Papafox's Daily TSLA Trading Charts

[Papafox]

Tesla on Nov 10, 2016

SCTY on Nov 10, 2016

This morning, NASDAQ technology stocks took a big dip and then recovered most of their losses along with the NASDAQ. Meanwhile, the DOW was up better than 1%. The disparity is because the infrastructure plans of Trump favor the typical DOW company more than NASDAQ companies. If you look at a chart of the NASDAQ, it resembles the TSLA and SCTY daily charts, but towards the end of the day the NASDAQ was closer to its previous close than TSLA. I suspect the shorts did some selling in the low volume afternoon hours to tweek TSLA's descent a bit.

So, the morning drop was caused by fears of how Trump's presidency will affect various sectors and TSLA investors rode the roller-coaster in an exaggerated fashion today. I think what retail and institutional investors will do is exactly the process that you saw on the short-term trading thread today, which is to look at the available information about Trump's motivations and conclude that maybe TSLA will do just fine in the next 4 years and that even though the environment will suffer, there's no war against American clean energy companies, particularly those who do their manufacturing in the U.S. What we learned in discussions today included:
* Peter Thiel of SIlicon Valley will have the president's ear and Thiel is a Musk friend and an investor in SpaceX
* Trump owns a Tesla roadster
* Republicans are for state's rights, which should keep the feds from messing with ZEV credits
* Trump-appointed justices might take a stand on interstate commerce that favors Tesla's desires to sell vehicles in all states. Remember that Trump believes that consumers should be able to buy health insurance across state lines.
* Trump wants to return manufacturing to American soil, and with 100% of American-destined cars being made in Fremont at the moment, TSLA shines compared to many other auto manufacturers

I had been looking forward to Nov 17, when we could finally get the SCTY merger out of the way and allow the stock price to return to trading without this question mark. At the present, fears of the unknowns of Trump's administration are holding TSLA back. We saw how quickly the DOW resolved the Trump presidency question. Let's hope that TSLA and potential TSLA investors quickly do the process we saw on the short-term thread today and begin the move from fear to ambivalence or even cautious optimism.

Conditions:
Dow up 218 (1.17%)
NASDAQ down 42 (0.81%)
TSLA 185.35, down 4.71 (2.48%)
TSLA volume 6.8M shares
SCTY 19.94, down 0.07 (0.36%)
Oil 44.47, down 0.19 (0.43%)

 

[Papafox]

Will likely post today's update on Saturday. It's gonna be a good one.

 

[Navin]

Papafox - I turn to you for your daily commentary like someone reads the daily paper. I can wait till tomorrow but pls don't stop posting. In fact - pls let me know what your favorite charity is so I can make a donation on your behalf as a small way of saying thanks.

 

[Papafox]

Papafox - I turn to you for your daily commentary like someone reads the daily paper. I can wait till tomorrow but pls don't stop posting. In fact - pls let me know what your favorite charity is so I can make a donation on your behalf as a small way of saying thanks.

Navin, I'm honored that you feel this way. A contribution to either the American Cancer Society or the Alzheimer's Foundation of America would be a good use of the funds. Thanks especially for the reminder that people find my efforts worthwhile.

 

[Papafox]

Friday was a great trading day to understand the environment in which Tesla is operating. The stock weathered the mandatory morning dip at about 10:00am. If you're going to be buying shares, why not buy then and allow the shorts to give you a discount? A morning dip has been extremely common during the past month. Next, we saw red-green-red-green-etc trading which generally means that we're transitioning from one color (red, in this case) to the other color (green), but often the significant change takes place on the next trading day. Instead, we saw TSLA investors finally emerge from fears of Trump and embrace the opportunity that is available when < $190 TSLA shares can be picked up at the same time sentiment is turning more optimistic. As the afternoon progress, the NASDAQ climbed, and so did TSLA. Apparently the shorts had other plans because if you look at all the peaks that took place before 2:00pm, the stock bounced off $187 more than once, like it was made of titanium. A flurry of buying pushed TSLA to 188 at about 2:20pm and the war was on: shorts trying to cap TSLA from exceeding 188 and longs, developing an appetite for TSLA shares, bidding the stock higher. TSLA penetrated 188 4 times before it successfully breached the short's blockade and closed at 188.56.

What's the significance of Friday's trading?
* A transition from days of red back to green sets the stage for a multi-day green run
* TSLA closed on a run-up on Friday afternoon, which bodes well for the Monday opening
* This was the first day that TSLA shed its fear of Trump. It was the dual fears (election plus SCTY merger) which has been haunting TSLA lately. If both these fears can be left behind this coming week, TSLA will at long last be positioned to climb higher.
* The shorts failed in efforts to cap TSLA, first at 187 and then at 188. Perhaps their resolve is weakening.

Don't be surprised to see a dip early in trading Monday morning (either within the green or from green to red). It is a short-induced effort, be assured (unless there's news to justify otherwise), and if you plan to do any buying on Monday you might as well take advantage of it if it happens.

The unknowns of the SCTY merger are becoming knowns and institutional buyers will be much more comfortable picking up TSLA again after the merger is completed than before. Uncertainty is something these kind of buyers don't like. Fortunately, big institutional buyers have the horsepower to overpower the games of the shorts. The election is behind us, the worst happened, and it apparently wasn't so bad. Now, if Tesla continues on a path towards a Q4 with even better numbers than Q3, and if the company stays on track to have money in the bank when Model 3 begins rolling off the assembly line in big numbers, then TSLA will be much higher than it is today.

Conditions:
* Dow up 40 (0.21%)
* NASDAQ up 28 (0.54%)
* TSLA 188.56, up 3.21 (1.73%)
* TSLA volume 4M shares
* SCTY 20.21, up 0.27 (1.35%)
* Oil 43.41, down 1.25 (2.8%)

 

[ggr]

* Oil 43.41, down 1.25 (2.8%)

Hmmm, the previous Friday:

* Oil 44.07, down 0.59 (1.12%)

So that's a loss of only 1 bit over 1.5% for that week. And yet I remember thinking that it had gone down every day last week! Actually, looking back at the postings, last Wednesday (something happened Tuesday night...) it was actually up to $45! But your posting said that was down a bit. I think someone rigged the figures

Anyway, seriously, oil prices are dropping again, slowly but steadily, and I think it is at least partly because the world thinks that the US will produce more oil and either export it or import less. I'm not happy about that.

 

[techmaven]

Unfortunately, they got closer by more of TSLA going down, not SCTY going up. I'd rather see TSLA at over $200 and then SCTY at $22+. Of course.

 

[Papafox]

Hmmm, the previous Friday:


So that's a loss of only 1 bit over 1.5% for that week. And yet I remember thinking that it had gone down every day last week! Actually, looking back at the postings, last Wednesday (something happened Tuesday night...) it was actually up to $45! But your posting said that was down a bit. I think someone rigged the figures

Anyway, seriously, oil prices are dropping again, slowly but steadily, and I think it is at least partly because the world thinks that the US will produce more oil and either export it or import less. I'm not happy about that.

I find the oil numbers on oilprice.com change frequently, and the time of day I look at the numbers has much to do with how those numbers appear. On the numbers I give for everything else, I am giving the end of day numbers, but not so with my oil price numbers. Perhaps this difference explains some of the mystery with the oil numbers.

 

[Papafox]

Thinking of when we might see this coming week's lowest stock prices, I'm somewhat torn. I suspect Monday will be an up day, so Monday morning has some credibility in my mind. On the other hand, I suspect the shorts will try to define the thumbs up on Nov 17's SCTY merger as being a big negative and we might see a flurry of short-selling the following morning in an attempt to spark a little fear in the market. I don't think their attempt will be effective for long, and so that morning's dip might be a time to buy. Your thoughts?

 

[GoTslaGo]

Hope you don't mind if I post a chart:

Last couple of weeks started with three consecutive down days forming a "Three black crow (-)" pattern at (1). This led to a strong down trend which began to peter out and reverse with arguably two "inverted hammers (+)" at (2). This was met with a tepid reversal, and three small body days implying indecision about the uptrend. Longs/bulls were met with strong resistance by the shorts/bears. Finally the short up trend was reversed with a spinning top at (3) and the price fell, but sustained by more buying (hence green day). At (4) we see a big red day, forming an "Engulfing Pattern (-)" predicting the next down day. That was initially the case, but the bulls were able to reverse and create a final "Piercing Pattern (+)" at (5).

Thus on a day to day candle pattern we see this tremendous battle between the longs and shorts for TSLA. The final day's piercing pattern is a good omen for Monday, and I agree there will likely be a one day upswing. However given the sharp conflict I do not see any sustained up or down trends this week, which matches the merger date this week. We may test support into the 180s/high 170s this week approaching the merger.

I do suspect there will be a down (red) day of or after the merger. However, at that point the arbitrage will have disappeared, and the temptation of longs putting money into SCTY to play the arbitrage will disappear. So the longs will once again be able to have a real influence again on TSLA after the merger.

My 2 cents.

 

[Papafox]

^ TSLA trading- Nov 14, 2016

^ Example of short-selling-induced drop: TSLA, Oct 4, 2016

Although I was expecting a short-selling dip on open today, we received something different, it turns out. The Dow was doing well, the NASDAQ was down only about half a percent, when I looked, but it turns out that a post on the short-term thread revealed that Facebook, Apple, Amazon, and another tech stock were all down about 3%, thus indicating a sector weakness as fund managers move money from one sector (techs) to another in order to better capture gains from changes we'll likely see in the Trump administration. These adjustments are painful and inevitable, but they are temporary. Ultimately, money gravitates to the stocks that offer the best potential and nothing I know of can match the long-range growth and potential profits of TSLA. TSLA has an ability to offer the product with the highest demand, the best specs, and the best cost. Money will return to TSLA soon enough.

The reason I posted two daily charts above is that I wanted to give you a comparison between a trading day which was primarily steered by external forces and one that was primarily manufactured by the shorts. Notice that the bottom chart exhibits the telltale deep downward dips, followed by close, near-recoveries of stock price before the process repeated. The quick dips and near recoveries is classic short-selling without an external stimulus (because if there was a negative external stimulus, you wouldn't see the near recoveries). The fact that the top chart (today's) was primarily steered by external causes doesn't mean the shorts stayed home, though. According to www.shortanalytics.com , 63% of today's TSLA trading involved shorts. That's huge! Take a look at 12:38pm when TSLA dropped through 180 briefly and triggered a bunch of stop-losses. A good push straight down was needed to get TSLA through 180, but once it punched through it took up a life of its own. This time spent below 180 would have been a good time for some shorts to cover their positions, if they were interested. Take a look at the prolonged afternoon trading along 182.50, in horizontal trading. This too is classic short trading methodology, aimed at stopping TSLA's recovery when it wants to head higher. In summary, the daily chart indicates that the primary reason for today's drop was external, but the majority of trading today in TSLA was done by shorts, and they certainly made the drop worse than it otherwise would have been.

Conditions:
* Dow up 21 (0.11%)
* NASDAQ down 19 (0.36%)
* TSLA 181.45, down 7.11 (3.77%)
* TSLA volume 6.6M shares
* SCTY 19.48, down 0.73 (3.61%)
* Oil 43.69, up 0.37 (0.85%)

 

[W84M3]

^ TSLA trading- Nov 14, 2016

According to www.shortanalytics.com , 63% of today's TSLA trading involved shorts. That's huge! Take a look at 12:38pm when TSLA dropped through 180 briefly and triggered a bunch of stop-losses. A good push straight down was needed to get TSLA through 180, but once it punched through it took up a life of its own. This time spent below 180 would have been a good time for some shorts to cover their positions, if they were interested. Take a look at the prolonged afternoon trading along 182.50, in horizontal trading. This too is classic short trading methodology, aimed at stopping TSLA's recovery when it wants to head higher. In summary, the daily chart indicates that the primary reason for today's drop was external, but the majority of trading today in TSLA was done by shorts, and they certainly made the drop worse than it otherwise would have been.

Conditions:
* Dow up 21 (0.11%)
* NASDAQ down 19 (0.36%)
* TSLA 181.45, down 7.11 (3.77%)
* TSLA volume 6.6M shares
* SCTY 19.48, down 0.73 (3.61%)
* Oil 43.69, up 0.37 (0.85%)

Thanks Papafox.

Can someone please explain to me how on Nov 7 the SP moves up, yet 68% of volume is short induced according to the site?
If there are less buyers than the amount of shares that gets created by shorts, SP should drop?

Same for Nov 8 btw

Thanks

 

[adiggs]

Thanks Papafox.

Can someone please explain to me how on Nov 7 the SP moves up, yet 68% of volume is short induced according to the site?
If there are less buyers than the amount of shares that gets created by shorts, SP should drop?

Same for Nov 8 btw

Thanks

I can answer that, at least to some degree. Every sale of a share has a corresponding buyer. Or in the case of somebody shorting the stock, they are "selling to open", which means there is a corresponding buyer (whether they are buying to open or buying to close a position).

I don't know the methodology, but apparently shortanalytics has access to whether sell orders in the market are sell to close (which is what we would typically do when selling shares we own), or selling to open (short selling) the stock.


The core principle is that every financial asset is owned by somebody, and for every buyer there is a seller.

 

[Papafox]

I can answer that, at least to some degree. Every sale of a share has a corresponding buyer. Or in the case of somebody shorting the stock, they are "selling to open", which means there is a corresponding buyer (whether they are buying to open or buying to close a position).

I don't know the methodology, but apparently shortanalytics has access to whether sell orders in the market are sell to close (which is what we would typically do when selling shares we own), or selling to open (short selling) the stock.


The core principle is that every financial asset is owned by somebody, and for every buyer there is a seller.

Thanks, adiggs, and let me add to this explanation. Shorts not only sell-to-open, they buy-to-close. If you have one short selling-to-open and the shares are purchased by a short buying-to-close, you have a transaction which is 100% short, and yet the net short interest did not increase. What we see is that shorts are, for the most part, prolific with their trading at this time. When TSLA is on a downtrend, as it has been for months now, the short-term trading is often dominated by shorts. When TSLA is on an uptrend, where it will be soon enough, then your more typical long day-traders and short-term investors jump in. It's really about frequency of trading, more than a rapidly-growing net short interest.

That said, if the majority of the trading for a day involved shorts as either the buyers or the sellers, you cannot properly understand the price action unless you consider both the motivations of the longs and motivations of the shorts.

 

[Gerardf]

I can answer that, at least to some degree. Every sale of a share has a corresponding buyer. Or in the case of somebody shorting the stock, they are "selling to open", which means there is a corresponding buyer (whether they are buying to open or buying to close a position).
<snip>
The core principle is that every financial asset is owned by somebody, and for every buyer there is a seller.

But, as I understand, for every short, an additional share is (temp.) "created" that is offered to the market seeking for an additional buyer.
With 140M shares and 30M open short positions, there are 170M shares that had to find buyers, for a total company valuation representing just 140M shares.

BTW, this has become one of my favorite threads on the forum. Thanks for your daily (!) effort Papafox !!
I feel I learned a lot here (but have much more to learn) so please continue !

 

[adiggs]

But, as I understand, for every short, an additional share is (temp.) "created" that is offered to the market seeking for an additional buyer.
With 140M shares and 30M open short positions, there are 170M shares that had to find buyers, for a total company valuation representing just 140M shares.

BTW, this has become one of my favorite threads on the forum. Thanks for your daily (!) effort Papafox !!

Also correct. The net 30M open short positions add 30M shares to the circulating shares. That's not strictly true - there are still only 140M shares of the company -it's just that 140M shares of the company are owned by 170M worth of owners, with an additional 30M shares that have been borrowed and are owed back to the lenders (for a net ownership of 140M).

Personally, I'd be freaked out about joining a position that is adding 20% to the total shares owned (pretend we go from 150M total company shares, to 180M shares in circulation). Most of those ~150M shares don't circulate (institutional and insider ownership) - the 20% incremental shares might be more like 50% more trading float. If there are really more like 90M out of 180M shares circulating, then the 30M borrowers of the shares have to get back their shares from a pool of 90M - that's 1 in 3 (it will be hard to get any of my shares away from me, much less 33% -- how about you?)


To my only semi-educated eye, that sure looks like standing around in a powder room with a candle for your light source. And thinking that's a good idea. Sure, it can work, but it can also end badly. And quickly.

 

[Gerardf]

(it will be hard to get any of my shares away from me, much less 33% -- how about you?) .

No way, no sale Not until 2020. (Maybe some % when we reach SP=400)

I will now leave Papafox's thread to Papafox. I feel i should not add to many posting in between his daily ones.

 

[ggr]

Also correct. The net 30M open short positions add 30M shares to the circulating shares. That's not strictly true - there are still only 140M shares of the company -it's just that 140M shares of the company are owned by 170M worth of owners, with an additional 30M shares that have been borrowed and are owed back to the lenders (for a net ownership of 140M).

Personally, I'd be freaked out about joining a position that is adding 20% to the total shares owned (pretend we go from 150M total company shares, to 180M shares in circulation). Most of those ~150M shares don't circulate (institutional and insider ownership) - the 20% incremental shares might be more like 50% more trading float. If there are really more like 90M out of 180M shares circulating, then the 30M borrowers of the shares have to get back their shares from a pool of 90M - that's 1 in 3 (it will be hard to get any of my shares away from me, much less 33% -- how about you?)


To my only semi-educated eye, that sure looks like standing around in a powder room with a candle for your light source. And thinking that's a good idea. Sure, it can work, but it can also end badly. And quickly.

I read "powder room" and thought "place where women go to powder their noses". Didn't make sense.

 

[adiggs]

I read "powder room" and thought "place where women go to powder their noses". Didn't make sense.

Heh - I've been reading 1800's era technology fiction lately, so I've had black powder and wooden ships with cannon and kegs of gunpowder on board in the brain.

 

[Papafox]

No way, no sale Not until 2020. (Maybe some % when we reach SP=400)

I will now leave Papafox's thread to Papafox. I feel i should not add to many posting in between his daily ones.

Intelligent discussion is always welcome here, Gerardf. Thanks for contributing.