TSLA shorts were tagged with only 36% of shorting on Wednesday. I've grown to regard the percent of selling by shorts number as almost a contrarian indicator now, as I see the percent dip at time when the manipulative shorting looks most likely. Option sellers can still short TSLA heavily and cover by day's end, and all they have to do is do the borrowing from a non-FINRA exchange. Looking at the tech chart, TSLA's return to the old pin price of 850, where it's been trading for the past month, has caused the bollinger bands to squeeze even tighter. The upper bb is barely above 900 now, which provides some resistance to a quick breakout. Conditions: * Dow up 36 (0.12%) * NASDAQ down 2 (0.02%) * SPY up 0 (0.08%) * TSLA 854.69, down 18.10 (2.07%) * TSLA volume 18.3M shares * Oil 55.69 * Percent of TSLA selling tagged to shorts: 36% * IV 61.1, 9%
TSLA chart above QQQ chart above Looks like deja-vu all over again. These 10:30ish TSLA dips are getting really common, it's almost as if someone really wants to keep TSLA around 850 or so. Fortunately, when good news comes, volume picks up and the stock price goes where it belongs. Patience until then, my friends. Amazon showed a similar strong open, immediate dip, but then a climb into the green NVIDIA's chart was similar to Amazon's TSLA wasn't the only tech-like stock to experience a notable dip shortly after market open. Amazon and Nvidia (see above) both opened high, dipped into the red, then spent the rest of the day recovering. What separated TSLA from these two stocks, however, is that Amazon and Nvidia both climbed into the green for their closes, but TSLA didn't. What I see is that when TSLA takes a dip (often along with other stocks), it is easier to hold TSLA down (especially with this anemic volume of only 15 million shares) than to push it down. TSLA did not enjoy the same recovery from a morning dip because the option sellers have too much at stake to just let TSLA go where it may, and so we're witnesses over 3 weeks of trading at 850, with a few gyrations. What separates the coming week for past weeks, though, is that the mid-bollinger band has just about caught up to the 850 pin. With the mid-bb above 847 on Thursday, it's not going to take long to get it above 850 and then I would expect to see TSLA riding the mid-bb higher, rather than just remaining stuck in the mud at 850. We'll see. Perhaps news of the rumored 700 Model Ys per day being turned out at the Shanghai GF will be the catalyst next week that breaks TSLA out of the 850 market-maker tractor beam. Looking at the tech chart, notice the super-narrow squeeze of the upper and lower bollinger bands. In the conditions below, notice the low IV. Conditions: * Dow up 332 (1.08%) * NASDAQ up 167 (1.23%) * SPY up 4 (1.14%) * TSLA 849.99, down 4.70 (0.55%) * TSLA volume 15.8M shares * Oil 56.23 * Percent of TSLA selling tagged to shorts: 36% * IV 57.6, 4%
TSLA chart above QQQ chart above Can I see a show of hands for all of you who were surprised that TSLA closed near 850 on Friday? Hmm, can't see many. Compare TSLA's chart to that of QQQ and you can see how little the two resemble each other. The NASDAQ's dip after open gave license for the usual suspects to push TSLA hard down. When TSLA broke into the green around 11:16am, the defeat of the Mandatory Morning Dip suggested that the usual supects were losing their grip on the stock price, and so a near vertical rally above 860 ensued. Alas, the pirates aren't known to give up easily and from the noon peak until close we saw a relentless press downward. In the final 10 minutes, however, covering began, along with buying by traders hoping for the usual Friday to Monday rise, and TSLA rose a couple dollars above the likely intended target of $850. If history repeats itself, Monday will be a good day for TSLA. Traders will buy options that expire Friday and then later this week the 850 tractor beam is turned on. Low volume, such as Friday's 18M shares, makes the manipulations that much easier for the pirates. There's lots of options still trading, and with an additional 15% of shares tied up in index funds now, the lower volumes give market makers and hedge funds ease to maneuver the stock price in order to determine options profitability. It really is a case of the tail wagging the dog. News: * Tesmanian says Tesla topped Consumer Reports' most popular car brand for the fourth year in a row * Tesmanian also says a China-designed new model Tesla is moving forward fast and could be unveiled late in 2021. Coronavirus For the first time since the beginning of this winter peak in Coronavirus cases in the U.S., daily cases have fallen below 100,000. This is substantial news since at its peak U.S. new daily cases were pushing 300,000. With vaccine production ramping up and inoculation bottlenecks being address, the coming months look promising for economic recovery. Looking at the tech chart, it's been nearly a month of TSLA trading horizontally under the market maker 850 tractor beam. This month of horizontal trading has been unusually profitable for the option sellers. Keep in mind that 850 equates to a pre-split stock price of $4,250, and after a greater than 10X rally, a month of horizontal consolidation is healthy here. What has changed with the stock is that the mid bollinger band has now risen to nearly the 850 level. We might lose some of the buoyancy that the mid bb has offered on down days and we might gain an upward push if the mid bb inches higher. For the week, TSLA closed at 852.23, up 58.70 from last Friday's 793.53. Hoping you had a good week! Conditions: * Dow up 92 (0.30%) * NASDAQ up 79 (0.57%) * SPY up 2 (0.39%) * TSLA 852.23, up 2.24 (0.26%) * TSLA volume 18.6M shares * Oil 56.85 * Percent of TSLA selling tagged to shorts: * IV 58.2, 6%
TSLA chart above QQQ chart above Tesla released their 10-K today, which added some spice to the typical Monday morning price spike. You can see TSLA taking a dip in pre-market trading just before 8am when word start hitting the street about 10-K details, especially TSLA's $1.5 billion investment in bitcoins. If you listen to some of the pundits, TSLA's investment may already have appreciated over $500 million, and today's 12% jump on bitcoins when word of Tesla's action became known is worth about $180 million. That's a nice piece of change if it holds. TSLA rallied shortly after the initial dip and exceeded 875 in pre-market trading. TMC member @st_lopes provided a nice summary of the 10-K highlights in this post. Overall, Q1 is typically the weakest quarter of the year, and January is typically one of the weakest months (vehicles in transit, factory reconfiguration, etc.). I'm happy to consolidate during the doldrums. The year 2021 continues to look promising. Looking at the tech chart, the relatively flat weeks of 850ish trading has resulted in the mid bollinger band flattening out as well. Note: I'm preparing to travel and will be providing a bit leaner than normal commentary for a few days Conditions: * Dow up 238 (0.76%) * NASDAQ up 131 (0.95%) * SPY up 3 (0.72%) * TSLA 863.42, up 11.19 (1.31%) * TSLA volume 20.2M shares * Oil 57.97 * Percent of TSLA selling tagged to shorts: 37% * IV 58.6, 7%
TSLA chart above QQQ chart above Tuesday was a particularly benign day for the macros, but with no bad news to speak of, TSLA nonetheless dipped 1.62%. Part of the problem was the low volume of 15 million shares, which made manipulations easy. Also, the bitcoin move by Tesla was controversial enough to assist in the manipulations. Any time there's ambiguity with Tesla, the usual suspects can use that ambiguity to suggest a negative for Tesla, and many investors never catch on. For example, it looks as though Tesla is already up about $500 million on its bitcoin investment. Monday's 12% bitcoin gains were in the ballpark of $180 million for Tesla, maybe more, and Tuesday's bitcoin gains were in the vicinity of 5%. Considering bitcoin's price action, the market should be mostly happy with Tesla's move. Also, if bitcoin works as an inflation hedge like gold, we could see bitcoin value do well during a financial crisis, which is just the time a company would most benefit from such a hedge. Where would the market makers and hedge funds like to see TSLA end up on Friday? The max pain chart below shows a clean dividing line. Something around 855 would just about nail the point where puts predominate at lower strike prices and calls predominate at higher strike prices. Once again, Tesla consolidates until all of a sudden it takes off and is moving again. Usually, the catalyst is a surprise. You just turn on the computer one morning and TSLA is going to the moon again. Patience. News: So far this week, the max pain chart shows a very definite dividing line between strike prices where puts dominate and strike prices where call options dominate. The intersection appears to be near 855 at present. Looking at the tech chart, the mid bollinger band inched up a little on Tuesday, which places it a nickel above 850. Let's see if a slow rise in the mid-bb can likewise cause a slow rise in the stock price. So far, the max pain chart suggests the market makers would be happy at 855 on Friday. @EcoBruin published a nice chart here, showing the breakouts that occurred after we saw significant tightenings of the bollinger bands in the past. Another way of considering the same phenomenon is that breakouts occurred after sufficiently prolonged consolidations that led to those tightening of bollinger bands (because level consolidations are the opposite of volatility and therefore lead to constricted bollinger bands). Conditions: * Dow down 10 (0.03%) * NASDAQ up 20 (0.14%) * SPY down 0 (0.07%) * TSLA 849.46, down 13.96 (1.62%) * TSLA volume 15.2M shares * Oil 58.43 * Percent of TSLA selling tagged to shorts: 40% * IV 59.2, 8%
TSLA chart above QQQ chart above Jumping on a plane, so this will be a quick report. Between 10am and about 10:45am, QQQ took an abrupt dip and TSLA responded, but at ludicrous multiples. Translation? Some of the QQQ dip may have been concern for chip availability, so some multiple might be justified, but look at the following dips: * NASDAQ: 0.25% * Apple: 0.46% * GM: 2.12% (after hours) * TSLA: 5.26% Since no Tesla specific negative news of consequence came out today, TSLA's 5% dip was far out of synch with other similar stocks. I suggest that the NASDAQ's morning dip was an excuse for a TSLA pushdown and that entities who wished to scare some shares away from retail investors went to work selling the dip in order to put in on steroids. Once a dip occurs, it's easier to hold a stock down than to push it down, and so it goes. Keep in mind that shorting a macro-related dip can be a profitable enterprise. All a hedge fund needs to do is to cover lower than. the selling price and if multiple entities are involved in the pushdown it's pretty easy to do. Could today's dip be because of big investor was selling this morning? I don't think so. because when the big investors are selling (except when responding to bad news), they sell very slowly so as to avoid pushing the stock price lower as they continue their selling. This morning's selloff was anything but slow and methodical. I concur with some of the TMC members in today's main thread that there are funds that get compared with the S&P500 and they have yet to pick up their TSLA shares. A coordinated pushdown is a way to minimize the price needed for these big dogs to buy. Keep in mind that this is the second week in a row in which we've seen Wednesday hit with a bear attack. In other news, recently Blackrock acquired a 5% stake in TSLA. We learned today that Vanguard has picked up a 6% stake. When you add these big dog acquisitions of TSLA to news of recent price target increases, the logical conclusion is that TSLA has more room to run upwards. In the meantime, keep your seatbelts fastened and HODL. That's what I'm doing. Looking at the tech chart, the dip ended the day 0.3 below the lower bollinger band. I find the influence of the upper and lower bollinger bands tends to give some wiggle room, so we'll give the lower bb credit for defining the bottom today. Option sellers don't want TSLA below 800 for the close on Friday, and so we may see some support at that price should downward pressure continue. Conditions: * Dow up 62 (0.20%) * NASDAQ down 35 (0.25%) * SPY down 0 (0.04%) * TSLA 804.82, down 44.64 (5.26%) * TSLA volume 35.3M shares * Oil 58.39 * Percent of TSLA selling tagged to shorts: 39% * IV 64.2, 18%