Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Thursday was not a good day for automobile stocks. Ford closed down 2.5%, GM down 3.5%, XPENG down nearly 5%, and Nio down 6.6%. TSLA likely got caught up somewhat in the sector dip. That said, various entities look like they added to the dip. Consider the massive 2:30pm category 5 tornado that just so happened to take place during the low volume afternoon of a day with only 14 million shares trading. Fortunately, buyers bid the price right back up again, giving the tornado a symmetrical shape and strongly suggesting manipulations.

Right now, the big issue that pundits are watching with Tesla is the effect of parts shortages on Q3 production. The market gets spooked when Toyota announced (as it did) that they were cutting September production 40% due to parts shortages and the worrywarts assume bad things for Tesla as well. OTOH, consider the evidence that Q3 production appears on track so far:
* Troy is estimating 220K deliveries in Q3, which is about a 10% increase over Q2. So far in 2021 Troy has been guessing to the light side of actual.
* Ship watchers have counted 16 vessels leaving China for overseas deliveries of Teslas, the highest number observed so far
* @gabeincal , our local Freemont Drone pilot, just flew over the factory and sees no evidence of reduced output in this TMC post

The bottom line is that production and deliveries appear on track so far but the market doesn't look at these things as carefully as we do.

AI Day
My impression of AI Day is that it'll serve its purpose as a recruiting tool for attracting some of the most talented AI minds coming out of our colleges. There was nothing that analysts could slap a short term revenue and profit number onto, so it's not likely to move the stock price. Nonetheless, just with the Plaid reveal, the significance of what has been (as is being) done is immense and requires time to fully appreciate.

Andrej Karpathy and his team did an excellent job of explaining how autopilot/FSD has evolved and gained its current capabilities. The simulation showed an extraordinarily accurate depiction of the real world.

The Dojo computer discussion was absolutely mind blowing when one considers the power of this upcoming machine. The world's most powerful supercomputer now runs about 500 Petaflops capability, and the Dojo computer will do double that, more than 1 Exaflops per cabinet (and multiple cabinets can be strung together).

Finally, Tesla revealed it is embarking on creating a humanoid robot using the most advanced real world AI out there to do boring, repetitive, and dangerous jobs. Such a product likely sounds like science fiction to most analysts, so don't expect any positive response this week, but the truly important point is that Tesla is a leader in AI because of their autopilot development experience and they're planning to leverage (for material gains) this knowledge to push the boundaries of what is possible with AI at this time.

Thank goodness Tesla invited AI geeks and not analysts because the questions were actually pretty good.

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Yield on 10 year treasury bonds descended below 1.25% on Thursday, good for high growth stocks

Max pain was 680 on Thursday morning but could dip slightly by Friday. The TSLA stock price is actually not far from their most profitable Friday afternoon closing price. OTOH, futures are down Thursday evening, which might discourage market maker upward pressure on Friday. Also, since traders are used to seeing sell the news events after a typical Tesla presentation (Model 3 was a big exception), the hedge funds might give some downward pressure on Friday.

The stock price bounced off the 200 day moving average and recovered some of its value on the far side of the 2:30pm tornado.

Conditions:
* Dow down 67 (0.19%)
* NASDAQ up 16 (0.11%)
* SPY up 1 (0.15%)
* TSLA 673.47, down 15.52 (2.25%)
* TSLA volume 14.1M shares
* Oil 64.05
* Percent of TSLA selling tagged to shorts: 40%
* IV 46.6, 7%

 

[Papafox]

TSLA chart above

QQQ chart above

As you may remember Thursday evening when I wrote my previous post, I was doubtful that the market makers would be able to hit their max pain target of 680 for Friday close. After all, futures were red for Friday and we normally see a sell the news reaction after Tesla presentations. Silly me. On Friday, max pain for option buyers was 680 and we closed at 680.26. Here's what happened.

* QQQ and the NASDAQ went from red to green as market open approached. This swap in sentiment turned a macro headwind into a macro tailwind
* Investors took a positive view of AI Day. Part of the reason is that TSLA traded down for the week going into AI Day, so there was no bidding up of the stock price prior to the event. In fact, Thursday's trading had been down 2.25%. Expectations were low, and it wasn't the Tesla Bot that turned heads. Instead, it was analysts such as Gene Munster who told TV viewers that AI Day clearly showed Tesla's large lead in technology over other automakers. Such a statement is the antidote for "competition is coming" and investors ran with it. TSLA jumped to nearly 692 right after market open.
* Friday's volume was a mere 14M shares. This low volume greatly aided the market makers in their manipulations.

And so we saw the typical Friday morning pushdown of the stock price when it is too far above max pain. Notice that TSLA and QQQ were moving in opposite directions for much of the morning. With upward pressure on the stock, it was best to hold TSLA below the max pain chart, anticipating that some late afternoon bidding up of the stock is likely when it is closing artificially low for the week. After all, traders like to grab some TSLA late Friday afternoon in anticipation of a Monday Morning pop. TSLA did indeed rise, and when it attempted to climb through 680 the market makers applied the necessary force to bring it right back down to 680 for the close.

Now, let's back off and look at the past few weeks and how the market makers still managed to hit their max pain price fairly closely even though we have seen some significant rises and falls. Friday, Aug 13, saw TSLA close at 717, up $81 over the past three weeks. The problem for the week ending Aug 20, however, was that it was a monthly options expiration date, which means that a lot of the bets were placed before the $81 run higher and thus those bets pulled the max pain number down for Aug 20. The easiest way to deal with too low a max pain number is to push the stock price aggressively down in the beginning of the week so that the price and max pain more closely align. TSLA went down to 650 during the week before recovering, and this plunge helped the max pain dip to 680.

Other weeks follow similar patterns. If there's upward pressure on the stock price, allowing the stock price to run higher early in the week can result in the max pain number rising and then a push lower toward week's end (with the help of market makers) can relieve some of the upward pressure on the stock but also prove very profitable to the market makers as the max pain number rises and they can then close close to this higher number.

For the coming week, one would expect upward pressure on the stock price, and the market makers might allow a nicer climb on Monday and Tuesday and then clamp on the shackles for the remainder of the week. Also, I look at AI Day similarly to how I saw the Plaid reveal in that it took time for investors to realize the significance of what was unveiled. Let's see what happens.

Here's the max pain chart from the Friday that just ended, Aug 20. If you find the 680 strike puts and calls peak, you'll see that calls are just a shade under 20K in volume and that puts are at least 16K in volume. In other words, when puts and calls are closely matched (and in large numbers) at the max pain price, closing right at that number yields the best profits. Sometimes simply closing above or below the max pain is "good enough" but with puts and calls closely matched it's best to close close to that strike price. Thus, Friday's 680.26 close.

Here's the max pain chart for the coming Friday, Aug 27. Max pain is at 680, but don't be too surprised to see that number rise as we head into mid-week. You can also see lots of calls at 700, and so one possible outcome would be a close on Friday of just below 700. Sooner or later, though, the market reserves the right to call "bull sugar" and if the price rallies well enough, volume can pick up to the point where manipulations are ineffective.

TSLA climbed early Friday morning, bounced off the mid-bollinger band, then sank back to close at the max pain price. Notice the 50 day and 200 day moving averages continue to get closer to each other, now only about $3 apart.

For the week, TSLA closed at 680.26, down 36.91 from the previous Friday's 717.17 close. Nothing is apparently wrong with Tesla, it's all a matter of market makers using the weak macros and weak auto and EV sectors early in the week to press down far enough to achieve their max pain target of 680. Hoping you enjoyed a good weekend.

Conditions:
* Dow up 226 (0.65%)
* NASDAQ up 173 (1.19%)
* SPY up 4 (0.80%)
* TSLA 680.26, up 6.79 (1.01%)
* TSLA volume 14.8M shares
* Oil 62.32
* Percent of TSLA selling tagged to shorts: 40%
* IV 43.1, 4%

 

[Papafox]

TSLA chart above

QQQ chart above

You gotta love the drama of the TSLA trading games underway. Last week we saw market makers successfully push TSLA down to within 26 cents of the 680 max pain number at week's end. It was a wild week with macros and sector weakness helping the early week pushdown. Tuesday was the real turning point as hedge funds shorting the decline managed to get TSLA to descend below 650, where I believe they expected to reap the benefits of triggering stop-losses. Instead, buyers eagerly bought up the $650-priced shares and managed to drive TSLA back up to the 200 day moving average (about 665). Wednesday was a big up day celebrating that bounce, and Thursday was an unexpected manipulated dip courtesy of the market makers. The real crux of the week's drama, though, was that Tuesday bounce off 650 because of its implications for "the pendant".

As you may recall, the pendant referred to that pendant-shaped triangle formed by the descending 6 month trendline and the ascending 2 year trendline. When TSLA reached the tip of the pendant it continued to rise, which strongly suggested TSLA was ready to break out to the upside. Alas, the market makers don't want a breakout because they've been making far too much money here in the narrow horizontal trading that TSLA has been stuck in. Thus, we saw a real effort last Tuesday to sink TSLA far enough to generate some fear that the break is really going to be to the downside. When the bounce off 650 came, the effort had failed.

TSLA entered this week after a significantly manipulated decline, and that's a setup for an up week to follow. We also had a positive response to AI Day, and investors are slowly figuring out just how meaningful the implications of AI Day really are (Tesla and SpaceX pulling in the brightest minds in the world to work for them, Tesla far ahead of its competition in technology and accelerating further ahead, and a new revenue source, AI and robotics, being announced). When the NASDAQ gained over 1.5% on Monday the setup was complete and TSLA roared higher.

Looking at the daily trading chart you can see the reliable Mandatory Morning Dip right after open as market makers were likely sending the message "there's nothing positive to see here, move along if you are a trader." Alas, TSLA quickly went near vertical through 695 and then kept rising until it approached 710. I believe this is where the market makers capped the stock in order to keep a pushdown to 700 as an option this week (it may not happen). Look at the volume of over 20K, which explains why TSLA was able to shrug off some manipulations and run more with market sentiment instead.

What happens going forward this week will be interesting because there's a wide range of potential outcomes. Looking down at the max pain chart you can see that the market makers really would like to get a descent down to 700 because of the massive call level (or even down to max pain). They've been extremely successful this summer at their manipulations, so don't count them out. OTOH, big institutional investors often respond to technicals, and with a positive resolution to reaching the end of a long pendant and with the upper bollinger band nearly reaching 740 now, there's a setup for that breakout to happen. Many pundits believe that if TSLA crosses 730 there's a path to a noticeably higher valuation. The 50 day moving average is nearly within $2 of crossing the 200 day moving average at a time when a Golden Cross could look especially potent. Volume will likely determine whether the breakout occurs or not.

Here's another factor to consider. Most of the concern following the excellent Q2 earnings report focused on Elon's words about parts availability. Here we are nearly 2/3rds through Q3 now and the July China production numbers of 37K suggest no big problems. August China production is rumored to be significantly higher. Reasons for holding off on a TSLA purchase are rapidly disappearing for the big dogs.

Note: Today I've begun adding daily Max Pain number to the "Conditions".

10 year treasury bond yields are stabile at the moment around 1.25%, which is attractive for rapid-growth companies such as Tesla

Again, I usually use a dip in the percent of selling by shorts number to be a contrarian indicator. Usually it means that those doing the shorting moved their source of shares to short from FINRA exchanges to non-FINRA.

Max Pain was indicated as 680 on Monday. Notice the high number of calls at 700. You need to move to 750 to see the next call mountain. That situation will change as the week progresses, however.

Check out the blue 50 day moving average about to "Golden Cross" through the red 200 day moving average. Also notice the previous weeks of trading in the 710 to 720 range, which should make a climb back into this realm easier.

Conditions:
* Dow up 216 (0.61%)
* NASDAQ up 228 (1.55%)
* SPY up 4 (0.88%)
* TSLA 706.30, up 26.04 (3.83%)
* TSLA volume 20.1M shares
* Oil 65.54
* Percent of TSLA selling tagged to shorts: 34%
* IV 39.2, 2%
* Max pain 680

 

[Papafox]

TSLA chart above

QQQ chart above
Please notice that the QQQ chart looks more exiting than it really was. The morning peak for QQQ was a gain of less than 1/2 of 1%, while the morning peak for TSLA was nearly 3X that amount.

I really didn't know if Tuesday was going to be a typical manipulation day or if enough optimism had been generated in the past week about Tesla so that the volume could grow high enough to overpower the market maker manipulations. We got our answer first with a Mandatory Morning Dip as soon as market trading began, and a quick pushdown of the green reaction to that MMD. I think the chief purpose of the MMDs are to chase traders away and keep the volume light. Once the day's gains had been removed, the game was to use the whack-a-mole mallet to bop TSLA any time it ventured above the red/green line. As 3pm approached, TSLA rose above the whack-a-mole threshold and managed to add a couple dollars to the price before close. Alas, volume was only 13 million shares, and it'll take more than that to get TSLA breaking out.

Nonetheless, Rob Maurer struck an optimistic note on Tuesday with this video, entitled "Why Tesla could be set up for a huge beat"

Overall, I tend to agree with Rob that Q3 is going better than expectations set around the time of the Q2 earnings call. Here's a graph from James Stephenson that gives you an idea of where TSLA is heading. My biggest suggestion is to avoid trying to time specific events with your TSLA investing. Everything takes longer than expected, includes some hickups and is bombarded with FUD. Eventually, it happens, and you want to be in when it happens.

Here's the link to the Twitter post by James of this chart

treasury bond yields crept up on Tuesday but are still at a desirable level for growth stocks

Despite puts and calls trending higher, we didn't see the max pain budge off 680 on Tuesday. My guess is that the market makers would still like TSLA at 700 for Friday's close. Let's see what macros and news throw at us as the week progresses.

That painfully slow overtake of the 50 day moving average to the 200 DMA continues. The two numbers are less than $2 apart now.

Conditions:
* Dow up 31 (0.09%)
* NASDAQ up 77 (0.52%)
* SPY up 1 (0.16%)
* TSLA 708.49, up 2.19 (0.31%)
* TSLA volume 13.0M shares
* Oil 67.64
* Percent of TSLA selling tagged to shorts: 37%
* IV 39.6, 2%
* Max Pain 680

 

[Papafox]

TSLA chart above

QQQ chart above
So, the plot thickens. Because the big rise in TSLA took place on Monday, option buyers (both put and call) have adjusted their bets and the max pain grew this morning from 680 to 690. If it can grow once again to 700 and the market makers push TSLA down on Friday, we could see once again a close extremely close to max pain (which would allow the pirates max profits).

Looking at the TSLA chart above, here is how they controlled TSLA tendency to climb on Wednesday. First, you see two Mandatory Morning Dips, one right after market open and another closer to 10:30am. Right on schedule. Again, these MMDs have a tendency of shooing away traders by saying "no big rally is going to happen today". The resulting low volume can then be better controlled. Next, we saw capping any time TSLA exceeded 715. Finally, there's the large final hour pushdown which sliced $4 off the gains today. On Tuesday we saw a dip of about 50 cents during that period, and on Monday the final hour pocket picking was greater than $2.50. So in three days we've seen about $7 sliced off the share price through the final hour pushdown. That slicing adds up. Market makers really want to keep TSLA within striking distance of $700 this week. The good news is that they're having to work hard to do so, which strikes me as bullish.

In News:
* Elon Tweeted that Version 10 of the FSD autopilot comes out a week from Friday and that "the button" for users to download should become available about 4 weeks after that
* In this Bloomberg Interview, Cathie Wood said that the autonomous taxi network over the next 10 years will grow to about $11 trillion from nothing, and that Tesla has the pole position here.

Meanwhile, reports of 1,800 vehicles/day output from Shanghai and more battery cells coming to Fremont in October (see this post by @Artful Dodger ) suggests lots of growth coming in 2021, more than what analysts have been expecting. Tick, tick, tick.

Yet another day of higher 10 year treasury yields growth might put some pressure on growth stocks if this trend continues. Fortunately, below 1.4% is still an attractive number and doesn't sound any inflation warnings.

The max pain number has risen to 690 Wednesday morning. Look at how puts have nearly overtaken call options at strike 700.

TSLA Shorts are once again in negative numbers (losses) for 2021, as they have been for other years as well.

TSLA is once again trading near horizontally in that 700 to 720 range where it was before the pushdown to enable the 680 close last week. The 50 day moving average is now just barely $1 below the 200 day moving average. Because TSLA is back in that previously narrow trading range, the upper and lower bollinger bands are zooming back towards the mid bb, and the IV is showing a mere 2%.

Conditions:
* Dow up 39 (0.11%)
* NASDAQ up 22 (0.15%)
* SPY up 1 (0.21%)
* TSLA 711.20, up 2.71 (0.38%)
* TSLA volume 12.3M shares
* Oil 68.36
* Percent of TSLA selling tagged to shorts: 38%
* IV 39.0, 2%
* Max Pain 690

 

[Papafox]

TSLA chart above (market trading hours only)

QQQ chart above

Seriously, is there anyone out there surprised that TSLA is trading near 700 as we approach Friday? This week has been just another week in the pattern we've been seeing this summer. TSLA makes a big move early in the week and then the market makers spend the rest of the week pulling it as close as possible to max pain. This week is no different. Very positive news about Tesla has been overshadowed by skillful manipulations. Traders don't jump in if the mandatory morning dip scares them away, and without sufficient volume the market makers have their way with this stock.

For the first 3 days of this week we saw upward pressure on TSLA's price, but somewhat negative macros on Thursday allowed the market makers to guide TSLA right where they want it for a Thursday close.

Q3 production and deliveries are looking good so far, which suggests a bidding up of the stock price as we get closer to the end of September. When the big dog traders return from vacation in the Hamptons and volume rises in September, that will be a helpful change as well. The market doesn't often move in predictable fashions, so you could indeed see a bidding up of TSLA earlier than expected. The toughest part of investing in TSLA is waiting for the inevitable shaking off of the manipulations and then seeing a rally that establishes a new value for the stock (then the games begin anew).

Max pain is at 690, primarily because that big peak of 680 calls is entering the equation. OTOH, we see nearly equal numbers of calls and puts at 700 strike. I tend to agree with @Curt Renz that 700 might be a better target for the market makers to shoot for on Friday.

Looking at the tech chart, notice the stock price ended the day sitting right on top of the mid bollinger band. We saw that happen recently with the August 16 dip. The 50 day moving average line is a mere 52 cents below the 200 day moving average. The Golden Cross would be more impactful if it could happen on a Marvelous Monday.

Conditions:
* Dow down 192 (0.54%)
* NASDAQ down 96 (0.64%)
* SPY down 3 (0.59%)
* TSLA 701.16, down 10.04 (1.41%)
* TSLA volume 13.1M shares
* Oil 68.06
* Percent of TSLA selling tagged to shorts:
* IV 40.9, 4%
* Max Pain 690

 

[Papafox]

TSLA chart above

QQQ chart above

The market liked what the Fed said on Friday and the NASDAQ gained 1.23%. This was a discouraging development for the market makers, who likely were trying to bring TSLA as close to the max pain of 700 as possible. Volume was light at 13.6M shares traded, which should normally have made the manipulation possible, but sentiment toward Tesla has been turning more positive lately and between positive sentiment and strong macros, the market makers missed their target by nearly $12. I see such a miss as a bullish sign.

Looking at the TSLA chart from Friday, you can see the Mandatory Morning Dip employed right after open. The NASDAQ took a small dip at that time, too, but not nearly so strong. When good news came forward from the Fed, both TSLA and the NASDAQ took off. Both were somewhat lumpy during the day but TSLA's trading was more a series of mountain peaks, suggesting bouts of buying that were followed by just as determined bouts of short-selling to keep the price from running too high. Twice TSLA approached 715 and twice it was capped and whacked.

Improving TSLA Sentiment
* TMC's @The Accountant posted this update suggesting that we may see both awesome delivery numbers as well as awesome profits in Q3
* Tesla is two-thirds of the way through the quarter and some of the fears about parts shortages are fading, especially with word of Model Y hitting high volume production now in Shanghai
* In this video, Gali of Hyperchange says that 4680 cell production has moved from 20% yields to 70-80% yields and speculates that significant production may only by 6 months away

Again, I suggest keeping your eye on the real progress Tesla is making and not getting distracted by the price manipulations.

Friday's message from the Fed had a reassuring effect upon those worrying about inflation, as you can see from the 10 year treasury bond yield chart.

Next Friday's max pain is 675, and we will likely see that number grow just as in the past week

@JimS was kind enough to provide this chart comparing max pain vs. actual stock price throughout last week. Not surprisingly, price and max pain tend to converge by Friday, but this week was unusual in that the market makers missed the max pain target by more than $10. Notice how a strong start to the week can lead the max pain to move toward the stock price, minimizing the work needed by the Market Makers.

With the 50 day moving average a mere 11 cents below the 200 DMA, we'll likely see our golden cross on Monday, which might help us break out of the duldrums. Check out the August trading which has mostly been very close to 710, with the exception of the manipulated dip down to 680. Because the stock price has been so stagnant in August, the IV is currently at a mere 1%.

For the week, TSLA closed at 711.92, up 31.66 from last Friday's 680.26. That undoes all but about $5 of the previous week's manipulated decline. Hoping your weekend was a good one.

Conditions:
* Dow up 243 (0.69%)
* NASDAQ up 184 (1.23%)
* SPY up 4 (0.89%)
* TSLA 711.92, up 10.76 (1.53%)
* TSLA volume 13.6M shares
* Oil 68.74
* Percent of TSLA selling tagged to shorts:
* IV 38.0, 1%
* Max Pain 700

 

[Papafox]

TSLA chart above

QQQ chart above
TSLA has not closed above 730 since April... until Monday. The implication is that TSLA may be breaking out of its rather stale trading range and getting ready to head higher. Importantly, the 50 day moving average crossed above the 200 day moving average on Monday for the Golden Cross. Technical traders appreciate both these developments, especially when they happen on the same day. When the opposite of the Golden Cross occurred not so long ago (50 DMA descending below 200 DMA), the day happened to be one with very positive trading, and so the event did not produce much negative sentiment, but Monday's price action bolstered the significance of the Golden Cross.

Looking back at Friday's trading, TSLA closed nearly $12 above the max pain number, suggesting that sentiment had moved sufficiently to the positive about Tesla that the market makers weren't able to manipulate the stock down to a more profitable closing price. As I said, that was a bullish development. Positive sentiment spilled into Monday's trading, along with positive NASDAQ performance, and the combination was enough to allow TSLA to break through the 730 barrier. Make no mistake about it, the market makers were protecting 730 and if you look at the chart you'll see it took multiple attempts to finally soar above 730.

The TSLA chart above shows the usual techniques to prevent TSLA from climbing too much. First we had a Mandatory Morning Dip at 10am when there was no dip visible in QQQ. Then you can see numerous quick sell-offs to sink TSLA after the many climbs. The one shortly after noon looked like TSLA fell off a cliff, which I think was the idea. Finally, we had the capping at 730. I see at least 5 attempts to break through 730 before TSLA succeed in the final half hour.

Take a look at the substantial after-hours climb. I believe that climb was likely market makers either delta-hedging or covering their shorting from market hours. Normally the market makers routinely delta-hedge stocks, which is why you see some trading days when TSLA has gained a lot on relatively light volume and the price keeps rising into the close as the delta-hedging continues. I also believe that sometimes with TSLA the market makers will short-sell instead of delta-hedge if they feel confident they can push the stock price back down and eliminate the need for the delta-hedging. Keep in mind that when the stock price is rising and MMs are buying to delta-hedge, they're throwing fuel on the fire and the climb continues.

What to expect for Tuesday? I'd be disappointed if the MMs don't try to throw a Mandatory Morning Dip at us to try and reclaim 730 and bring TSLA back into its previous trading range. They'll be facing the possibility of increasing volume should the positive sentiment toward TSLA continue. A nice climb could lead to more climbing as traders jump in for a breakout move, which is why the market makers will try hard to prevent such a move.

The max pain chart below for Friday shows nearly 20K calls at 750 strike, so if another break upwards materializes, the market makers will be heavily protecting 750 this week.

Monday brought yet another day of declining 10 yr treasury bond yields

One oddity in the max pain chart for Friday is the peak of puts at 720. Expect the max pain number to rise during this week, so I wouldn't expect market makers to try for 690 (they now lack the horsepower). OTOH, they may hesitate to try pushing below 720 because of that bunch of call options.

The good news is the blue 50 DMA crossed above the red 200 DMA. A strong climb on Monday resulted in the stock price closing above the significant 730 mark. The upper bollinger band stands at 735.88, which doesn't give much headroom from the current stock price,


Conditions:
* Dow down 56 (0.16%)
* NASDAQ up 136 (0.90%)
* SPY up 2 (0.44%)
* TSLA 730.91, up 18.99 (2.67%)
* TSLA volume 18.2M shares
* Oil 69.21
* Percent of TSLA selling tagged to shorts:
* IV 36.8, 0%
* Max Pain 690

 

[Papafox]

TSLA chart above

QQQ chart above

I love days like this when the stock price does things that really cannot be explained by anything other than manipulations. TSLA did indeed experience a Mandatory Morning DIp (as expected) as the option sellers worked to push the stock price under 730 and keep it there. The desired message was, "No, TSLA hasn't entered a new trading range."

Unfortunately for the market makers, at 10:19AM 56K shares traded in 1 minute and a near vertical jump above 735 ensued over the next few minutes. The same type of mountaintop pattern we saw on Monday evolved again as buyers bid up the price of TSLA and the market makers capped the climb, pushed down, only to find another buying spree and start of yet another peak.

About 3pm the market makers got serious and started a deep push to get TSLA to close below 730 (and accomplish their original mission). The stock price went red and touched about 729.30 with 25 minutes of market trading left, but buyers say this dip as a contrived effort, offering a nice price for TSLA, and they started bidding the price up into the close. In the final 10 minutes of market trading, as the closing cross bids started coming in, it must have become abundantly clear that buyers greatly outnumbered sellers and so the stock price shot up in the final minutes before close, gaining back most of the dip and closing above 735. Bravo! Why so much buying? The market makers likely shorted like crazy to get that final hour push, and they needed to cover that shorting at day's end. Nearly 2 million shares traded hands in the final 4pm closing cross.

So, what's at stake to cause such a major effort to keep TSLA below 730?
* The price 730 marks a departure from the trading range of many months and suggests the stock is cleared to climb higher now.
* The Golden Cross happened on Monday and for it to coincide with a push upward to a new trading range is double-trouble for the option sellers.
* Then there's the upward resolution of the pennant. See image and explanation below.

My pennant is not drawn nearly as precisely as others I have seen, but it gets the message across. Since April of 2020 TSLA has been on an overall uptrend with higher lows as time progresses (bottom of the two lime-green lines). Meanwhile, TSLA had also been on a short term downtrend with lower highs as time progresses, as seen by the upper lime-green line of the pennant. The two lines of the pennant converged in mid-August with TSLA rising above the uptrend line, indicating that the triangle was resolving in favor of the long up-trend. Alas, this development didn't sit well with those hoping for a push-down or at least hoping for more horizontal trading, and so we saw the spirited pushdown in mid-August. Now that TSLA has convincingly climbed away from the intersection of those two pennant lines, investors who follow technicals are more likely to buy (and a lot of institutional investors utilize technical analysis).

Of course the market makers are going to try for a pushdown below 730 if macros and news allows later this week, but for now they have received a real setback in keeping TSLA from showing that it's ready to climb higher.

Positive use of Tesla Investor Community
Most of us have benefitted from the excellent advice of longtime Tesla investor Dave Lee (@DaveT on TMC). His emphasis has moved over the years to Twitter and to his Youtube channel (Dave Lee on Investing). Recently, Dave became concerned about the situation of many people unable to leave Afghanistan after the Taliban takeover and he moved quickly to find if any people connected to his Tesla Investing community had loved ones still inside Afghanistan (he found a good number) and he lined up a group to see if they could be brought out of the country. All 38 eventually found their way across the one still open border crossing. Financial resources were contributed by Dave and other Tesla Investors. Dave used the same skills he developed in investing to separate the real facts from the noise. One advantage of gaining wealth through Tesla investing is that it gives oneself the time and financial resources (and skills) to pull off such a feat. I tip my hat to Dave. Check out the story if you have time

Looking at the max pain chart, we have a confusing mix of puts and calls with a no-man's land filled with both in random fashion. I use the max pain number in such instances because in theory it takes the mix into account. Max pain rose from 690 to 700 on Tuesday and will likely rise more as the week progresses. I'm not expecting the market makers to be successful in nailing the max pain number this week. The buying pressure is too great at present.

Looking at the tech chart, notice how TSLA bounced off the upper bollinger band. There's only about $5 headroom between the stock price and the upper bb at the moment, so we might see institutional buying be somewhat cautious if the upper bollinger band is exceeded. OTOH, if the stock price gallops upward, the algos may be buying, hell or high water.

Conditions:
* Dow down 39 (0.11%)
* NASDAQ down 7 (0.04%)
* SPY down 1 (0.15%)
* TSLA 735.72, up 4.81 (0.66%)
* TSLA volume 20.3M shares
* Oil 68.56
* Percent of TSLA selling tagged to shorts:
* IV 36.5, 0%
* Max Pain 700

 

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TSLA chart above

QQQ chart above

For all practical purposes, we're in the 2nd half of the week now, and the option sellers will be doing their best to push TSLA below 730 for Friday's close. Making their job a little easier has been the ongoing NHTSA autopilot investigation. This Tesla Daily video by Rob Maurer does a good job of explaining the NHTSA request for information. Additional negative news included a Tweet by Elon saying the Roadster would not be produced until 2023 as supply chain issues have made 2021 a challenging year.

OTOH, good news on Wednesday included Elon Tweeting that version 10 of the FSD software will go out to testers a week from Friday and that updates that enable "the button" could come weeks later.

Looking at the TSLA chart above, you can see the ubiquitous Mandatory Morning Dip (this time right after open) and a greatly exaggerated dip around 2:00pm when macros dipped as well but not nearly so significantly.

Max pain gained another $10 on Tuesday morning and now stands at 710. Again, I don't think market makers could realistically shoot for such a low Friday target. Given the buying strength earlier this week, I think the MMs are more focused on 730 now.

So a little over 3% of short shares were closed last week. Part of the upward pressure on TSLA has been shorts covering to close

The good news is that the upper bollinger band continues to rise and is at 743.38 at present

Conditions:
* Dow down 48 (0.14%)
* NASDAQ up 50 (0.33%)
* SPY up 0 (0.05%)
* TSLA 734.09, down 1.63 (0.22%)
* TSLA volume 12.7M shares
* Oil 68.59
* Percent of TSLA selling tagged to shorts:
* IV 37.9, 1%
* Max Pain 710

 

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TSLA chart above

QQQ chart above

Yep, TSLA is trading like its in the 2nd half of the week now. Once on Thursday and three times on Wednesday TSLA topped 740. We're seeing a fight for each $10 increment with this stock and typically we see several runs above the stock price ending in zero before a run finally sticks. The pattern we've been seeing is higher prices in the morning when volume is up and lower in the afternoon when volume is lighter. Interestingly, the macros have been enhancing this pattern as well. I'm still expecting market makers to shoot for 730 on Friday's close and if Friday is as low of volume as Thursday's 12 million shares traded, the market makers should be able to pick a couple more bucks from the pockets of the longs and pull TSLA down to the desired level.

News:
Sawyer Merritt Tweeted about an all hands meeting that Elon held. Here's a link to the Tweet. Highlights include:
* Model 2 might not have a steering wheel and pedals (hoping that FSD is ready to go).
* Cybertruck is delayed until late 2022 and volume production would not occur until 2023. One could read this as a negative (Cybertruck is delayed again and maybe the reason is that 4680 cells are taking longer than expected) or one could read that demand for Tesla vehicles is so high right now that there's no need to introduce another vehicle early in 2022.
* The opening up of Tesla charging is coming soon, starting in Europe

There was another small decrease in the 10 year treasury yields on Thursday.

Check out that no-man's land in the max pain chart above. Strike prices 670 and 680 are dominated by calls but 690, 700, and 710 are dominated by puts. The strike prices go green-red-green-red after that. What does this all mean? I believe it means that the options buyers are tired of creating an easy max pain target for the market makers to hit every Friday. Thus you see a fair number of 735 puts and lots of calls at 700 and below.

The net result of such a mixed up ordering of calls and puts for Friday's close is that the max pain chart above shows an unusually wide flat area between 700 and 730. In other words, there's a rather wide area of near ambivalence for the market makers at the time of Friday's close.

Despite two days of small declines, various TSLA indicators such as 50 and 200 day moving averages, the mid bollinger band, and the upper bollinger band continue their upward movement. If the upper bb is at 750 or above on Monday of next week, things could get fun around here because a big dog buyer might be tempted to join in.

Conditions:
* Dow up 131 (0.23%)
* NASDAQ up 22 (0.14%)
* SPY up 1 (0.31%)
* TSLA 732.39, down 1.70 (0.23%)
* TSLA volume 12.6M shares
* Oil 69.99
* Percent of TSLA selling tagged to shorts:
* IV 37.6, 1%
* Max Pain 712.50

 

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TSLA chart above

QQQ chart above

Much has been happening the past few days so let's first look at Friday's trading then look at what has transpired afterwards.

As you remember, I suggested a close at 730 on Friday because the really flat max pain curve gave the MMs little incentive to push below 730. Why did you see dips to the vicinity of 725, then? I see two reasons. First, traders who jump into the stock on Friday afternoons have been doing very well holding through the Monday and (often) Tuesday runs higher. Market makers would be wise to anticipate buying pressure in the final hour, which is precisely what we saw. Secondly, when the market makers are shorting the stock to keep it from running above their closing target, they know they want to cover those short positions by end of day and there's no guarantee that there'll be enough sellers during the closing cross to enable the needed buying at the right price. Thus, MMs are wise to shoot for a price below their Friday target ideal close price because they are anticipating some upward movement into the close.

That upward movement into the close is exactly what happened, with a slow uptick in the final hour of trading and then a quick upturn in price by a few dollars as TSLA neared the closing cross. I had to smile because about a minute before the quick upturn into close I bought 2 Sept 22 500-strike calls that @The Accountant 's post had brought to my attention.

News:
* In this blog post, @FrankSG presents a thorough update on his Tesla investment thesis. It's worth a look.
*News in 24 reports that Tesla's Berlin gigafactory should receive 1.1 billion euros of subsidy from the German government for construction of a battery factory on the site
* Various sources report that Elon told workers that Cathie Woods' valuation of TSLA at $3000 in 2025 is possible if the company executes well. That's a 4X increase from 2021 prices. Billionaire Leo KoGuan Tweeted that he's adding a million TSLA shares and he thinks Cathie is right. In this Dave Lee on Investing post, Dave breaks down just what needs to happen in order to reach that valuation in 2025. Teslanian offered this summary of the Ark Invest position on TSLA's trajectory going forward. What's the media saying about all this? Crickets, of course.

This weekend's news cycle potentially places more upward pressure on TSLA for the coming week. The Frankfurt exchange closed at $741.80 on Monday.

Mystery solved? So, just why are we seeing over 50,000 put options selling at the 630 strike price, a full $100 below the current stock price? It can't be because investors expect TSLA to lose $100 of value this coming week. Rather, I think it's because put sellers at higher strikes want to avoid margin calls if the stock price turns south, and one way of doing so is to buy lower strike puts, so as to limit the theoretical loss. A 730 strike put for Friday sells for about $8.75 while a 630 put for Friday sells for about $2.15. If the stock price goes up or at least doesn't go below 730, the seller makes $6.60 while still keeping the brokerage off his back.

Here's a closer look at the max pain chart for Friday, which over the weekend showed max pain at 725. We don't really have the mixed up puts and calls as we saw last week. Instead, TSLA calls dominate at 735 and above. As with last week, I suggest the max pain numbers will change (rise) as the week progresses.

Thanks again to @JimS for making this chart available, which compares max pain and stock price on a daily basis for the past two weeks. Once again, the two drift apart early in the week and then converge by Friday's close. The fact that the stock price hasn't been coming down to max pain for the past two Fridays is a bullish indication in my mind because it indicates that the market makers were defeated to some extent in achieving their most desired closing number by too much buying pressure.

As the rise of the stock price has resumed, so has the decline of short interest. The closing of short interest positions has, of course, been putting some upward pressure on the stock price. Tesla shorts are down $717M so far this year and those losses are likely to grow into the billions later this year.

Coronavirus Update

It's too early to call a top yet with the delta variant outbreak in the U.S. this summer, especially with the 3 day weekend about to conclude.

Nonetheless, with so many of the most vulnerable already vaccinated, the daily deaths are noticeably below those of this past winter. The level of fear by businesses is considerably lower this time around because those employees and customers who wished to be vaccinated have had their opportunity already. Certain industries such as chip makers still are feeling the negative effects of Covid, however, and a complex business such as an automaker is affected by its weakest link.

Looking at the tech chart, all is in order for an assault on 740 this week. We've crossed above 740 several times already and now the challenge will be a daily and a weekly close above it. The lack of a substantial call wall at 750 might even put that price in play (at least for a crossing), should the early week trading get enthusiastic.

For the week, TSLA closed at 733.57, up 21.65 from the previous Friday's 711.92. That makes a gain of $53.23 over the past 2 weeks. Not bad. Hoping you've had an enjoyable weekend.

Conditions:
* Dow down 75 (0.21%)
* NASDAQ up 32 (0.21%)
* SPY down 0 (0.02%)
* TSLA 733.57, up 1.18 (0.16%)
* TSLA volume 14.8M shares
* Oil 69.29
* Percent of TSLA selling tagged to shorts:
* IV 36.4, 0%
* Max Pain 715

 

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TSLA chart above

QQQ chart above
Congratulations longs, TSLA has convincingly shown that it is broken out of the spring and summer trading range and is ready to try something higher for fall. A morning climb through760 and a close above 750 is impressive. Let's hope that September means traders back home from vacation and higher volumes to be seen.

The day began with pre-market prices near the Frankfort close just above 740. More than 8 million shares trading in the first hour prevented the market makers from taking control of the price action. Volume of nearly 20 M shares allowed TSLA to hold most of its gains into the close.

Futures are down for Wednesday's opening, and so some negative macros will allow us to see how well TSLA fares with negative forces at play. Wednesday morning's max pain chart will give us an idea of how the calls and puts are aligning to influence the week. Overall, I am a long term investor and TSLA"s trajectory definitely is heading upward, but for the week it's a guessing game where we end up since the market makers lost control on Tuesday and we'll need to see if conditions allow them to regain control.

Yields on 10 year treasury bonds headed higher as a new week began.

A pullback in bitcoin prices still places Tesla's purchase in the profitable column.

Right now the division between puts and calls takes place around 730

Looking at the tech chart, the stock price exceeded the upper bollinger band and then decreased to slightly below it for the close. Tuesday's big climb is amplifying the implications of last week's golden cross.

Conditions:
* Dow down 269 (0.76%)
* NASDAQ up 11 (0.07%)
* SPY down 2 (0.36%)
* TSLA 752.92, up 19.35 (2.64%)
* TSLA volume 19.8M shares
* Oil 68.33
* Percent of TSLA selling tagged to shorts:
* IV 36.1, 0%
* Max Pain 720

 

[Papafox]

TSLA chart above

QQQ chart above

The macros did indeed turn red on Wednesday, but TSLA traded at times above 760 in pre-market and right after opening, buoyed by strong August sales numbers from the Shanghai factory. This Teslarati article shows the numbers, which includes over 31K exports and nearly 13K local deliveries. That works out to be about a 34% jump from July.

Despite the truly excellent news from China, TSLA fell in the morning along with QQQ. By noon, QQQ was down about 1% while TSLA was down nearly 1.5%. When you consider that TSLA was about 1.5% up at open and QQQ was down at open, the disparity in the noon dip is even greater. That's about a 3% dip for TSLA between shortly after open and noon. Can you say a little pushdown from the options sellers?

Fortunately for TSLA investors, the market decided to buy the noon dip and although QQQ only recovered about half its dip by day's end, TSLA managed to climb barely into the green by 2pm. From here, the expected Whack-a-mole maneuver ensued, where TSLA is hit with selling any time it dares to stick its adorable little head above the red/green line.

The excellent China performance in August suggests record Q3 earnings on the way. In this Tweet, Mayur Thaker suggests that Tesla should report non-GAAP earnings of over $2 billion in Q3. @The Accountant pointed out in a TMC post on Wednesday that a $2 billion non-GAAP profit would be a doubling of first achieving $1 billion non-GAAP profits in Q1 of this same year, a mere 6 months to add an additional $1 billion to quarterly profits. Sounds like a good reason for the stock price to move upwards, doesn't it?

Between Tuesday and Wednesday the max pain number moved upward from 720 to 730. Looking at the current chart, the transition point between calls and puts looks to be 740, so we may see the market makers with little incentive to push below 740, if they could. With daily volumes near 20K this week, they may not be able to do so and may be more focused on keeping TSLA below 760.

The tech chart shows that Wednesday's climb didn't climb much above the upper bollinger band. Fortunately, the upper bb has been climbing every day.

Conditions:
* Dow down 69 (0.20%)
* NASDAQ down 88 (0.57%)
* SPY down 1 (0.12%)
* TSLA 753.87, up 0.95 (0.13%)
* TSLA volume 18.8M shares
* Oil 69.17
* IV 37.6, 2%
* Max Pain 730

 

[Papafox]

TSLA chart above

QQQ chart above
As @Curt Renz pointed out in this main thread post Thursday, the Dow and S&P500 have closed down 4 sessions in a row now, and TSLA has still closed up 4 sessions in a row. Something is up. I think that something is that investors are seeing not only bullish technicals but also enough strength in July and August deliveries that they realize Q3 is not going to be a disappointment. Further, any analyst with a spreadsheet should be able to see that Q3 profits could well be eye opening. These results are despite a chip shortage that will eventually go away. Add this enthusiasm to Elon's comments about the ARK Invest $3000/share target for 2025 and there's reason for big dogs to jump into this stock.

One big dog is Leo KoGuan, Tesla's 3rd largest individual shareholder. His publicizing significant buying will help the stock price to rise. Isn't that tactic self-defeating if he wishes to buy at the best possible price, however? Keep in mind that KoGuan already owns substantial quantities of TSLA and that stock increases in value as the price goes up. Further, the closer to ATH TSLA climbs, the closer to a breakout that brings it to never-before-seen levels. Market makers and hedge funds have been adept so far in suggesting that TSLA is range-bound. A big climb into a new trading range dispels that illusion, and its buyers like KoGuan who bring TSLA to the next big raly.

My biggest concern from Thursday's trading is that volume was a mere 13.6 million shares. We'll have to do better on Friday to keep the market makers from taking over the show.

News:
* In this Electrek.co story, we get to see the text that Elon sent to workers regarding the push to deliver vehicles through the remainder of September (and the quarter). The reason for the big push was parts shortages earlier in the quarter and the goal is "a decent Q3 delivery number." I'd take that understated goal with a grain of salt as Elon has now learned the benefits of sandbagging a bit.

10 year treasury bond yields dipped for yet another day

Every day this week the max pain number has increased substantially, and Thursday morning's number was no exception. The transition point between call dominance and put dominance is now about 745. As long as the market makers can push TSLA a penny below 750 they're good for the week. OTOH, if volume picks up and the stock continues to rise on Friday (futures are positive), then the market makers will likely play defense again at 760. Since 760 has already been exceeded or kissed every day this trading week, I suspect if the close is below 760, that price will be exceeded in the close on Monday of next week.

Looking at the tech chart, the upper bollinger band is at 767, which gives adequate headroom for a 760 capture Friday or next week.

Conditions:
* Dow down 152 (0.43%)
* NASDAQ down 38 (0.25%)
* SPY down 2 (0.43%)
* TSLA 754.86, up 0.99 (0.13%) TSLA volume 13.8M shares
* Oil 67.90
* IV 37.6, 2%
* Max Pain 735

 

[Papafox]

TSLA chart above

QQQ chart above

Alas, volume on Friday was a mere 14.8M shares, which handed control of the stock price to the option sellers to tweak as needed on Friday, and they accepted the baton then ran with it. I had been looking for a close at least a penny below 750 so as to thwart the call buyers with 750 strikes, and for most of the day this looked to be the plan. Pre-market trading above 760 could not be tolerated and so TSLA was pressed down to the red/green line of about 755 by 11am. Descending macros made such a move easy. Then we saw TSLA engaged in whack-the-mole to avoid any excitement about an upward move, and this game lasted well past 1pm. While QQQ was still trading green, the pushdown began before 2pm and initially hovered slightly above 750. This is not a good price for the market makers since we often see a climb in the final 20 minutes of trading as covering takes place and traders load up for the next Monday morning exuberance. Sure enough, two big minutes of selling around 2:30pm dipped TSLA to the 747-848 range, and everything was going like textbook for the close just a smidge below 750. Around 3:00pm QQQ started a descent but TSLA resisted joining until about 3:10pm. At that point the macro dip looked too enticing and a major push all the way down to max pain of 735 looked possible. The stock ended the day a few coins above 736.

Because the max pain chart was so flat on the bottom and there would be so little to gain in moving TSLA from 750 to 735, I really thought 750 was the target. As the macros gave the market makers an engraved invitation to push lower, however, the plan changed. So, what's the advantage to the MMs of 735 vs. 750? If you look at the max pain chart below, you'll see that max pain next week is an astonishingly low 700. A close at 736 gets the price a whole lot closer than a close at 750, thus the decision to push TSLA hard down in the final hour. The good news? This late afternoon dip, if truly a manipulation, had nothing to do with the company itself. The market may figure that out if buying is robust on Monday morning.

What about other auto manufacturers being down on Friday as well? Doesn't this explain the dip? If you look at the charts of those companies, their trajectories throughout Friday were noticeably different than Tesla's. Tesla had more gains in the morning and a steeper dip going into close than most.

Friday will be a triple-witching option close, with many option contracts placed long ago, and so the max pain does not reflect the recent three weeks of climbing. Max pain is only 700 on Friday, with a massive 44K call options at 700 strike expiring that day. OTOH, we see a tall 30K put wall at 720, which gives the market makers some pause before trying be push below that number. We could see a nice rebound on Monday, especially if the shorting done on Friday for the push lower has not been covered yet. Overall, I think the max pain is unrealistic to achieve this week and we'll see max pain rise as the week progresses, but not as quickly as the previous two weeks, owing to the large number of contracts expiring this Friday. I would expect a larger gap between stock price and max pain on Friday than we've seen recently.

Thanks again to @JimS for providing this three week comparison chart between closing price in green and max pain in blue. Fridays are marked with a darker line. You can see in all three weeks that the gap expands early in the week and contracts by Friday close. For most of the summer we have seen max pain and closing price pretty close together come Friday close, so this past week's activity was no anomaly.

News:
* The Detroit News reports that Democrats have come up with a new EV incentive. Gone are the rewards to hybrid buyers and the super restrictive max price. As for the bonus for buying from a union company (as a reward to the UAW) buyers of union-assembled cars would be an extra $4500 incentive. Opposition is already popping up, with Toyota and Honda challenging the union-built bonus. My take is that we have seen such radical changes already to the incentive, and with Joe Manchin already saying the $3.5Trillion bill will not go through, pork will indeed be trimmed from the bill and the union-built incentive will likely disappear. One reason? If a bill gave non-union car builders a bigger incentive to offer, the law would be struck down in court, and I think the reverse situation would also emerge. The posturing does give the Dems bonus points with the UAW and other big unions, however.
* Gary Black Tweeted that the recent incentive bill would only give buyers the incentive after Dec. 31, 2021, which would of course delay purchases. That date is not likely to survive unchanged, but it would be extremely discriminatory toward Tesla since Tesla and GM are the two companies currently excluded from the $7500 tax credit and GM does not have significant production underway at the moment.
* Full Self Driving version 10 software is now in the hands of beta testers and many feel it is a big jump forward. Don't expect Wall Street to pay much attention to the release, however. Of the videos I've seen so far, this long video on the streets of San Francisco strikes me as the most useful.

* @The Accountant is projecting production of 236K vehicles in Q3 and deliveries of 240K. He believes we'll see non-GAAP profits of $2 billion in the quarter. Bottom line, don't let the manipulations scare you away from yet another record quarter.

Coronavirus:
The good news this week is that we're seeing perhaps the beginning of a dip in this Delta variant spike in the virus here in the U.S. The bad news is that sometimes we see false tops. Looking at last winter's chart you can see two false tops before the true top. Let's take another look next week and see what happens.

New cases chart as of Sept 12

Looking at the tech chart, the 50 day moving average and the 200 DMA are now only separated by less than $2. Let's hope we can pull the 50 DMA higher this week. If you go back 50 days you arrive at about July 20, which (if you look at the blue 50 DMA line) is near the low point for the trading over the past 50 days. As we move forward the 50 DMA will rise.

For the week, TSLA closed at 736.27, up 2.70 from the previous Friday's 733.57. That small gain gives TSLA a rise of $55.93 over the past three weeks. Hoping you enjoyed a wonderful weekend.

Conditions:
* Dow down 272 (0.78%)
* NASDAQ down 133 (0.87%)
* SPY down 4 (0.79%)
* TSLA 736.27, down 18.59 (2.46%)
* TSLA volume 14.8M shares
* Oil 69.72
* IV 41.2, 8%
* Max Pain 735

 

[Papafox]

TSLA chart above

QQQ chart above

I hope you really didn't think the Wall Street pirates would refrain from a mandatory morning dip on Monday, following that breathtaking dip into close on Friday. Once again, the NASDAQ/QQQ macros gave TSLA's option sellers an attractive excuse for a hard pushdown, and they took it. QQQ dropped more than 1% shortly after open before bottoming out around 10:20am, and TSLA followed with a dip of some 4% over a similar timeframe. If we saw TSLA consistently running higher at a 3X multiplier compared to the NASDAQ, the 3X multiplier on the dips would make sense, but we don't see anything like that multiplier on up days. The TSLA dip bottomed out just above 709, which was a mere $9 above the published max pain.
See chart below...

Notice the really deep tornado-shaped dip at 10:13am. That's typically a giveaway for manipulation since it implies that the deep selling to reach the bottom was immediately followed by equally-enthusiastic buying as investors realized the dip was a massive overreaction. So... to the left of the tornado we have the dip on steroids in response to the NASDAQ/QQQ dips and to the right you can see the market reaction once the dip bottomed out. Notice an almost linear recovery throughout the day compared to QQQ which remained red throughout market trading hours. Please also notice the attempt at whack-a-mole with TSLA once it crossed the red/green line.

Part of the reason for TSLA's ability to so nicely recover from the morning dip was because of over 20Mshares volume, and much of that volume would likely have been generated because TSLA was suddenly on sale at an amazing price only weeks away from the conclusion of what should be the biggest quarter yet in TSLA's deliveries and profits.

News:
* @The Accountant provided TMC readers with these four posts showing details of his Q3 production, delivery, and financial computations.

Yields on 10 year treasury bonds remain in an attractive spot to keep Wall Street from worrying too much about inflation

Over the last week, shares shorted were up over 1 million shares.

Notice the huge growth of puts at 700 strike. They're at 77K now, with only about 44K calls at that strike price. You need to go all the way to 740 now before you see a strike with calls dominating puts. I expect to see official max pain price for Friday heading higher now. The reason we see max pain so much lower than 740 is because of all those call options stretching from 400 to 740 that are outnumbered by puts but yet we don't see anywhere near as many puts above 720, even when outnumbered by calls.

Looking at the tech chart, despite the battles between longs and market makers, the battles have largely taken place well above the mid bollinger band, and so the upper bollinger band has also risen. It's at 771 now, which gives headroom for a nice rally if conditions turn favorable.

Conditions:
* Dow up 262 (0.76%)
* NASDAQ down 10 (0.07%)
* SPY up 1 (0.26%)
* TSLA 743.00, up 6.73 (0.91%)
* TSLA volume 22.9M shares
* Oil 70.68
* Percent of TSLA selling tagged to shorts:
* IV 37.7, 3%
* Max Pain 700

 

[Papafox]

TSLA chart above

QQQ chart above

Many years ago a wise friend of mine gave me dating advice: "listen for 'dings'" he said. A ding is something in conversation that is oddly inconsistent. He said that dings reveal information that the lady is not willing to consciously reveal. I believe that dings work for investing as well. Today I saw a ding.

It wasn't the morning enthusiasm for TSLA that brought the stock price above 752. Nor was it the afternoon pushdown of TSLA during the low volume afternoon hours. Rather, it was the strong climb of TSLA in the final 25 minutes of market trading that brought it from 737 to nearly 747 in minutes with no news of consequence out there and no comparable movement in the broader indexes. Somebody wanted shares pretty badly and we saw nearly 645K shares trade in the 4:00pm hour. As the week progresses, let's remember the ding and see if we can figure out what happened here near close on Tuesday. We see strong gains near close on Fridays sometimes as either traders pick up shares for the coming Monday morning pop or investors respond to the approaching closing cross. Big day-end moves on Tuesdays without news just aren't common.

News:
* On Tuesday CNBC presented this article that says Toyota, Honda, and Tesla are all opposed to the most recent version of the EV incentive. You wouldn't normally expect CNBC to do anything that helps Tesla, but their article is more likely aimed against the UAW. I really believe that this stinker of a bill will be significantly amended before it can pass into law.

Another dip of 10 year treasury bond yields puts growth stocks in a good light on Tuesday

That massive put wall at 700 just keeps growing. I think more likely the action this week will be centered on 740 or 750. The week is young still, so much can transpire between now and Friday.

Looking at the tech chart, Monday's big dip and Tuesday's smaller dips were both unwound before close. Looking forward to see what Wednesday offers.

Conditions:
* Dow down 292 (0.84%)
* NASDAQ down 68 (0.45%)
* SPY down 3 (0.54%)
* TSLA 744.49, up 1.49 (0.20%)
* TSLA volume 18.5M shares
* Oil 70.71
* Percent of TSLA selling tagged to shorts:
* IV 39.1, 6%
* Max Pain 700

 

[Papafox]

TSLA chart above

QQQ chart above

The macros smiled toward TSLA longs on Wednesday and gave them the setup for an excellent day. Morning was red for both TSLA and QQQ, but TSLA rose into the green after 11am, spent the better part of an hour enduring the whack-a-mole treatment, but soared higher with the NASDAQ when the broader index jumped up after noon. Check out the rather smooth climb of QQQ and compare it to the plateaus of TSLA. I suggest the TSLA plateaus were capping exercises by the option sellers. Notice the particularly long plateau near 755 just after 2pm.

Part of the problem for the manipulators was that although only 15M shares traded hands on Wednesday, the dip in the morning followed by the afternoon rally spread out the buying so that afternoon manipulations were no cakewalk.

So, midway through a week with max pain at 700, TSLA closed above 755. How do the option sellers respond from here? Looking at the max pain chart below, the strike price 740 is getting loaded up with puts that may top the calls before week's end and so option sellers may opt for a Friday close just below 750. OTOH, if macros or news hands the option sellers a golden ticket, they'll try to push lower.

That might not be possible, however. News lately has been very positive for Tesla:
* Deliveries in both the U.S. and Europe appear strong just two weeks from quarter's end, leading to growing confidence in Q3 performance
* In this Tesla Daily video podcast , Rob Maurer shares details from a discussion between UBS and Tesla. Important notes are that increases in sales prices of vehicles didn't much impact Q2 revenues but will be apparent in second half of year revenues. Exports from the Shanghai factory are extremely profitable. Tesla can handle chip shortages better than other automakers because it writes the software and can much more easily switch to another chip option.
* The stinker of an EV credit bill is already being pummeled with criticism and in this tweet we see signs of the union provisions feeling the pressure to be changed or eliminated.
* Some big dog investors are looking to get TSLA trading higher. Dave Lee on Wednesday asked Leo KoGuan if he now owns more than 5 million shares of TSLA. KoGuan's Tweet answer:

One possibility is that the rapid climb in TSLA right before close on Tuesday might have been a shot over the bow by one of the big dog long investors seeking to demonstrate that two can play the end of day manipulation game. I suspect the hope would be market makers doing more traditional delta-hedging and less manipulating with TSLA if they feared their manipulations could get whacked by big dog longs.

Although the max pain is still officially 700, the 740 strike shows almost as many puts as calls now, and thus the transition point between domination by puts and domination by calls has moved to the right (higher strike prices) as the week progresses.

The tech chart shows Wednesday's close as being the highest close since April.

Conditions:
* Dow up 237 (0.68%)
* NASDAQ up 124 (0.82%)
* SPY up 4 (0.84%)
* TSLA 755.83, up 11.34 (1.52%)
* TSLA volume 15.3M shares
* Oil 72.65
* IV 35.7, 0%
* Max Pain 700

 

[Papafox]

TSLA chart above

QQQ chart above

The shocking thing about Thursday? I didn't see any flagrant manipulations! QQQ when down, and so did TSLA, but not at some high multiple. QQQ went up, and so did TSLA, again not at some extra high or extra low multiple. TSLA traded like a normal stock even though volume was light (13.3M shares) and market makers could have pulled it in the desired direction. As my friend said, "watch for dings."

Before I put on my rose-colored glasses, however, it's best to realize that there was something going on in the background. The opening minute of trading produced over 200K shares traded, and the final minute of market trading produced 1.2M shares traded. Perhaps our big dog investors put a little fright into the market makers with their Tuesday zoom to a higher number shortly before close. This has been a unique week so far.

Overall, TSLA continues to benefit from positive sentiment as we approach two weeks before Q3 end. We'll see a Q3 Production and Delivery Report in the first few days of October, followed by the Tesla annual meeting, followed by the Q3 Earnings Report. Each of those events could potentially be a nice catalyst to the stock price.

If the option sellers weren't fully delta-hedged prior to this week, a max pain of 700 and a close at 750 or maybe even 760 would be a big departure from the successful manipulations we've been seeing all summer. Pay attention to all these changes because they suggest a change in how this stock may be trading in the near future.

For Friday, the market makers would like to get TSLA below 750 if conditions allow. Should that not be possible, they'd like to play defense and try to prevent a climb above 760. This is late in the week for TSLA to be this high above max pain. It's a change of the pattern. On Friday, do we see a Hail Mary throw in the end of the fourth quarter by the option sellers (big dip into close) or is trading going to be surprisingly benign or even surprisingly positive? Can't wait to see.

Yields on 10 year treasury bonds rose for the second day in a row

Max pain has remained at 700 the whole week even though the stock price has been rising. Puts dominate at 740 and below with Calls dominating at 750 and above. Obviously, the market makers would prefer a close on Friday below 750.

Check out the previous 4 days of trading. On Monday we have that long dip below 710 as the pirates tried and failed to push TSLA closer to max pain. With that pushdown defeated, each day so far this week has been a climb.

Conditions:
* Dow down 63 (0.18%)
* NASDAQ up 20 (0.13%)
* SPY down 1 (0.16%)
* TSLA 756.99, up 1.16 (0.15%)
* TSLA volume 13.3M shares
* Oil 72.64
* IV 36.9, 2%
* Max Pain 700