Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Well, @DarkandStormy broke the code and correctly guessed Friday's trading in this post: "So...the usual morning dip before a ride up in the afternoon and then we play roulette for the direction in the final hour?" Let me add a little interpretation. QQQ rose all day, with the morning being the most active. TSLA fell prey to an exaggerated hedge fund pushdown that was taking advantage once again of weakness in the auto sector (see this post by @Words of HABIT ). In early afternoon the market makers started pushing upward to get a close closer to the optimal 650, and they received a boost from investors who saw the stock price turning around. Alas, the final hour became a real tug of war and the market makers failed to achieve their 650 and instead saw a close of 643 and change. A nearly $7 miss from max pain is unusual for Friday closes in recent months. With only 14.6M shares trading, Friday, as with other days of this week, became a manipulation fest for option sellers and hedge funds. The week before the Q2 Earnings Report has been quite unusual because of a lack of stock price appreciation leading into the ER and because of the low volumes.

Some of the week's weakness could have been due to a freeze on refresh Model S deliveries, but as you can see from this Teslarati article, or by visiting the Model S delivery thread, deliveries have once again resumed. That change of delivery status could potentially help Monday to be strong.

Looking back at the week, we saw a combination of short-term negatives (Refresh S delivery pause, auto stocks weak) and long-term positives. One of those positives was Tesla beginning subscription based Full Self Driving for $199/mo. In this Tweet, Gary Black put the subscription service into perspective:

After market close on Monday, we get to see the Q2 results and listen to the conference call. Retail bulls remain optimistic that we'll see a beat of analyst expectations for the quarter. @The Accountant has put together an excellent summary of retail, Factset, and Tesla survey of analyst numbers and they can be found in this TMC post. To summarize, the retail investors expect between 1.10 and .99 earnings per share (non-GAAP) and FactSet and Analyst averages compiled by Tesla comes out at .94. Notice how FactSet and Tesla's survey of analysts numbers align? I think that Tesla's survey forced those gaming the FactSet numbers to stop gaming the system (by listing ridiculously high earnings per share in order to declare the quarter a "miss"). Well done, Tesla.

I haven't had a chance yet to see Dave Lee's take on the Q2 numbers, but I found Rob Maurer's video extremely helpful for understanding the issues at stake:

Market makers would have preferred a Friday close slightly above 650, but the hedge funds won the tug of war in the final hour and so TSLA closed at 643.38

Looking at the tech chart, TSLA closed just above the 200 day moving average.

For the week, TSLA closed at 643.38, down 0.84 from the previous Friday's 644.22. Yawn. Keep in mind that the trading for summer so far has had less to do with Tesla's value as a company but instead has been focused on how the stock price can be manipulated for the most profitable close for options seller each Friday. Sooner or later Tesla will shake off the low volume, start a climb, and find a more reasonable price. Construction of the Berlin and Austin gigafactories continues. When the reality of Tesla with 4 big auto factories (and one gigafactory for batteries) sinks in, a price readjustment is inevitable. In the meantime, enjoy your weekend.

Conditions:
* Dow up 238 (0.68%)
* NASDAQ up 152 (1.04%)
* SPY up 4 (1.03%)
* TSLA 643.38, down 5.88 (0.91%)
* TSLA volume 14.6M shares
* Oil 72.07
* Percent of TSLA selling tagged to shorts: 44%
* IV 49.5, 6%

 

[Papafox]

TSLA chart above

QQQ chart above

Congratulations longs on a spectacular earnings report. The analysts guessed 0.94 for Earnings per share (non-GAAP), retail guessed 0.99 to 1.20, and Tesla delivered 1.45. Lots of other metrics, including free cash flow of $619M and excellent results on reduced reg. credits, added to the power of this report. Here's a tip of the hat to @The Accountant who gave us an early heads up that a record earnings report was coming our way.

My favorite part of the ER was an explanation of how the 4680 cell development was coming along. More on this later.

Why didn't the stock price run to the moon after hours? The most likely explanation was that mentions of possible supply chain challenges gave the naysayers a little ammo with which to prey upon the fears of investors. Think about it, though: potential supply chain issues are short-term issues. Demand has never been stronger, according to Elon, Tesla is moving forward with 4680 cells and two more gigafactories, and automotive gross margins are 28.4% (25.8% excluding credits). New products are under development (cybertruck).

What we often see with a blowout ER is various parties emphasizing the negatives while the market makers and hedge funds scramble to rejigger their holdings. Analysts start giving price target increases in a few days and the stock starts heading higher. Nothing is set in stone, but things often work that way.

Although the official max pain number is 650, I see 650 dominated by puts and 660 about even between calls and puts. Market makers would like to keep TSLA below 670 this week. Let's see what happens with volume. If the big dogs start buying TSLA after this report, volume will reflect it and the usual manipulations we've seen the past couple months get overridden.

Looking at the tech chart, the 200 day moving average has worked well for support again and again. The upper bollinger band is at 691 and may provide resistance on the way up.

Enjoy this excellent report. The short term is always a wild card with TSLA, but the company is clearly paving the way for some spectacular years ahead. Don't miss them.

Conditions:
* Dow up 83 (0.24%)
* NASDAQ up 4 (0.03%)
* SPY up 1 (0.25%)
* TSLA 657.62, up 14.24 (2.21%)
* TSLA volume 24.4M shares
* Oil 72.20
* Percent of TSLA selling tagged to shorts: 33%
* IV 49.7, 6%

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday was a tough day for EV stocks and high growth stocks. If Tesla had no news of substance going into Tuesday's market, it's finish of losing a bit less than 2% would be about right or even slightly positive. For it to lose this amount after such a strong Earnings Report suggests a closer look is needed. First, check out this post by @Lycanthrope which shows how deeply other EV stocks dipping Tuesday morning. Look at ARKK and you'll see it was down nearly 2.5% for the day, which shows the pressure on high flying tech stocks. My guess is that we had some of the usual "tweeking" by hedge funds and market makers in order to negate the good news effect from Monday's earnings report. TSLA bottomed out around 1:30pm when it was down about 5% and QQQ was down about 2.2%. That's a greater than 2X multiplier for TSLA's dip on a day following a spectacular earnings report. I suggest the hedge funds did their usual short-selling on the dip to make some money by accelerating the dip and then covering at the bottom. The market makers would smile at this move because after Monday's ER, TSLA has the potential to climb later in the week when the pressure on high flyers and EV stocks diminishes.

Next, compare the QQQ chart with TSLA's. TSLA showed a more robust recovery than QQQ after bottoming out, and this is normal. Look what happened to TSLA, though, after passing 640 and approaching 650. It leveled off into horizontal trading, which is very odd for such a stock on such a volatile day. I suggest we were seeing capping to keep TSLA from running above 650 and keep traders from getting optimistic.

Bottom line: I think TSLA would have done noticeably better on Tuesday if not for a little help on the way down and capping for much of the afternoon.

TMC's @Singuy posted this roundup of analyst price changes here in the main thread. The Goldman raise of PT (even though it is small) carries weight.

There are lots of investors, retail and Wall Street types, who regard TSLA as a momentum stock and will buy when it starts heading upward with conviction. For this reason, the market makers make a point of cutting any rally off at the knees in order to keep the momentum stock buyers from jumping in. Volume was above 32M shares today, which is higher than what we've been seeing. This would be tough volume to manipulate if the macros were not negative on Tuesday. Time to be patient and let the market get its worries out of the way so that TSLA can start exerting some strength from the good news that has been delivered.

So far this week has shown benign behavior from the 10 year treasury bond yields. Tuesday's rate fell below 1.25%

Once again, Max pain is at 650. Calls slightly exceed puts at 650, but puts dominate at 660, so things are a bit choppy.

Looking at the tech chart, the 200 day moving average didn't prevent a dip below it, but the stock price managed to close almost even with the 200 DMA, so we'll give it points as support, nonetheless.


Conditions:
* Dow down 86 (0.24%)
* NASDAQ down 180 (1.21%)
* SPY down 439 (0.46%)
* TSLA 644.78, down 12.84 (1.95%)
* TSLA volume 32.5M shares
* Oil 71.91
* Percent of TSLA selling tagged to shorts: 44%
* IV 44.4, 0%

 

[Papafox]

TSLA chart above

QQQ chart above

So, here's how trading looked on Wednesday:
* EV stocks- UP
* High growth tech stocks- ARKK UP 2.3%)
* Nasdaq- UP 0.70%
* Ford- beat on earnings, UP nearly 4% after hours
* According to TMC member @BlackS in this post, "Based on the market action this week: MSFT, AAPL, GOOG, FB, TSLA, all reported stellar earnings and save for GOOG, all went down."
* Volume of TSLA was light at 15.9M shares traded
* TSLA crossed the red/green line about 26 times on Wednesday and closed up a mere 0.34%
* TSLA's trading resembled a game of "Whack a mole" with someone responding every time TSLA dared climb too much above 645.
* Max pain for TSLA was 647.50 today (I know, I know, these coincidental alignments of stock price and max pain have been happening all summer

Conclusion: Someone continues to manipulate the "sugar" out of TSLA. The similar response of big name high flyer tech stocks mentioned by @BlackS suggests that the hedge funds and market makers might be playing similar games with other volatile high growth stocks. I remember when we were in the coronadip last spring and Chamath Palihaptiya said that some hedge funds were leveraged more than 10X deep and at least one had over a trillion dollars trading capabilities. Let that set in, "a trillion dollars worth of trading capabilities". Maybe TSLA isn't the only stock getting the "sugar" manipulated out of it this earnings season. What the pirates have learned to do with Tesla can now be used on other stocks to a certain extent. Until investors wise up and keep handing millions to the option sellers each week for weekly calls and puts purchased, the manipulations will continue. Of course at some point a surprise catalyst sets TSLA climbing, the market makers lose control as momentum buyers jump in and volume rises rapidly, and off we go! Until then, keep an eye on Tesla's achievements because the payoff will come soon enough (and likely at a time that you and I don't expect).

Max pain is 647.50 on Wednesday

Check out that red 200 day moving average line for the past three months. It continues to climb slowly and is the focus of TSLA during this time period. On Wednesday TSLA closed a few dimes above the 200 DMA.

Conditions:
* Dow down 128 (0.36%)
* NASDAQ up 102 (0.70%)
* SPY down 0 (0.04%)
* TSLA 646.98, up 2.20 (0.34%)
* TSLA volume 15.9M shares
* Oil 71.91
* Percent of TSLA selling tagged to shorts: 41%
* IV 41.4, 0%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA enjoyed a nice 30 point gain on Thursday. Was the announcement of AI day responsible for this jump? The way I see it, other news, especially the 2Q ER, set the stage for Thursday's big move. Picture yourself sitting on a teeter-totter, your side on the ground, with the other side high in the air. Various weight changes have occurred which made the two sides nearly even in weight. A butterfly that had been sitting on your shoulder decided to take flight, and with that slight reduction in weight, your side of the teeter-totter rose high into the air while the other side moved downward. The AI announcement was the butterfly taking off. Sometimes it doesn't take much.

Looking specifically at the TSLA and QQQ charts, as TSLA rose, the market makers put in a good effort to cap the stock at 660 and then started pushing downward, but the dip in the macros (see QQQ chart) came to an end and hungry buyers bid the stock price up quickly. From 12:30pm on, QQQ was heading lower, with a really pronounced dip in after-hours trading. Such a macro descent in the afternoon is normally a chance for the pirates to start pushing TSLA down as well, but at a steeper rate. TSLA instead climbed until 2pm and then slowly settled (and didn't bat an eye when QQQ dove into the red after hours when Amazon lost 7%. TSLA definitely showed strength on Thursday.

Where does the stock go from here? The option sellers don't want to see TSLA exceed 700 because that's the approximate high side of the trading range, and if TSLA busts through 700 you could see a really nice climb as traders jump in and shorts back out. Thursday's action was much like trench warfare where one side (the option sellers) could no longer hold the line (650) and so they retreated to set up a new defense at 680, a more defensible location, with the goal of preventing a 700 breach. I would say the MMs stand a good chance of holding TSLA below 700 this week, but if 700 is breached hard, more movement is likely coming. Maybe we'll see a prolonged campaign to take 700 next week. TSLA looked just too strong on Thursday for MMs to push it down to 650 for the close, though. Volume of nearly 30M shares on Thursday gives the day's run upward all the more credibility (and difficulty for the pirates to overrule).

TSLA opened just above the 200 day moving average, bounced slightly off the upper bollinger band, then closed slightly below the upper bb. Notice the trading range since May with 700 being the high and about 550 being the low.


Conditions:
* Dow up 154 (0.44%)
* NASDAQ up 16 (0.11%)
* SPY up 2 (0.41%)
* TSLA 677.35, up 30.37 (4.69%)
* TSLA volume 29.7M shares
* Oil 73.62
* Percent of TSLA selling tagged to shorts: 35%
* IV 46.4, 1%

 

[Papafox]

TSLA chart above

QQQ chart above

I love trading weeks and trading days like this because the narrative plays out so clearly. Normally we see a run up into the Earnings Report, but that never happened this quarter, due to macro and sector forces plus some astute maneuvering by the options sellers. After that normal run up into the ER, we normally see a weak week following the report. Even though this was the best ER that Tesla ever produced (though not necessarily one that would create the greatest increase in stock price), fear of the "usual" post-ER dip plus a bad macro day on Tuesday allowed the usual suspects to push TSLA down more than $12 even though it should have risen after such a strong ER. The rest of the week was gamesmanship to keep bulls from getting frisking and starting a big rally.

Downer Tuesday gave way to whack-a-mole Wednesday, to thirty points up Thursday, which brought us to Friday with the market makers having two problems on their plate: keeping TSLA below 700 so that a major rally didn't develop, and finishing as close to the max pain as possible on close.

Even though Friday's pre-market trading was red for both QQQ and TSLA, by 10am both were moving higher and TSLA cracked into the green and started climbing. TSLA reached the danger zone a little before 1pm when it exceeded 695, and the market makers had no choice but to pull out the heavy artillery and cap the climb. Shortly thereafter TSLA began an orderly descent (even though the macros were not descending) on schedule for reaching the effective max pain of between 680 and 685 (the transition point between dominating puts and dominating calls) well before market close. With an hour and a half to go before market close, TSLA began horizontal trading mostly below 685, now that the closing target had been reached. Alas, traders were shrewd enough to see an opportunity, and they joined the buying in the final 8 minutes of market trading (thereby competing with the market makers who were planning to cover their shorting for the day). The price of TSLA of course went up a few dollars.

What to expect for Monday? If macros are a bit weak, expect the pirates to push hard down to try to avoid a $700 breach this coming week. They may not succeed, and if the stock price rises yet again and crosses $700, things may get interesting because investors sitting on the sidelines waiting for a breakout to happen may see the rise above $700 as a good clue that the tide has at last changed. Buying leads to more buying, which is why the option sellers will be working hard to keep TSLA below $700.

News:
* Demand for Model 3 and Model Y in the U.S. is extremely high. I just double-checked rumors and a Model 3 ordered today won't be available until November and a Model Y won't be available until December. It's hard to imagine that here we are in mid-summer with Model Y nearly sold out for the year. Word of Tesla's strong demand could become a catalyst if the media runs with it.

10 year treasury bond yields below 1.25% bodes well for high growth stocks such as TSLA

Bitcoin prices have risen above $40K now, suggesting that no impairments will need to be logged in Q3

Every strike price 680 and below was dominated by puts, and 685 was the first dominated by calls. Not coincidentally, the market makers pushed TSLA down below 685 for the final hour and 20 minutes of market trading. Unfortunately for them, in the final 8 minutes of market trading we saw the usual Friday afternoon buy-in of traders loading up for a potential Marvelous Monday Morning and the manipulation failed to close below 685 by $2.20. Looks like even though TSLA rose this week, the option sellers made out like bandits once again.

Coronavirus Update

The combination of the July 4 holiday and the arrival of the Delta variant was a bad combination in the U.S., as you can see from the spike.

Meanwhile, daily deaths are low for at least two reasons: the most vulnerable have already been vaccinated against Covid and aren't picking it up in numbers and there's about a two week lag between new cases and resulting deaths. Overall, I don't expect Wall Street to panic this time around because this is a pandemic of the unvaccinated, for the most part. The majority of Americans who are vaccinated will continue working and spending. My big hope is that this summer upturn is the wake-up call that many of the unvaccinated need to get vaccinated and help bring this pandemic at last to an end.

Looking at the tech chart, notice how the red 200 day moving average pretty much set the bottom of the trading range in July. On Thursday TSLA bounced off the upper bollinger band and settled a bit, but on Friday it rose above the upper bb then settled to the upper bb. What we'd like to see this coming week would be for the upper bollinger band to rise above $700 to minimize the resistance in punching through.

For the week, TSLA closed at 687.20, up 43.82 from the previous Friday's 643.38. It's been a good week, after all. Enjoy the weekend and let's look forward to next week's trading.

Conditions:
* Dow down 149 (0.42%)
* NASDAQ down 106 (0.71%)
* SPY down 2 (0.49%)
* TSLA 687.20, up 9.85 (1.45%)
* TSLA volume 28.5M shares
* Oil 73.95
* Percent of TSLA selling tagged to shorts: 38%
* IV 45.5, 1%

 

[Papafox]

TSLA chart above

QQQ chart above

With TSLA trading above 700 in pre-market trading, bulls were confident and not even a quick dip into the red shortly after open by QQQ could dissuade TSLA fever. TSLA climbed near vertically to 710 and then made quick work to 720, as well. The stock maxed out at 10:46am, about 20 minutes after QQQ's peak, exceeding 726. Between 10am and 2:45pm, a full 4 hrs. and 45 mins, TSLA threatened to climb above 720, but each foray above 720 was met by resistance.

Unfortunately for TSLA's strong day, the NASDAQ and QQQ faded as the day progressed, giving the market makers an excuse for a push below 710 for the close. Normally on days with such strong runs through noon, the stock will continue to trade at a high price as market makers load up on shares in the afternoon for delta-hedging. Perhaps with 33M shares trading (about 50% above normal) the market makers had adequate opportunities to buy for hedging purposes earlier in the day.

I am now rethinking market maker strategies after last week's trading. As you remember, TSLA gained nearly $44 during the week and yet it closed within a few dollars of the effective max pain price. Let's watch how max pain changes throughout this week and see how well the market makers can do if the rise of TSLA moderates rather than runs away. Removing some of that upward pressure in a controlled fashion would likely be more profitable to the MMs compared to holding too long in a tight range, only to see TSLA zoom upwards like in the 2019-2020 rally. Right now the strategy looks to be keeping TSLA below 720 for the week and then using any weakness (macro, news, etc.) to try for a 700 dip, only if possible. As I suspected, the strength of the Q2 ER wasn't missed by the market. Rather, the buying was delayed, and that delay was due in no small part to how the stock price was "tweaked" on the afternoon of the ER and on the following day.

Sometimes buying pressure simply doesn't allow a push down. Look at the TSLA chart and you'll see an attempt to push below 700 leading up to market open, push down below 710 a few minutes into the opening vertical run, and finally a successful push down below 720 every time the stock tried to run above this number.

The good news is that TSLA has risen above 700, which had stood as the top of the trading range for three months. Momentum traders are much more likely to jump in now that the trading range has been broken to the topside.

News:
* KGI Securities has begun covering TSLA with an outperform rating and a price target of 855
* Five days ago, a news article bragged that Ford now has 120K reservations for the EV Ford F150. On Monday, this Teslarati post suggests Cybertruck now has 1.2M reservations. Let's keep things in perspective.
* Joe Tegtmeyer Tweeted here that Austin may be just a few weeks away from producing test Model Ys

As if 10 yr. treasury yields falling below 1.25% wasn't enough, they declined even further on Monday. This, of course, is bullish for strong growth stocks like TSLA

Despite the wall of calls at 700, TSLA soared above 700 right from market open, thanks to the momentum of Thursday's and Friday's trading. Why did TSLA spend much of Monday battling to hold 720? Check out those calls at 720. Someone doesn't want TSLA closing above 720 this week.

Looking at the tech chart, TSLA closed today about $15 above the upper bollinger band. Usually (but not always) the stock price falls within the band after about two days as the band rises and/or the stock price declines). The exception is rallies of such strength that the upper bb runs after the stock price for days at a time, trying to catch up.

Conditions:
* Dow down 97 (0.28%)
* NASDAQ up 8 (0.06%)
* SPY down 1 (0.21%)
* TSLA 709.67, up 22.47 (3.27%)
* TSLA volume 33.1M shares
* Oil 71.26
* Percent of TSLA selling tagged to shorts: 36%
* IV 45.1, 1%

 

[Papafox]

TSLA chart above

QQQ chart above

Note: I am still time constrained... so much to ponder, so little time. Good news: my dog Iceman has survived his serious illnesses and is getting back on his feet again.

As we last left off, TSLA gained nearly $44 last week and market makers still managed to see a close last Friday within just a few dollars of effective max pain. So, how are things shaping up for this week? TSLA was up about $22 on Monday and flat Tuesday. Meanwhile, Max pain increased from Monday morning's 670 to Tuesday morning's 690. With not a lot of options open between 690 and 700, if the market makers can get TSLA to close at 700 this week, they will have yet again optimized profits from selling options and allowed the stock price to have proceeded higher (and thereby relieved some of the buying pressure without a mega-rally developing and TSLA running to the moon).

I'm thinking the new strategy is to protect the stock in the second half of the week from big runs higher but when buying pressure is present, allow the stock some room to run on Mondays. That run allows the market makers to once again take control of the stock price (although at a higher price) and the additional weekly call options purchased will drive the max pain numbers higher (and thereby allow the MMs to make close to optimal option sales profits even with the stock price increasing. Looks like the moderation of rallies (rather than trying to prevent altogether) is a possible new plan. We'll see. It might save the market makers the drama and costs that a mega rally such as 2019-20 can produce.

The tool that allows the market makers so much control over TSLA stock is that stock buyers rely too heavily on price behavior in deciding when to buy into this stock. If TSLA can climb above 700 but can't hold much of the gains above 700, then many buyers conclude that the stock simply isn't ready to go higher because "someone knows something."

Anyway, I'm getting ahead of myself. Looking at the TSLA chart, we saw price pushing 720 before market open. The usual suspects went to work shortly after market open and pushed TSLA down into the red as the NASDAQ headed there after 10am. Looking at the QQQ chart, you can see a strong reversal of QQQ around noontime, and then QQQ went on to close up nicely for the day. Look at the TSLA chart for noon and beyond and you have an afternoon of "whack the mole". Clearly TSLA ran down with QQQ but didn't run up with it. The reason? Volume decreased to a mere 21.5M shares for the day and the stock became easily manipulated, especially after the nice 10am Mandatory Morning Dip.

So, the question I have right now is whether the option sellers will allow TSLA to remain near 700 this week or if they're going to push harder toward a close closer to 690. The good news is that the upper bollinger band will be moving higher and giving TSLA more headroom to run over time. Good news, such as another round of $5K price increases for Models S and X LR suggest strong demand. Strong U.S. demand allows Shanghai vehicles to be sent to Europe, and strong Model 3 and Y SR+ sales in China will keep demand strong there as well. Really strong demand despite multiple price increases is the story that the media is not telling.

10 year treasury yields remain low and stable

Tuesday's Max Pain chart shows the large numbers of calls at 720, which is the reason why the option sellers have been so intent on Monday and Tuesday keeping TSLA below this number. Look at the nearly 10K puts at 690. The market makers don't want to go back down there by Friday.

Looking at the tech chart, today was up day number 5 in a row, which is an uncommon streak. The upper bollinger band has risen above 700 at last. The 50 day moving average is bending upward and will soon cross the red 200 DMA in a Golden Cross. More on this crossing tomorrow.

Conditions:
* Dow up 278 (0.80%)
* NASDAQ up 80 (0.55%)
* SPY up 4 (0.81%)
* TSLA 709.74, up 0.07 (0.01%)
* TSLA volume 21.5M shares
* Oil 70.56
* Percent of TSLA selling tagged to shorts: 40%
* IV 44.3, 0%

 

[Papafox]

TSLA chart

QQQ chart

For the second trading day in a row, TSLA exceeded 720 momentarily and gave heart palpitations to the market makers. In both cases, we saw a spirited effort to push TSLA back away from 720 by day's end. On both days, macros rose in the afternoon and TSLA resisted... first by staying level on Tuesday and then being pushed down on Wednesday as macros remained positive.

With even less volume of Wednesday (16M vs. 21M) the option sellers had an easy time walking TSLA down. The low volume suggests that nobody really wants to sell right now, which is good. It also suggests that we don't have big buyers at the moment. One possible explanation for lack of big buyers is that the big institutional buyers often like to avoid buying above the upper bollinger band. Looking at the tech chart below, you can see that through nearly flat trading, the upper bb has almost caught up with the current stock price. Perhaps on Thursday, with the upper bb rising further, some big dog buyer will jump in.

I'm keeping today's post fairly short because I want to post a recap of the late 2019 breakout and look at various cues that helped paint the picture of what was coming. I will post in this thread. Also, thanks to those who gave their well-wishes for Iceman's recovery!

Max pain stands at 690 again on Wednesday as we have somewhat lumpy calls and puts. Strike price 680 is dominated by calls but 690 is populated mostly with puts.

On the tech chart, notice that the upper bollinger band is just 30 cents below the stock price at market close on Wednesday. The blue 50 day moving average is arcing upwards to cross the red 200 day moving average for the Golden Cross. A Golden Cross with headroom between stock price and upper bollinger band could be a good combination.

Conditions:
* Dow down 324 (0.92%)
* NASDAQ up 19 (0.13%)
* SPY down 2 (0.49%)
* TSLA 710.92, up 1.18 (0.17%)
* TSLA volume 16.1M shares
* Oil 68.15
* Percent of TSLA selling tagged to shorts: 34%
* IV 43.4, 0%

 

[Papafox]

Prelude to the Late 2019 Breakout

It's helpful to look over our shoulders at the events leading up to the late 2019 breakout that brought TSLA up 12X. Fortunately, the posts in this thread are very helpful. Please join me in the wayback machine as we take a short trip back in time.

The journey begins Oct 2, 2019 when Tesla's Q3 Production and Delivery Report was announced. TSLA had been trading at about 245 for two week... it was as if someone didn't want it closing above 250 (imagine that!). A leaked email from Elon to employees stating that Tesla had a chance at 100K deliveries set unusually high expectations for the P&D Report. FactSet upped their expectations to 98K. When 97K were delivered, the usual suspects took the opportunity to use this ambiguous result to define it as a negative and push down. It was a 10% increase in production from Q2 and according to member @luvb2b Tesla was perhaps getting close to non-GAAP break-even with such deliveries.
10/2/19- Close 243 pre-split/49 post-split

10/3/19- Close 233 pre-split/.47 post-split

Meanwhile, the shorts smelled trouble and were starting to abandon ship

As with many manipulated events at TSLA, the smarter money bid TSLA back up to the pre-dip level.
10/10/19- Close 245 pre-split/49 post split

On October 14, 2019, TSLA crossed above the 200 day moving average with a gain of 9 and broke through the 245 capping
10/14/19- Close 257 pre-split/52 post split

On Oct 23, Tesla surprised with a strong 3Q ER that included:
GAAP profits: $150M
Cash flow: Net increase of $376M
Automotive Gross Margin: 22.8%, up from 18.9% last quarter


The next day, Oct 24, TSLA gained nearly 18% on heavy volume. Capping was evident at 300. Notice the walkdown of the stock price leading into the ER even though shorts were very actively covering during this time.
10/24/19- Close 299.6 pre-split/60 post split (nearly 18% gain)

1025/19- Close 328 pre-split/66 post split (up 9.49%)

Nov 3, 2019- Tesla had settled a bit from the two day mega-run. Trading was around 313 when I realized that the shorts were not going to be able to push TSLA down much more before the next up leg. I wrote that day, "P.S. The NASDAQ is not in the habit of sending engraved invitations when your favorite stock is about to run higher. It's your decision to join the party when evidence looks promising." Note that the blue 50 DMA was about to cross above the red 200 DMA in a "Golden Cross". This technical waypoint wasn't the reason for my call, however. I was judging the inability to push TSLA down further as an indication that the stock was about to get away from the manipulators again.

11/03/19- Close 313 pre-split/63 post-split

On Nov 6, 2019, the rally of 2019/20 picked up its second wind after manipulations temporarily halted the post-Q3 ER euphoria. Three events occured:
* Elon tweeted that Tesla's cybertruck would be revealed on Nov 21
* China's media was buzzing over a Nov 11 made-in-China Model 3 launch
Even with these events, we saw afternoon capping at 320 which may or may not have been broken
Alas, at 2:45pm Standard and Poors upgraded their outlook on Tesla from negative to positive. Volume took off and so did the stock price.
11/06/19- Closed at 326 pre-split/65 post split

Tesla investors who missed the 2013 rally didn't know it yet, but an even bigger rally had just begun

 

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TSLA chart above

QQQ chart above

I know, I know, it's deja vu all over again. For yet another day, TSLA climbed above 720, was bopped down, and closed with meager gains. Most notable aspect of Thursday's trading was the extremely low 12.6 million shares. Thus, once the morning volume disappears, it's easy to lead this stock price wherever one wishes. While the QQQ chart was climbing, TSLA was descending during the afternoon, as it does during a market maker manipulation. Also, check out that classic Mandatory Morning Dip for TSLA.

Take a look at the max pain chart below. First of all, official max pain jumped up to 692.50. The 690 strike is strongly favoring puts. Moreover, look at the 700 strike now... puts have almost caught up with calls. Even at 710 puts and close to calls in numbers, so the real incentive for the market makers is to get TSLA to close below 720. The market is perfectly happy to price TSLA at 720, but it can't stay there right now because certain parties are determined to pull it below that number during the light-volume afternoon hours. The good news is that the TSLA stock price has been following the upper bollinger band this week and it had previously been following the 200 day moving average. Both are running higher, so for now we may be taking the escalator higher, rather than the Starship.

What to expect for Friday? I'd certainly look for a close below 720. A close above 720 would mean the market makers lost control of the stock price and would bode well for Monday's trading.

News:
* AI Day- August 19- Strong rumors of Tesla linking up with a robotics guru give a glimpse at how Tesla could take the lead in yet another developing tech industry.
* As Clean Technica speculated, Tesla was not invited to today's EV announcements at the White House. Both Rob Maurer and Dave Lee looked at the snub, and neither were too worried. It was a chance for Biden to cozy up with the United Auto Workers. The good news is that the plan is for the EV incentive to be part of the reconciliation bill that the Democrats can pass without the need for Republicans. As Dave Lee pointed out, if this bill goes through, Tesla is pretty much assured of selling every vehicle they can manufacture, thus moving Tesla into an entirely new level of profitability during the life of the incentives.

Puts are gaining on call options at both the 700 and 710 strike prices, keeping the pressure on the market makers to tweek TSLA below 720 for Friday's close.

Check out that upper bollinger band and how the rally of the past six sessions has been tracking the upper bb. Meanwhile, the blue 50 DMA is getting closer to the red 200 DMA for the Golden Cross.

Conditions:
* Dow up 272 (0.78%)
* NASDAQ up 115 (0.78%)
* SPY up 3 (0.63%)
* TSLA 714.63, up 3.71 (0.52%)
* TSLA volume 12.6M shares
* Oil 69.09
* Percent of TSLA selling tagged to shorts: 40%
* IV 43.0, 0%

 

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TSLA chart above

QQQ chart above

Macros handed the market makers a gift on Friday. With the NASDAQ dipping and growth stocks such as TSLA feeling additional downward pressure from an upward bump in 10 year treasury yields, combined with very low volume of 15.4M shares for TSLA, the market makers had a walk in the park bringing TSLA down to the most profitable price for option expiration Friday. Max pain on Friday morning was 697.50 and seeing that there was a rising trend throughout the week on max pain, a close around 699 would be just about as close as one could get to maximizing profits for the option sellers.

Comparing TSLA to the QQQ chart above, you can see that QQQ pretty much leveled out by noon but TSLA continued the descent into close and beyond. No need to follow the macros when it is Friday and there is more money to be made by pushing TSLA lower.

Good economic news caused the 10 year treasury bond yields to rise on Friday, and the rise was seen as a negative for high flying growth stocks such as TSLA

Here is next Friday's max pain chart, which a max pain number of 700. The number of calls at 700 is a small fraction of puts, and so the market makers would prefer to see TSLA close above 700 next Friday. Notice the lack of a big call wall at 720, too. That enormous wall of calls resides at 750, and so the market makers will do what it takes to keep TSLA below 750 in the coming week. I look at this max pain chart as good news because it allows both longs and market makers to find common ground in the week ahead. The one caveat is to question who has bought all those puts. If they're hedge funds preparing for a manipulation, then the week could become interesting. I'll lean toward the positive interpretation of the chart unless we see otherwise.

Coronavirus Update

The Delta variant continues to create a noticeably large uptrend in new cases of Covid19 in the U.S. For the unvaccinated, this is bad news (but also an incentive to get vaccinated). Fortunately, most Americans are already vaccinated and although they can catch the Delta variant, for the most part the outcomes are satisfactory. The spike in Covid19 does not appear right now to be a threat to TSLA because the majority of Americans who are vaccinated will continue to work and buy. Concerns about a short-term effect on economic activity may actually help Tesla as it would likely affect interest rates and take away some pressure created by any rise in 10 year treasury bond yields.

Although the daily deaths lag the daily new cases by a couple weeks, we're still not seeing a big increase in deaths. Part of the reason could be the fact that the unvaccinated are generally younger and healthier than the vaccinated, and part could be that vaccinated individuals who catch the disease are counted in the new cases but are unlikely to end up on the daily deaths chart, due to significant benefits from the vaccines in reducing severity of the disease.

The blue 50 day moving average continues to close in on the red 200 day moving average for the Golden Cross, which will make technical traders happy. Meanwhile, Friday's dip and the upper bollinger band's continued climb gives TSLA about $22 of headroom for rising until it hits the upper bb again. This is important because many institutional investors like to buy below the upper bb.

Standing back for a broader look at Tesla the company, we anticipate good things ahead for vehicle manufacturing as Austin and Berlin factories come online, margins continue to improve, and Tesla sells every vehicle that they can make. Some lofty valuations for TSLA have been proposed because of the continued growth and improving margins.

Nonetheless, other areas of the company could surprise in the near future with significant contributions to total profits.
* ARK Invest continues to be bullish on Full Self Driving and the ride hailing business that Tesla would create. They're looking at $3000/share in 2025
* By the time Tesla succeeds with Full Self Driving, it will have accomplished one of the most important Artificial Intelligence (AI) feats of all time. Dave Lee and other astute followers of Tesla believe that Tesla will leverage their knowledge about building AI solutions, will also leverage the DOJO computer that would be extremely useful for developing AI solutions, and will expand into multiple additional products that require AI. The purpose of Tesla's Aug 19 AI Day will be to recruit the top talent entering the field. Hopefully, we don't see much speculation leading into the event (because these events when accompanied by price rising before the event then turn into sell the event situations. Nonetheless, if expectations remain low as we head into AI Day, there could be some positive surprises (partnerships, demonstrations, etc.) that could lead to buying.
* Much attention was generated within TMC investment forum by this video by Tesla Economist, regarding profit potential from Tesla Energy, especially the megapack business. Potential profits were suggest with numbers so high that they could even make Cathie Wood blush. The video does show that when Tesla executes well in a large potential market, the profit potential can be amazing.
* Overall, it's an exciting time to be a TSLA investor with multiple aspects of the company showing great promise while automotive continues to eclipse their prior records.

For the week, TSLA closed at 699.10, up 11.90 from last Friday's 687.20. Enjoy your weekend!

Conditions:
* Dow up 144 (0.41%)
* NASDAQ down 59 (0.40%)
* SPY up 1 (0.17%)
* TSLA 699.10, down 15.53 (2.17%)
* TSLA volume 15.4M shares
* Oil 68.28
* Percent of TSLA selling tagged to shorts: 41%
* IV 40.7, 0%

 

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TSLA chart above

QQQ chart above

So, let's look at Monday's TSLA trading with a little perspective. Almost every week this summer has ended with TSLA's price within just a few dollars of the max pain price for option buyers. Thus, we anticipate that reality this week too. Last week, TSLA ran above 720 most days of the week before being beaten down by you know who. On Monday the manipulators chose to cut TSLA off at 715 whenever it climbed through that number. The implication would be that last week's rise in TSLA was made possible by a big jump on Monday and a resulting upward movement of the max pain number as the week progressed. Let's see what happens on Tuesday but we'll need a bit more early week oomph to get the max pain number heading higher and therefor the stock price closing higher on Friday (or a surprise that causes the market makers to lose control of their tweeking efforts).

With volume a mere 14.6M shares, placing a lid on TSLA's climb becomes easier. Nonetheless, overall direction of this stock is upward at the moment and when TSLA does cut loose, you'll want to be in to enjoy that ride.

News:
* For an excellent overview of what's happening to the U.S. economy, I find these talks by Cathie Wood to be extremely useful. Her bias, of course, is that she runs ETFs that are loaded with high-flyers and of course her views are going to be somewhat tinted by her core beliefs that these particular high flying stocks have a great future. The positive side of her bias is that she touches upon issues that are particularly important for investors in high-flying tech stocks, such as TSLA. Given the benefit of time, I saw how her view that inflation is going to be more benign than the mainstream believes has so far come true. Check out the latest video for the big picture:

* This article from The Street says Jefferies has upgraded TSLA from hold to buy and raised the price target from $700 to $850. The Jefferies note is reproduced here in this TMC post
* In this Tweet, Joe Tegtmeyer shoes images of the Austin Gigafactory and how Model Y trial production is about to begin. Keep in mind that production of vehicles to sell to the public can be about 3 months behind the start of trial production
* In this Tweet, Gary Black says that 49% of analysts now rate TSLA as a buy, which is the highest level in 2 years.

The bottom line of Berlin and Austin getting close to testing production and analysts becoming warmer towards TSLA is that Tesla continues to execute and the pressure to push the stock price higher continues to build as well

10 yr treasury yields rose again on Monday but TSLA and other high flyers weren't negatively affected

On Monday we saw a jump in the FINRA percent of selling by shorts number, suggesting extra effort in moderating TSLA's climb on Monday

Unfortunately, the number of calls at 720 has been growing, suggesting that the market makers will make an effort to keep TSLA below 720 this week. If macros plus Tesla news allows for a climb above 720, then 750 would be the next price that the MMs set out to protect.

Looking at the tech chart, the headroom between the stock price and the upper bollinger band has been cut to 12, but a price of 726 would still be quite an acceptable outcome for most of us this week. The trouble, however, is getting that climb past the market makers.

Conditions:
* Dow down 107 (0.30%)
* NASDAQ up 24 (0.16%)
* SPY down 0 (0.08%)
* TSLA 713.76, up 14.66 (2.10%)
* TSLA volume 14.5M shares
* Oil 66.48
* Percent of TSLA selling tagged to shorts: 48%
* IV 39.3, 0%

 

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TSLA chart above

QQQ chart above

Day 2 of this week yielded a dip for TSLA. When you think about an ETF for high flyers (ARKK) being down 2.6%, and the NASDAQ being down about 0.5%, TSLA being down 0.53% makes it about even with the NASDAQ today, much better than ARKK high flyers, and much better than the typical 2X multiplier for TSLA when the NASDAQ is down. I suggest part of the reason for the benign trading today is that the small dip puts TSLA right about where the market makers want it on Friday. There's a tall wall of puts at 700, there's a very small hill of calls at 710, and so a close somewhere between 700 and 710 would be the preferred resolution on Friday, provided nothing big happens as the week progresses.

The big news item for Tuesday was the release of China delivery numbers. Here are three responses:
* CNN - Tesla sales cratered in China, but investors don't seem to mind In this story, CNN's reporter interviewed Gordon Johnson, who was more than happy to spin a fairy tale about Chinese buyers losing their interest in Teslas.
* Barron's- Tesla’s Deliveries Came Up Short in China. Why the Stock Market Doesn’t Care—and You Shouldn’t Either. Barron's has actually caught onto Tesla's practice of exporting heavily in the first month of a quarter.
* TMC @The Accountant - 2021 Monthly China Numbers for Proper Context - The accountant lists date when production numbers will likely be known and then goes on to show historical difference between 1st month of quarter deliveries and production over the same period. Conclusion: Bullish AF
Choose your source of Tesla news carefully, please.

Other News:
* The infrastructure bill passed the Senate 69-30 on Tuesday. That's good news because once the infrastructure bill becomes law the Democrats can concentrate on the reconciliation bill, which should include the EV credits. If buyers can get $10K effectively knocked off the price of an EV, Tesla will be able to sell every vehicle they can make for many years and Wall Street simply cannot ignore something like that.

Yields on 10 year treasury bonds drifted higher again on Tuesday

Meanwhile, Bitcoin has made a strong comeback from trading below Tesla's purchase price in the low $30Ks. No impairment for Q3, looks like

Check out the tall wall of puts at 700 and the minor hill of calls at 710. Between the two numbers is no man's land this week and that's where the market makers want to see TSLA on Friday.

Despite the slight dip in TSLA on Tuesday, the upper bollinger band continues to rise, as does the 50 day moving average. Tick, tick, tick.


Conditions:
* Dow up 163 (0.46%)
* NASDAQ down 72 (0.49%)
* SPY up 1 (0.12%)
* TSLA 709.99, down 3.77 (0.53%)
* TSLA volume 13.0M shares
* Oil 68.47
* Percent of TSLA selling tagged to shorts: 54%
* IV 38.0, 0%

 

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TSLA chart above

QQQ chart above
This week's TSLA trading is about as exciting as watching paint dry. The week is so boring that less than 10M shares traded hands today, giving the market makers carte blanche for moving the price wherever they like. Looking at the max pain chart below (official max pain is still 700) similar numbers of calls and puts exist at 705, and so a finish for the week between 710 and 700 still looks like the most likely solution. With not much reason to jump in or out and with low, low volume, the results are likely predictable.

Market makers can make TSLA appear to be reacting to the NASDAQ at anywhere from a 0.5 to a 4X multiplier of the NASDAQ's moves, the the market accepts the action without question.

There's an overall upward tendency with TSLA,, however, and if you look at trading around 10am-11am and then around 3pm, TSLA got ahead of the NASDAQ and was ready to run higher, so of course the whack-a-mole mallet was pulled out and "Whack!" TSLA gave up the green and settle back into the red where you know who wanted it.

In this TMC post, member @viridi apparently has the resources to see what's happening with the trading on a higher level than you or I and he spoke of capping and spoofing to keep TSLA below 710.

In this TMC post, member @Lycanthrope compares TSLA to other automotive stocks to illustrate how TSLA is likely being manipulated, rather than running with the pack.

News:
* A Republican senator from an agriculture state (Nebraska) introduced a non-binding resolution for the upcoming EV credit to be only available for EVs priced less than $40K and available only to buyers who make less than $100K/yr. The obvious conclusion is that this senator wanted to minimize the number of true EVs that are actually purchased with the credit (presumably to minimize the effect upon ethanol demand). These kind of games will continue until mid September when the bill gets hammered out. A bigger concern is that hybrids may be included in the proposed credits. This move would become a bailout for the existing auto manufacturers and have less to do with promoting EVs. Let's hope that issue gets cleared up, too.

Yields on 10 year treasury bonds nudged up a bit more on Wednesday

Want more evidence that substantial manipulations are underway? Check out the percent of selling by shorts chart.

Right now the sweet spot for market makers is a close of Friday between 700 and 710.

While TSLA trades in a slight decline in order to fulfill the market makers' most profitable price on Friday, the upper bollinger band continues to rise and is at 734 now.


Conditions:
* Dow up 220 (0.62%)
* NASDAQ down 23 (0.16%)
* SPY up 1 (0.25%)
* TSLA 707.82, down 2.17 (0.31%)
* TSLA volume 9.7M shares
* Oil 69.34
* Percent of TSLA selling tagged to shorts: 55%
* IV 37.5, 0%

 

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TSLA chart above

QQQ chart above

This week's "The dog ate my homework" award goes to short-seller Carson Block, who recently revealed a decision to cease his short on TSLA. Between a dream involving a no-show by Chamath Palihapitiya and an insight that interest rates are being held artificially low in order to spur on new technologies to combat climate change, there's no doubt that Block has come up with a story far too weird to convince any 4th grade teacher. Nonetheless, Block's decision to end his short of TSLA contributed to Thursday's TSLA strength.

The other aid to TSLA's strength came from a price upgrade by UBS from $660 to $725.

Let's follow TSLA and QQQ through the day, shall we? QQQ dipped nearly half a percent shortly after market open, with TSLA dipping about double that amount. Both broke back into the green about 10:30am but as QQQ rose higher into the green TSLA spent an hour of "whack the mole" time as it kept being pushed back to Wednesday's closing price any time it showed some strength. Alas, around 11:30am, TSLA broke free from the shackles of mole whacking and over the next half hour climbed above 720. Naturally, the market makers had to diffuse this rise to the forbidden price of 720 (way too many sold calls at 720 expiring Friday) and so a pushdown below 720 followed. Meanwhile, from 1:30pm until close, QQQ kept rising. This rising macro pressure kept growing and one had to wonder if the below 720 cap would hold at TSLA as the market galloped upward. Alas, with 15 minutes to go before market close, TSLA broke through the 720 cap and closed above 720 for the first time since April. Bravo!

All the shorting needed to keep TSLA below 720 (or to at least try doing so) necessitated covering by the market makers, and so we saw about half a million shares trade hands during the 4:00pm closing cross and at 4:01pm. Apparently that buying wasn't sufficient and TSLA continued to climb in after hours trading until peaking at above 725 at 4:32pm.

Of course I consider failures of manipulations to be a bullish sign. The flip side is that the market makers don't want to pay money to the holders of those 720-strike call options, and so we'll see them redouble their efforts on Friday to push TSLA below 720. Traders may smell blood in the water, however, so that if macros are positive the market makers could have a tougher time at it.

News:
* Twitter user Ray4Tesla reports that Tesla China has hired an experienced auto magazine editor for a position presumably to defuse FUD and communicate better within the country

The rising 10 year treasury bond yields have moderated on Thursday, which might account for part of the market's optimism

Percent of selling by shorts dropped on Thursday, which means that shorting was less prevalent on Thursday, right? Actually, I've come to regard such dips on obvious manipulation days as a contra-indication. We also saw that TSLA trading on FINRA exchanges dropped on Thursday. The logical conclusion is that the market makers moved their shorting of TSLA to dark pools to better conceal the mischief.

That tiny hill of 720 calls has now grown into a nice sized mountain

Looking at the tech chart, TSLA's breaking free from the "must close below 720" shackles is another clue that this stock wants to run higher. The upper bollinger band is nearly to 740 now, leaving lots of headroom for further climbing.


Conditions:
* Dow up 15 (0.04%)
* NASDAQ up 51 (0.35%)
* SPY up 1 (0.30%)
* TSLA 722.25, up 14.43 (2.04%)
* TSLA volume 17.2M shares
* Oil 68.92
* Percent of TSLA selling tagged to shorts: 42%
* IV 38.5, 1%

 

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TSLA chart above

QQQ chart above

On Friday the most likely scenario took place: the market makers succeeded in pushing TSLA back below 720. The good news is that any price above 710 was a bit of a failure for the manipulators this week, and they failed by about $7, which is noticeably higher than normal. Again, I consider failures of manipulations to be bullish signals.

TSLA was generally showing more strength than QQQ in pre-market trading. Within half an hour of opening, TSLA rose to within $1 of $730. Then at 10am came a hard push down of TSLA, the real Mandatory Morning Dip that got the "readjustment" of TSLA's price going on Friday. If you look at QQQ, you will also see a strong green spike upward around this time, but the timing is critical because as the 10am plunge on the backside of TSLA's spike was underway, QQQ was rapidly rising. Certainly, we weren't looking at macros as the cause of the 10am TSLA plunge. For those pundits of the market who shun the thought of manipulation, I will give them credit that auto stocks generally had a bad day on Friday, but the timing of the ups and downs suggests other factors here.

Consider, for example, as 3:00pm approached, QQQ had begun a march upward into closing. TSLA, OTOH, traded level because it was being capped to prevent any further degradation of the option sellers' profits for the week.

Significant short-selling in order to keep TSLA well below 720 would of course require significant covering of those short positions at day's end (otherwise, one is risking being out of neutral should a strong Monday morning upswing materialize).

News:
* Tesla Annual Meeting set for October 7, 2021
* 2 days later, Tesla is giving factory tours of the Berlin Gigafactory on October 9, 2021
* Elon Musk was caught on video saying he hopes the Berlin Gigafactory will be turning our vehicles by October, or soon thereafter

Nice decrease in yields for 10 year treasury bonds on Friday

Here's the max pain chart for Friday, Aug 20, a monthly expiration. Because it is a monthly expiration, some of the calls and puts were purchased when TSLA was at a lower price, which is why, for example, we see calls exceeding the number of puts at 700. I suspect we'll see more than the usual amount of adjustments to to the puts and calls as the new week progresses.

Coronavirus Update
The summer spike of the Delta variant of the Coronavirus now has daily new cases exceeding previous outbreaks with the exception of the winter of 20/21. Fortunately, the rise in the daily deaths has been much more gradual than in previous outbreaks. While the loss of life in the U.S. is a humanitarian tragedy, business is likely to continue (because most adult Americans are now vaccinated) and Wall Street should weather this storm. Any slowdown in the economy would tend to lower interest rates and might actually help high flying companies such as Tesla.

Interesting timing: the golden cross of the blue 50 day moving average through the red 200 day moving average should take place this week as TSLA prepares for the AI Day event on Thursday. Houston, we may have a catalyst. Meanwhile, the upper bollinger band has risen to about 743, so there's headroom for a climb, as well.

For the week, TSLA closed at 717.17, up 18.07 from the previous Friday's 699.10. That makes a gain of 81.86 in the last 3 weeks. Not bad. This past week was the week of TSLA being pushed below 720 for the Friday close and the previous week was a push slightly below 700 for the close. We know the game. Have a great weekend!

Conditions:
* Dow up 16 (0.04%)
* NASDAQ up 7 (0.04%)
* SPY up 1 (0.18%)
* TSLA 717.17, down 5.08 (0.70%)
* TSLA volume 16.7M shares
* Oil 68.44
* Percent of TSLA selling tagged to shorts: 45%
* IV 38.7, 1%

 

[Papafox]

TSLA chart above

QQQ chart above

Consider the following possible explanations for why TSLA closed down $31 on Monday:
* The NHTSA is responding to NTSB pressure and is conducting an investigation into 11 autopilot crashes involving first responders.
* QQQ lost over 1% by 11am while TSLA lost more than 5%
* Sawyer Merritt Tweeted "the full Fremont Model 3 line was shut down on Sunday the 15th. Parts shortages was the reason given for the shutdown."
* EV companies with exposure in China had a bad day as fears arose that the government crackdown on games (history could be rewritten) could somehow lead to a crackdown on EVs manufactured in the country. Closing down were NIO (5.87%), BYD (7.97%), XPENG (6.58%) and TSLA (4.32%)
* Max pain Monday morning was 690 and may well be lower Tuesday morning. Market makers had an incentive to help TSLA with its dip today and then cap in order to keep the positive events of the week (Golden Cross and AI Day) from pulling the stock too high above max pain

Let's look at each one individually:
*Autopilot probe- The NTSB is all about investigating accidents and for this reason is biased against the positive effects of Tesla Autopilot. NHTSA has a broader (and likely more balanced) view of Tesla autopilot, but the agency is getting heat. There's even the possibility the Biden Administration is trying to turn up some heat on Tesla, given the hatchet job we've seen recently on the proposed EV incentives. The probe is examining version of Tesla's software that are no longer relevant to the current product and the greatly improved product we're going to see in another month or two (version 10 or 10.1). Given how irrelevant the investigation is, and given the high incidence of drunk drivers involved in these late night/early morning crashed the most likely corrective action (if any is required) would be requiring Tesla to activate its interior camera for monitoring the driver's eyes on the road. Chances are that Tesla already has built software for this possibility. Opinion: Not powerful enough by itself to account for dip

Macro forces- Notice that the QQQ dip bottomed out about 11am and then QQQ actually managed to sneak into the green prior to close. TSLA, OTOH, showed exaggerated dip (over 5%) in the morning along with QQQ but then remained low while the macros recovered. Opinion: TSLA didn't recover with QQQ. Something else was afoot

Sawyer Merritt Tweet of Model 3 line shut down on Sunday- If the shutdown is only for a few days, no big deal. If it is longer, Wall Street could get a bit worried (but China is cranking out vehicles and Tesla is already halfway through the quarter with no apparent major reduction in output). Troy's numbers are still indicating a beat over Q2 production and deliveries. Opinion: This is something to watch but word is not yet widespread and length of stoppage still is unknown, so probably not the big issue on Monday

China EV companies were down on Monday- These were really big dips on Monday. Moreover, the dips involved quick dip and then the stock price staying low all day through close. The pattern more closely matched what we saw with TSLA today. Opinion: Yep, part of the reason for Monday's dip

Market Maker Manipulations- They do it every week, why not this week, too, especially if the maximum pain number is below 690 on Tuesday morning and TSLA could be showing strength as the week progresses? Most traders have learned to expect a "sell the news" dip after an event such as AI day, but this dip typically follows a rise into the event. With TSLA this week, it may be easiest for the Market Makers to capitalize on all the negativity of Monday to get the stock price down and keep it down for the day than it would be to push downward throughout the week. Also, if the stock is depressed during the Golden Cross, it loses some of its punch for technical traders. Opinion: Yep, likely a factor

Monday brought even lower yields on 10 year treasury bonds, which is a positive for high growth stocks like TSLA

Though TSLA dipped below the mid bollinger band on Monday, it rose high enough to close at the mid-bb. Monday's negativity also allowed the upper bollinger band to stop rising, which would be helpful to the Market Makers should something really terrific be revealed during the AI Day event.

Conditions:
* Dow up 110 (0.31%)
* NASDAQ down 29 (0.20%)
* SPY up 1 (0.24%)
* TSLA 686.17, down 31 (4.32%)
* TSLA volume 23.1M shares
* Oil 67.48
* Percent of TSLA selling tagged to shorts: 44%
* IV 41.2, 2%

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday was day 2 of the mystery dip. The NHSTA autopilot investigation story just didn't warrant anywhere near this level of dip. We learned today that Model 3 production commenced again on Monday, so the Sawyer Merritt story of the weekend stoppage was not the cause either. China EV stocks sank on Monday and both Ford and GM sank on Tuesday, but those events don't explain TSLA's trading by themselves. Nor do I think that some whale of a investment organization was simply trimming TSLA shares. Monday morning's dip was far too steep for that explanation to make sense, nor would we have seen Monday afternoon's capping to keep TSLA level as the NASDAQ recovered. A big investor would be more subtle in order to avoid the kind of price degradation we've seen in the past two days.

Another indication that someone was trying to push TSLA down (rather than someone was just unloading shares) was that around 1:50pm TSLA actually sank below 650 for a few minutes. Touching 650 would activation stop-losses set at this amount, and I don't think a seller would want to do that.

Instead, I think we're seeing an old fashioned bear raid, similar to what we saw in earlier days. Don't ask me who is the instigator, but I can tell you that the NHTSA investigation is the necessary fear-inducing catalyst to distract from the real source of the dip. During a big dip event, hedge funds will short on the way down and cover near the bottom to profit from the dip, and I have no doubt that they made some bucks from this dip too. The involvement of hedge funds doesn't explain some of the other oddities of the dip, however, such as Monday afternoon's capping while the NASDAQ rose.

Why would the event take place early this week? One explanation is that TSLA is poised to pop higher. Many technical traders have been drawing charts to predict what comes next. In Tuesday's TMC main investors' forum, @Paracelsus in this post offered a chart with a downtrend of the past 6 months and the uptrend of the past 2 years creating a pennant (triangle) with a tip where the stock will likely break up or down. When TSLA reached the tip of the pennant, it continued to follow the uptrend line, a trajectory that someone didn't like and wished to suggest a different direction of movement. Other charts I've seen have been very similar to this one. With the 50 day moving average about to do the Golden Cross through the 200 day moving average, and with AI Day on Thursday, these potential catalysts when added to the the pennant resolution could easily send TSLA higher. And so someone has decided to redraw the technical chart of TSLA's trading, at least temporarily, to try to fool the market into believing that TSLA is about to break lower. One possibility could be that a big buyer wishes to accumulate TSLA at a good price prior to the break upward. As for market makers, let's see where TSLA closes on Friday. A close near the present max pain number of 685 would suggest their involvement in the mischief.

Fortunately, TSLA showed a climbing trend after 1:45pm Tuesday, a climb that was steeper than the NASDAQ's. The dip may have played out. Let's see how the macros treat TSLA Wednesday morning.

News:
* Goldman-Sachs reiterated TSLA buy rating
* Cramer is saying "Buy TSLA"

10 year treasury bond yields are almost down to 1.25% again, which is postive for high growth stocks like TSLA

Our old friend the 200 day moving average provided support today as the stock price closed just above it


Conditions:
* Dow down 282 (0.79%)
* NASDAQ down 138 (0.93%)
* SPY down 3 (0.66%)
* TSLA 665.71, down 20.46 (2.98%)
* TSLA volume 22.9M shares
* Oil 66.64
* Percent of TSLA selling tagged to shorts: 39%
* IV 45.9, 6%

 

[Papafox]

TSLA chart

Wednesday was the day the market called "bullsugar!" to the week's TSLA negative trading and bid the stock back up substantially. On Tuesday quite a few TMC members posted their buys and the market followed the next day. Bravo. The bottom line is that Tesla continues to grow rapidly with accelerating margins and two new gigafactories to open later this year. The market on Wednesday realized the media blitz against Tesla had been overplayed.

The volatility in the QQQ chart during the afternoon was initially caused by algos interpreting comments from the Federal Reserve. What's interesting is that even after QQQ dipped nearly 1% into close, TSLA lost far less of its gains for the day.

Thursday will be AI Day after close. That timing may add some upward pressure to the stock on Thursday.

QQQ chart

Max pain was down to 680 Wednesday morning. After the day's positive trading, max pain could recover to perhaps 685. If that's the case, the current price of 689 just isn't too far away.

On Tuesday we saw TSLA close at the 200 day moving average. On Wednesday, the close was at the mid bollinger band. Technical traders keep mentioning 730 as a price that could cause TSLA to run quite a bit higher. This week's dip makes 730 less likely should AI Day bring some pleasant surprises for TSLA shareholders.

Conditions:
* Dow down 383 (1.08%)
* NASDAQ down 130 (0.89%)
* SPY down 5 (1.09%)
* TSLA 688.99, up 23.28 (3.50%)
* TSLA volume 20.2M shares
* Oil 64.67
* Percent of TSLA selling tagged to shorts: 41%
* IV 44.3, 4%