Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Monday was just a coordinated bear attack, my friends. Congrats to those who moved quickly and grabbed deep discounts. Over here in Hawaii, Iceman the 16 year old Tesla dog and I slept right through the sale. The quantity and intensity of FUD was positively eye opening. Consider:

* Reuters found a way to get "SEC probes Tesla" into the morning headlines. All they had to do is work with a fired employee who got into a beef with Tesla back in 2019 regarding how Tesla explained the need to work on a customer's rooftop. On Sept 24 of this year the ex-employee heard back from the SEC after a freedom of information inquiry for details and was basically told we're still looking at the situation. That's all that Reuters needed, this was an SEC investigation of Tesla! They held onto the story until it was just coincidentally released on the biggest FUD day of the year. Congratulations, Reuters, you have just been awarded Papafox's flaming dog poop award in journalism for this heroic effort.

* Not to be outdone, The New York Time launched this autopilot hit piece against Tesla on Monday morning. The theme of the piece was that employees were trying to warn Elon Musk that there were issues with the Tesla full self driving autopilot but Musk, ever so focused on money, pressed on regardless of the warnings. In order to add balance to the discussion, Kim Paquette Tweeted that there are over 35,000 U.S. auto deaths each year, with 94% caused by human error, Elon provided a link to Tesla's safety statistics (strange how the money-craving Musk somehow built the world's safest vehicles), and Twitter regular James Stephenson created a graphic to more quickly allow people to realize just how immense the safety improvements from Tesla already are:

* Of course what FUD circus would be complete without a contribution from Lora Kolodny of CNBC? Lora's weak subject was Tesla replacing some cameras in its vehicles. Yawn.
We had to travel to Canada to find some actual news of Tesla, and it was quite positive:

Tesla sales in Germany rise 234% in November as legacy automakers see double digit declines​

Regarding the price movements of TSLA, @Artful Dodger mentioned in the main thread how the usual suspects gave a deep pushdown of the stock price even before you and I could participate in pre-market trading. QQQ dipped right after market open, but QQQ dipped about 0.7% while TSLA dipped 5.6%. In other words, the macro dip was not the cause of the TSLA dip, it was the camouflage that disguised what was actually going on.

Bottom line: Q4 is still looking very positive and some of the Wall Street pirates want shares from retail buyers badly enough that they'll put on a show such as this morning's to scare shares out of the uninitiated.

With 10 yr treasury yields remaining below 1.5%, all is quiet on the Western Front

Max pain was 1095 Monday morning and you have to go all the way up to about 1140 until you see call options dominating.

Looking at the tech chart, the combination of morning macro weakness plus FUD plus manipulations pushed TSLA all the way down into the 950s, but as we saw before when TSLA descended below 1000, it didn't stay there long. The stock closed above the lower bollinger band and 50 day moving average. The stock has traded negatively for four sessions in a row. After Monday's bounce, if Elon refrains from selling on Tuesday and macros cooperate, TSLA may be ready to reclaim lost territory.

Conditions:
* Dow up 647 (1.87%)
* NASDAQ up 140 (0.93%)
* SPY up 5 (1.18%)
* TSLA 1009.01, down 5.96 (0.59%)
* TSLA volume 27.0M shares
* Oil 69.79
* IV 70.6, 81%
* Max Pain 1095

 

[Artful Dodger]

TSLA chart above

The NASDAQ Realtime Chart for TSLA goes live each day shortly after 8:00 a.m. ET. Then, for the greater part of the day, you can use your mouse to drag the chart's time span over to the right to see the SP chart all the way back to 4:00 am E.T. (only work's until sometime shortly after the Close).

But if you didn't happen to visit the TSLA Real-Time chart yesterday, here is the initial bear raid beginning at approx 04:20 a.m. ET (my screenshot taken at 8:00 a.m. after "dragging right"):

Note well that at 04:30 a.m. the only people up and dumping 30K shares are Market-makers and hedge funds (or both). On Monday, there were 1.24M shares traded in the Pre-market, and only 320K shares traded in the Aftr-hrs session. Yeah, nothing to see here, move along...

#$EC: blind to bear raids since 1998.

Cheers!

 

[Papafox]

TSLA chart above

QQQ chart above

I wasn't kidding when I said that changing opinions about the effects of Omicron variant would create whipsaw volatility. Tuesday was of course a day for the market to really shed some Omicron fear and give the markets reins to regain losses. TSLA's gain of 4.24% was nice, but given the NASDAQ's gain of 3%, that's only about a 1.4X difference, and we usually see much higher ratios with TSLA, both in up and down markets. For perspective, Nvidia gained nearly 8% (2.7X) on Tuesday and ARKK gained 5.4% (1.8X).

The reason why TSLA didn't climb higher, I suspect, is that the usual suspects were capping or pushing down as best they could. For example, check out the dip that started about 10:30am and the long afternoon dip starting about 2pm. Look at the apparent capping to keep TSLA below 1050. Now check out the percent of selling by shorts chart (2nd below) and you will see that TSLA experienced 60% selling by shorts on Tuesday, a really high percent that suggests short selling was being used to temper Tuesday's climb.

The bigger picture is that on Monday, the bear attack (complete with FUD) was an attempt to finally push below 1000 and generate enough fear in retail longs so that they would sell and allow hedge funds and other pirates to buy those discount shares prior to Tesla's news about Q4. That selling would in turn push TSLA lower, which would generate more fear, more selling, and the dip would feed upon itself. Unfortunately for them, TSLA refused to stay below 1000 for a single day. I think a big reason for that is that quarterly results of TSLA this year have been excellent and increasingly good each quarter. It's really hard to generate fear in that environment, and what we're seeing instead is that investors such as those on TMC are seeing the dips as buying opportunities and buying those dips very quickly rather than freaking out and selling. We investors are getting acquainted enough with FUD to not only refrain from being scared by it, but also recognizing a frenzy of multiple FUD pieces often marks the bottom of a dip (it's a hail Mary pass, of sorts).

TSLA's climb in Tuesday after hours trading suggests to me that the market makers were doing too much manipulating and not enough delta-hedging during market hours and had to continue buying in after-hours trading to attempt achieving delta-hedged neutrality.

News:
* China's CPCA numbers come out before Wednesday market open and those numbers are likely to surprise to the upside
* On Tuesday, China announced a loosening of bank reserves, which leads to more money available for loans. I don't know the exact timing of that announcement, but it may be the reason why QQQ (and TSLA) rose quickly in the final minutes of Tuesday market trading.

As fear dissipates, some money will move out of bonds and the 10 year treasury bond yield should move upward

Percent of selling by shorts rose quickly on Tuesday to 60%. Are more investors taking long-term short positions on TSLA? Nope, just the opposite. I'm thinking the heavy amount of shorting on Tuesday was done by option sellers (market makers and hedge funds) in an attempt to reduce the day's climb.

Max pain Tuesday morning was 1050 and TSLA closed at 1051.75. There's plenty of week left for those two numbers to diverge further.

Looking at the tech chart, you can see three dips since Nov 1 where TSLA fell below 1000. In all cases, TSLA bounced and closed the day above 1000. The first dip ended in a climb near 1100 and the second in a climb to near 1200. Thus, we may have more bounce to go. The mid bollinger band is around 1079 at the moment and we'd really like TSLA to get above that number soon because drifting along below the mid-bollinger band is a recipe for pulling all the bollinger bands lower, and TSLA has a tendency to follow a bollinger band (check out climb along upper bb and then uncertainty along mid-bb. A climbing mid-bb gets time working in favor of long investors.

Conditions:
* Dow up 492 (1.40%)
* NASDAQ up 462 (3.03%)
* SPY up 10 (2.07%)
* TSLA 1051.75, up 42.74 (4.24%)
* TSLA volume 18.6M shares
* Oil 71.86
* IV 65.1, 71%
* Max Pain 1050

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA got off to a rocky start in pre-market trading after the China delivery numbers fell below Wall Street computations. This Reuters article says the CPCA reported Tesla delivering 52,859 vehicles in November, including 21,127 for export. In a Tweet, Gary Black talked about Wall Street expecting 55-60K. Was this a miss? In the eyes of a manipulator it certainly could be projected as such, but in reality the shortfall might just be explained as Wall Street expectations being built upon incorrect vehicles in transit calculations. In another 10 days or so we'll learn the production numbers for the Shanghai factory, and those will be useful for judging China activity.

Interestingly, Pierre Ferragu of New Street Research increased his TSLA price target from $1298 to $1580 during pre-market trading (see this Gary Black Tweet). Ferragu sees 50% upside as he expects 280-285K deliveries and other positive developments. Ferragu's price target increase neutralized the potential negative spin on the CPCA numbers, and TSLA managed to continue its bounce from the recent below $1000 excursion.

No Elon selling during the day.

The slow increase of 10 year treasury bond yields is underway. I am guessing we'll need to get above 1.7% before the market starts to get worried again.

Max pain inched up to 1055 on Wednesday morning. The twin towers of Puts at 900 and 950 strike have decreased from 37K on Monday to just above 25K on Wednesday morning. Calls at 1100 strike increased from 5K on Monday morning to 13000. The Put to Call ratio has plummeted from over 3 to just 1.45 on Wednesday morning. With calls increasing and puts decreasing, much of the day's movement could likely be attributed to market maker delta hedge buying.

Wednesday's close near 1061 puts TSLA close to the mid bollinger band again and is helping to cause the mid bb to turn upward (where it can do us longs some good!). Since at no time in November and December did TSLA close below 1000, I am going to call this a triple-bottom (which should be more powerful a dip suppressor than a double bottom).

Conditions:
* Dow up 35 (0.10%)
* NASDAQ up 100 (0.64%)
* SPY up 1 (0.26%)
* TSLA 1068.96, up 17.21 (1.64%)
* TSLA volume 13.9M shares
* Oil 72.61
* IV 64.8, 70%
* Max Pain 1055

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA felt the downdraft of NASDAQ losses all day long, with the NASDAQ closing down 1.71%. TSLA's drop of 6.1%, a 3.6X ratio, which is way too high, even for a high flying tech stock. For perspective, Nvidia dropped 4.2% and ARKK dropped 5.3% on Thursday, How to make up the difference? Thursday was Elon's day this week to sell nearly a million shares. Let's discuss the methods by which hedge funds add to the dip whenever Elon sells.

I've often talked about how profitable it can be when hedge funds can start short-selling TSLA ahead of another downward catalyst. The idea is to sell high and cover (buy) low. When Elon is selling, the covering is easy because the quantity he's selling is the same each time. Sell high, cover low. On Thursday Gary Black mentioned that high speed traders were front-running Elon's selling. He's saying the same thing as me, only with different words. Elon has now sold 11M of his proposed 17M shares.

As long as macros don't descend, TSLA stands a good chance of climbing on Friday. After all, we see strong demand any time TSLA dips below 1000 and it is currently less than 1004. One reason for upward pressure come Friday is this Tweet from Gary Black, who attended a meeting with Tesla officials. Coming catalysts include: 2 factories opening with limited production before year end, their 1st yr. gross margins should be similar to Shanghai year 1 GMs, 2022 deliveries of about 1.5M if batteries permit, and cybertruck launching in late 2022. Dave Lee does a great job of breaking down Gary Black's points in this video. Dave also goes into depth with what's happening with the EV tax credit. Nicely done video, for sure. The wall of Puts at 1000 is a reason why market makers would not want TSLA to descend below 1000 on Friday.

OTOH, I can think of two force that could work against TSLA on Friday. Important economic data will be released and if it is disappointing we could see the markets sink. The other reason is that the bears have been attacking all week and might continue on Friday to achieve some price goal.

All in all, I think this week's bear attack is noise (unless you have options expiring soon), and news continues to suggest a robust 2022 ahead.

All week long TSLA has been battling the bears, with percent of selling by shorts running at or near 60% every day including Thursday.

Nice to see 10 year treasury yields remaining below 1.5%. This should not have been a problem for the markets today.

Max pain crept up another $5 to 1060 on Thursday. Looking at the big strike peaks, I would say the market makers will try to avoid letting TSLA close below 1000, due to the large numbers of Puts expiring at that strike.

Saved by the 50 day moving average (blue line).


Conditions:
* Dow down 0 (0.00%)
* NASDAQ down 270 (1.71%)
* SPY down 3 (0.68%)
* TSLA 1003.80, down 65.16 (6.10%)
* TSLA volume 19.2M shares
* Oil 70.94
* IV 67.0, 77%
* Max Pain 1060

 

[Papafox]

TSLA Chart above

QQQ chart above

What a week this has been. Percent of selling by shorts has remained near 60% all week (see chart below) while some hedge funds attempted a full court press to manipulate TSLA downward. We've seen similar bear attacks at times when TSLA looked ready to climb and the hedgies thought they'd scare some shares out of retail investors.

Looking at the charts above, you can see the moment in pre-market trading after 8am when the Consumer Price Index (CPI) numbers came out. Although the numbers were right about where they were originally expected, whisper numbers on Wall Street had crept up and so the market breathed a sigh of relief and stock prices rose. TSLA initially rose with the market but the powers that be managed to push TSLA well into the red during morning trading before it recovered.

Take a look at the 1020 line on the TSLA chart. Notice the bounce off 1020 during the CPI climb? Notice the various other times when TSLA approached 1020 but was immediately knocked down? Look at how subdued TSLA was in that climb at the end of market trading when QQQ hit it's daily high right near the close. Some big hedge fund had bet lots of money that they could keep TSLA below 1020 on Friday's close and so they deployed the resources needed to keep it there. This is yet another example of why you don't really want to play the weeklies lottery as a call buyer.

In a nutshell, the week's news was ambiguous enough and macro fears were strong enough on some days so that Wall Street could play games with the TSLA price throughout the week without ill effect. The ambiguity extended to the China wholesale "sales" numbers.

What we see with TSLA are strong climb periods and then periods when the stock is at the mercy of the Wall Street pirates because updated news is needed to get the next leg of the stock price climb going again. I suspect Q4 results will generate sufficient good news to get another climb going, but until we get within a week or so of year's end the anticipation of good results takes a backseat to the efforts of hedge funds and/or market makers, as we saw this past week.

News:
* Rumor has it that limited Tesla semitruck production has begun in a Tesla facility near the Nevada gigafactory.

This whole past week, from Monday through Friday, showed significantly elevated percentage of selling by shorts. Translation: a big manipulation week.

Friday was yet another day with 10 yr treasury bond yields remaining below 1.5%. This will likely not last.

The published max pain number for Friday, Dec 10 is 1000. We also saw an enormous shift in put to call ratio from early last week until Friday. The ratio was at times greater that 3 (3 puts for every 1 call) but by Friday afternoon that ratio had dropped to only about 1.2. Notice the very high strike puts and the very low strike calls suggest that option buyers are avoiding "the usual" strike buy prices because they're catching on to the tendency of market makers to move the price by Friday to render nearby "in the money" strikes worthless. Spreading out the bets makes this manipulation less capable.

Thanks to @JimS we can see yet again the interplay of closing price and advertised max pain as we move toward Friday market close. The stock price for the past week tells the story of the Monday bear attack, recovery going into Wednesday, manipulative front running of Elon's stock sales on Thursday, and a slight recovery on Friday.

Coronavirus Update

The arrival of the Omicron variant in the U.S. has not yet spiked the new cases chart, but likely will. The big question remains: will Omicron continue to show relatively mild symptoms as more data comes in? South Africa numbers continue to support the theory that Omicron could be considerably less damaging to the economy than some previous variants.

Looking at the tech chart, notice that TSLA opened just above the 50 day moving average, dipped to a bounce off the lower bollinger band, and then climbed back above the 50 day moving average for the close.

For the week, TSLA closed at 1017.03, up 2.05 from the previous Friday's 1014.97. Here's hoping you enjoyed a good weekend.

Conditions:
* Dow up 216 (0.60%)
* NASDAQ up 113 (0.73%)
* SPY up 4 (0.94%)
* TSLA 1017.03, up 13.23 (1.32%)
* TSLA volume 19.7M shares
* Oil 71.67
* IV 59.1, 53%
* Max Pain 1000

 

[Papafox]

TSLA chart above

QQQ chart above

Monday was an ugly day for the macros and TSLA as the NASDAQ lost nearly 1.4% while TSLA fell as much as 6% but managed to recover to 4.98% for the close. For comparison purposes, ARKK, a collection of high flyers, lost 1.74%, making TSLA's nearly 5% loss unlikely due tech sector issues. Ford was down 4.76% and GM down 6.45%, so there may have been some auto sector weakness working on TSLA.

Alas, the mystery was solved when we see that Elon sold nearly a million additional shares today, bringing him about 70% of the way to reaching his stated 10% sale of his stock. Because TSLA has so many options outstanding compared to other stocks, hedge funds that sell prior to Elon's selling rake in the profits not only because of the sell high/buy low aspect but also because market makers need to delta-hedge sell to keep delta-neutral on their options and the combination of hedge funds, market makers and Elon selling creates a large, downhill domino effect. TSLA should rally when Elon's selling is nearly complete. Can't wait until this is done.

Pricewise, TSLA has dipped into the 950s before in recent months, but it always rallied back above $1000 for the close. Again, I credit Elon's selling on a strongly down macro day as a big part of the reason TSLA didn't recover to $1000 before close (another part would be the big macro dip in final half hour of market trading).

With the perception that this week's share sale is complete, there's room for the stock price to recover as the week progresses. Don't be surprised, however, to see hedge funds try for a mandatory morning dip to see if there's enough fear out there to push lower after a close below 1000. One gauge of inflation comes out on Tuesday that could affect the market, then on Wednesday Powell will give a briefing regarding the two day Fed meeting that kicks off Tuesday.

Elon made the cover of Time magazine today as Person of the Year, a well-deserved honor. Ironically, Elizabeth Warren Tweeted a photo of the mag cover and the words "Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else." As painful as these share sales are to us TSLA longs in the short term, they really are making the point that Elon is paying huge taxes this year and it's a painful process. I rather suspect the sales will be completed before year end so as to emphasize the tax bill in 2021. In the longer run, the stock price will return to what's appropriate for profits and growth and this sale of shares will just become haze in the rear-view mirror.

Once again the bond market ignored inflation jitters and the 10 year treasury yields closed below 1.5%

Stated max pain on Monday was 1000. The put to call ratio is back to a pretty normal 1.2.

Bravo for the lower bollinger band, which provided support for the closing stock price (both at 966.4).

Conditions:
* Dow down 0.89%
* NASDAQ down 1.39%
* SPY down 0.89%
* TSLA 966.41, down 50.62 (4.98%)
* TSLA volume 25.3M shares
* Oil 71.13
* IV 60.0, 58%
* Max Pain 1000

 

[Papafox]

TSLA chart above

QQQ chart above

On Tuesday the Labor Department released the Producer Price Index (PPI) numbers for November and they were 9.6% increase from a year ago, the highest increase since the index's conception back in 2010. Naturally the market had some indigestion over this news and QQQ fell about 2% until bottoming out around 1pm. At that same time, TSLA had fallen 3.7%, which is a typical multiple for TSLA to fall when the macros are falling substantially. The good news is that around 3pm TSLA volume picked up substantially and TSLA almost made it into the green before following the macros in another dip shortly before market close. I'm encouraged by TSLA's afternoon rise because it shows that when the Fear of Falling has been dissipated, Fear of Missing Out takes over and can be quite strong. Volume on Tuesday was a somewhat robust 23 million shares.

Wednesday around 2pm we should hear from the Fed regarding their 2 day meeting. Since tapering of bond buying and a couple interest rate hikes are on the agenda (hikes in 2022) there's certainly the possibility of a negative market reaction.

Most of you have been aware of the recent war of words between Elizabeth Warren and Elon. Such disagreements hold the possibility of negative reactions from the senator and her supporters, but I thought I'd take a look at the other side of the coin: how are people on the right viewing Elon after this tiff? I found the appropriate story at Foxnews.com and browsed through the comments. Top comments were almost universally positive for Elon including the reactions to this post:

My point is that Elon's tiff with Warren is making him and Tesla more acceptable to those who strongly identify with the right. We may actually see a broadening of the market for Tesla vehicles as the right warms up to Elon. Tesla buyers have always come from the full spectrum of political leanings but driving a Tesla has just become more acceptable in certain circles, I would suspect.

I found the above Tweet by Gary Black interesting because you can indeed see the strong correlation between estimates of 2022 earnings per share and the stock price (over the past two years). The recent dip in stock price suggests that the Elon is selling dip should be a shorter term phenomenon and at some point the stock price will increase to the appropriate price for 2022 estimates. Notice that his estimate of 2022 earnings is considerably below the estimates given by our TMC gurus. Tick, tick, tick.

What's also worth watching is the analyst stock price targets when TSLA is climbing. Typically we see TSLA run out of steam in a strong climb when it runs out of multiple price targets above the current price. Keep price targets in mind next time you think there's no top to a climb when TSLA looks to be heading to Jupiter.

Even with Tuesday's high producer's price increase, the 10 yr treasury bond yields remained unaffected

Max pain remained at 1000, but you can now see a definite dividing line. Below 1000 puts rule and above that strike, calls exceed puts at the various strikes.

TSLA closed about $3 above the lower bollinger band. If you look at the past three months of trading, TSLA ran along the upper bb until early November, when it was bumped down to the mid bb on word that Elon would be selling shares. Some inappropriately steep dips in December led us to the lower bb this week, which TSLA has been tracking for the past few days. All in all, the stock price has gravitated toward one bollinger band or the other throughout the past few months.

Conditions:
* Dow down 107 (0.30%)
* NASDAQ down 176 (1.14%)
* SPY down 3 (0.69%)
* TSLA 958.51, down 7.90 (0.82%)
* TSLA volume 23.0M shares
* Oil 69.94
* IV 61.8, 62%
* Max Pain 1000

 

[Papafox]

TSLA chart above

QQQ chart above

All eyes were on the Fed meeting when the market opened on Wednesday. Although futures on Tuesday night suggested a green start to trading, You can see the very distinct dip and then immediate rise to QQQ as Powell revealed the Fed's plan for multiple interest rate hikes in 2022. The market spent about an hour in relative uncertainty, but as 3pm approached, QQQ (and the NASDAQ) took off in a rally that brought the NASDAQ up 2.15% for the day.

What's interesting is to compare the differences between QQQ and TSLA. We saw TSLA climb into the green right after market open, suggesting an eagerness by some to buy into TSLA at the sale price in the 960s. Alas, TSLA sunk so that around 12:20pm when it bottomed out it was down about 3.2X QQQ's dip. Such a large multiplier suggests some shenanigans afoot, most likely hedge funds shorting the dip and not only making a profit by covering lower but also deepening the dip.

What's bizarre is the dip TSLA took between about 2:05pm and 3:05pm. Various scenarios are possible, but one I entertain is that whenever TSLA or market news is ambiguous, there's often some large option seller who will short TSLA in order to suggest a direction for the stock. OTOH, FINRA percent of selling by shorts was only about 50% on Wednesday, so perhaps this isn't the explanation. More interesting was the capping of TSLA so that it remained barely in the green until about 3:15pm even though QQQ was climbing upward like a Falcon 9 rocket at the time. Again, I see this as an attempt to hold TSLA back so that it doesn't go ballistic. As is true in so many similar cases, the QQQ (and NASDAQ) run up in the final hour was too intense to hold TSLA back, and so TSLA eventually shook off the cap and climbed. Notice that even though TSLA declined at a 3.2X multiplier, it closed the day up a mere 1.82% compared to the NASDAQ's 2.15% gain. Wednesday was a classic "hold TSLA back" day which helps explain how TSLA can trade so slowly compared to the macros until it finally starts a strong climb and then heads to a price more in line with bullish price targets.

Notice the greater than $5 run higher in after-hours trading. This is a bullish sign.

For those of you who did some buying in the 930s and 940s, congrats. On these deeper dips I am inclined to buy leaps that expire at least a year away and preferably two years away. I wouldn't feel comfortable buying call options that expire in Q1, however, and here's why. We never have enough visibility on the number of vehicles moving to ensure that the delivery numbers will surprise well to the high side. They usually do, but there's no need to lose money on an odd quarter if you mis-guess. Consider what may affect TSLA deliveries in the coming two weeks. TSLA is down more than 25% from recent all time highs and I assume a fair number of Tesla buyers are also shareholders who might defer purchases until the stock bounces back. Secondly, some buyers are holding off purchases this month in the hope that a purchase in 2022 will bring them a U.S. incentive payment. There are always possibilities of big snow storms affecting deliveries in late December and most importantly of all, Q4 is the quarter that Elon says he'll begin unwinding the frantic end of quarter delivery rush. I'm guessing we'll still deliver record numbers of vehicles in Q4, but I hate to risk a bet on a short time frame when it's so much easier to make money by investing with a longer time horizon.

As of Wednesday night, futures are up, and so maybe TSLA will have a shot at retaking 1000. Don't be surprised to see the usual suspects trying to cap. A big enough climb to signal a bounce out of the below 1000 wastelands would be a signal for many who have been watching from the sidelines to get back in. For this reason, you can expect some effort to moderate TSLA's climb. Fingers crossed there's no selling by Elon on Thursday.

Yet another uneventful day for 10 yr treasury bond yields

Max pain was 990 Wednesday morning. I continue to find the above chart to be fascinating because at TSLA there's been a major departure from the puts at the low end, calls at the high end norm.

Wednesday's trading revolved around the lower bollinger band: open at the band, a push below and then a run above.

Conditions:
* Dow up 383 (1.08%)
* NASDAQ up 328 (2.15%)
* SPY up 7 (1.56%)
* TSLA 975.99, up 17.48 (1.82%)
* TSLA volume 24.5M shares
* Oil 71.60
* IV 62.1, 63%
* Max Pain 990

 

[Papafox]

TSLA chart above

QQQ chart above

In pre-market trading on Thursday, TSLA was doing what we expected: climbing and flirting with (and sometimes exceeding) 1000 again. Alas, the NASDAQ chose to have a delayed conniption about the Fed statement on Wednesday and it fell 2.47% by market close. TSLA's loss of about 5% was a 2X multiplier and somewhat excessive when you consider that ARKK was down 3.7% and Apple was down 3.9%. When we learned that Elon sold his nearly 1 million shares again on Thursday, it all made sense.

I suggest checking out Dave Lee's video to get a concise summary of the forces at work in the economy and by the Feds, at the moment. My personal feeling is that Powell is making the necessary changes without overreacting and that inflation will indeed dip somewhat by the end of 2022. I see no reason to be scared away from a TSLA investment, particularly with the substantial growth we're expecting in the coming year and with the strong demand we're seeing for TSLA vehicles.

I felt Thursday's dip was a second chance at catching these low prices and I added two more leaps in the afternoon. I likely haven't bought at the bottom, but I have bought at prices I'll likely be very happy with in a few months, and so I am choosing to spread out my buying so as to not be empty-handed when TSLA finally takes off like a Falcon 9.

Let me be blunt: these low prices are only possible because of the combination of Elon selling nearly a million shares in a day and the hedge funds front running those sales. This is an unusual week because we're seeing two selling days in one week. With approximately 13 million shares sold, Elon only has 4 selling sessions left if his goal is selling 17M. I'd be very surprised if the market waits for all the selling sessions to be completed before TSLA turns noticeably higher. He can complete the exercise of his stock options of the 2012 award letter in 3 more sessions. My guess is that he will complete all the buying in 2021 because taxes could be higher in 2022 and also because he has made a point about paying more taxes this year than any American ever has done, and I think he doesn't want to spill the buying over into 2022 and dilute the year's tax number as he continues his Twitter sparing with Sanders and Warren.

This is a unique time because we see signs of Fear of Falling and Fear of Missing Out appearing simultaneously. The past two weeks has been a bear attack of substantial proportions, aided by macro weakness. The bears have succeeded partially because the Elon selling is not complete yet, so some potential investors are not yet willing to dive back in yet. In this post by @Curt Renz , we learn that ARKK is currently at an unusually low 8% of portfolio. Count ARK Invest in as one of the investors likely waiting for this Elon selling spree to get closer to the end before they jump back in and buy aggressively.

For Friday, I'm guessing the hedge funds will try to continue their dip. OTOH, the current price of 920 is so attractive we could also see a very nice climb. Macros could well decide which outcome we see.

Despite all the worry on Wall Street about inflation, the 10 year treasury bond yield remains low at the moment.

Max pain dipped to 970 with Wednesday's losses. I feel a bit silly suggesting earlier this week that the reason we see calls and puts at all these odd strike prices is because the option buyers are getting smarter and spacing out their strike prices so as to make market maker manipulations more difficult. I now see that this Friday is a triple witching expiration, which mostly explains such a crazy distribution of puts and calls.

Notice that volume has been increasing over the past two weeks. Normally, you would guess that volume approaching 30M shares would be too great for manipulations to sway heavily, mischief still allows the tail to wag the dog at times.

Conditions:
* Dow down 30 (0.08%)
* NASDAQ down 385 (2.47%)
* SPY down 4 (0.88%)
* TSLA 926.92, down 49.07 (5.03%)
* TSLA volume 27.0M shares
* Oil 72.15
* IV 67.3, 79%
* Max Pain 970

 

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TSLA chart above

QQQ chart above

On Friday, TSLA definitely outperformed QQQ. One likely reason: Friday was the date for readjusting S&P 500 percentages. We saw an amazing 10.4M shares trade during the 4pm minute as many funds opted to buy their shares during the closing cross. An additional 1.8M shares traded hands in a pre-arranged trade during after-hours trading.

This would have been an excellent environment for Elon to sell, but we saw no forms filed on Friday or over the weekend.

Over the weekend, Senator Joe Manchin made known that he would not support BBB and disappointment by the market that BBB is not coming is reflected in futures being broadly down over 1% on Sunday night.

We also saw Elon Tweet the following:

Gary Black responded with this Tweet, showing how he has calculated Elon already up to $10.8B in taxes paid and suggesting Elon's selling is done for the year. If that's so, we will see a rebound of TSLA once the market comes to believe the selling has indeed concluded.

OTOH, Elon's words "I will pay over $11 billion" leaves the door open for any higher sum, so of course that statement will be scrutinized. Arguments in favor of Elon possibly concluding his selling for the year are:
* he would like to state the highest tax payment number in his swordplay with Warren, so if a much higher number was planned soon, he might have held off mentioning a number over the weekend
* the tax consequences of selling in 2022 instead of '21 might look less threatening now that the BBB bill and the likely accompanying tax increase may be shelfed.

Bottom line: we don't know anything for certain but have a few clues to work with. Let's see how Wall Street reacts.

Another benign day for the 10 year treasury bond yields

Official max pain is 1005 coming into the new week (big change from Friday's 960)

Hmm, I detect a trend in max pain and closing price

Coronavirus Update

In the United States, we see a resurgence of Delta variant with new cases of Omicron also now appearing. As Omicron spreads, expect the U.S. numbers to show a spike and the stock market to overreact, of course.

South Africa was ground zero for the Omicron variant, and so what happens there bears watching. So far, the spike in cases was much faster than other variants, but a possible peaking and reduction in cases happened far quicker than you'd expect. More time is needed to avoid false conclusions, but the apparent quick peak is encouraging.

Usually the deaths trail new cases by a couple weeks, so again it is too early to use the charts to draw conclusions. Anecdotal evidence suggests a big decline in severe cases. We'll revisit these charts next week.

Also, I live in Hawaii, which is currently experiencing a rapid increase. I'll get a close up view of what's transpiring.

TSLA continues to trade around the lower bollinger band as we await news that Elon's selling has concluded or is near concluding.


Conditions:
* Dow down 532 (1.48%)
* NASDAQ down 11 (0.07%)
* SPY down 5 (1.06%)
* TSLA 932.57, up 5.65 (0.61%)
* TSLA volume 29.8M shares
* Oil 70.86
* IV 63.0, 66%
* Max Pain 960

 

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TSLA chart above

QQQ chart above

To no one's great surprise, EV stocks unwound noticeably today (due to assumed death of BBB and its EV incentives), most between 8 and 5%. TSLA's dip of 3.5%, with the NASDAQ down 1.25%, was no worse than what you'd expect. The market was busy worrying about Omicron variant of Covid-19, which the CDC today said has within a week's time become the predominant Covid strain in the U.S.

Prevailing views of Omicron continue to suggest it's a more contagious but less lethal form of Covid than what came before. If some variant of the coronavirus is going to sweep through the country and give natural immunity to many unvaccinated souls, this is likely the variant that will do the least damage. Fingers crossed. On Monday night Futures are up, continuing the whipsaw volatility regarding likely overreactions then sighs of relief regarding the new variant.

Good news was on the horizon for Tesla in the form of November production numbers from China. The numbers dispel worries that supply chain issues negatively affected Tesla's Shanghai production in November.

Also, @Curt Renz posted this article in the main investor's thread about the Biden administration moving ahead with tougher vehicle fuel efficiency rules. Such rules should generate more demand for credits sold by Tesla.

With Q4 looking on track to be a decent quarter yet again, expect some price recovery in the final week of December, which is next week. At these low prices, don't be surprised if the recovery begins this week. The task now, if you have some dry powder, is to guess the bottom or at least buy before the sale is over. I've already pretty much finished my Christmas shopping, so to speak. Also, keep in mind a possible overlap between the "Elon is done selling" rise and the "Only a week before we see Q4 Production and Delivery Report" rise.

Keep in mind that Friday, December 24, is a trading holiday.

Yet another benign day with yields

Max pain is at 1000. You can see calls outnumber puts at 950, a rather even distribution of puts and calls follow, then 1000 strike and above is strongly favoring calls.

With the EV incentives apparently disappearing and Omicron breathing down our necks, Monday was yet another descending day along the lower bollinger band. Let's hope the green futures predict Tuesday's open.

Conditions:
* Dow down 433 (1.23%)
* NASDAQ down 189 (1.24%)
* SPY down 5 (1.06%)
* TSLA 899.94, down 32.63 (3.50%)
* TSLA volume 18.2M shares
* Oil 68.23
* IV 63.5, 69%
* Max Pain 1000

 

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TSLA chart above

QQQ chart above

We may have seen the last day of Elon's TSLA selling spree on Tuesday, fingers crossed. If so, let the recovery commence!

Some of you may have seen this post of mine in the main investors' thread, speculating that Elon might have been selling on Tuesday. How did I reach that possible conclusion on a day with a 4.3% gain? Consider:
* In the first half of the day, we saw numerous big sales in a minute, along the lines of over 30K shares traded in a minute and at least one above 70K
* Those big minutes of trading dipped the stock price, indicating that they originated with selling, not buying
* This was a strongly macro positive day, a bad choice of days for a hedge fund to try making money through short-selling TSLA and then covering lower
* This was not a Friday, when a big option seller might be trying especially hard to affect the closing stock price
* We were well below max pain, which suggests market makers would not be pushing lower
* By 1pm TSLA was trading well below the NASDAQ, which had taken off in a nice climb. Something was definitely up since there was no news.
* Before 2pm TSLA soared and made up for lost time, which could happen if the Elon selling, or at least the vast majority of it, was done and the selling pressure had just been removed.

The next question is: Why did TSLA perform so well on Tuesday when it typically loses (sometimes A LOT) on Elon selling days? You certainly have the hedge funds which are front-running Elon's selling pushing the stock price down big time on most selling days. I suspect that they were simply caught off guard by his selling on Tuesday. Further, the macro run higher helped disguise the fact that today was a selling day. This being the lead-in week to Christmas may have also affected staffing in the hedge funds that normally would have front-run Elon's bouts of selling. I don't really think we're seeing just your typical front-running, though. There are a few big players on Wall Street who are mad at Elon for selling the shares on his own, rather than using Goldman-Sachs or Morgan-Stanley to do the selling (for a price). I think the general animosity on Wall Street for the way Elon does business helps to explain why we normally see the various players make a point of really punishing the stock on Elon selling days.

Here's the funny thing, though. TSLA taking a temporary dip during the noise of Elon's selling is not necessarily a bad thing for Elon. My understanding is the taxes he pays on selling the shares and purchasing his options is affected by the day's price of TSLA. The lower the price, the less tax he pays on the transactions. As long as TSLA recovers its price relatively quickly, the low stock price during the selling and buying of shares and options by Elon benefits him financially once the stock price recovers. I suspect he would not cause such a dip in the stock price if he knew that Q4 results were going to be a negative surprise. One could even think that his reappearance at the Q4 Earnings Report to lay out Tesla's upcoming roadmap for vehicle production could be an attempt to help restore the stock price, if needed. I don't think Elon planned on seeing the stock price dip this dramatically during his selling because I don't think anyone expected the Wall Street pirates to play such severe games with the selling. The stock price dip was more a result of over-the-top Wall Street manipulations than anything Elon could have anticipated before beginning the sales.

In this article, Reuters mentions that during an interview (the Babylon Bee Interview) "Tesla CEO Elon Musk said he had sold 'enough stock' to reach his plan to sell 10% of his shares in the world's most valuable car company...". Reuters then quoted Elon as saying "I sold enough stock to get to around 10% plus the option exercise stuff and I tried to be extremely literal here." This Reuters article suggests the selling is now over on the 10% sale. Don't be surprised if the market responds positively. You could even suspect that Elon's appearance with the Babylon Bee team on Tuesday was his way of letting the cat out of the bag about the selling now being complete.

I seem to remember that Elon still has a couple more purchases of stock options to go to complete his 2012 awards. Would he do any additional selling at the time those options are exercised? We don't know, but maybe not or maybe any selling associated with the remaining options would be a surprise enough to the market that the pirates are yet again caught off guard should any selling occur. Tuesday's selling with a more than 4% increase in the stock price on the same day is really closing this chapter of Elon selling stock on a high note.

News:
* In this Deutsche Bank report, a recent meeting with Tesla head of IR Martin Viecha gave useful information to investors regarding where Tesla is heading. Check it out. In particular, word about progress on the 4680 cells suggests this enormous piece of Tesla's strategy going forward will indeed be successful.

The same optimism that buoyed the market could have been the reason why 10 yr. treasury bond yields rose on Tuesday

Official max pain drifted down to 965 Tuesday morning, Look at what's happening with the puts vs calls, however. Calls now dominate at 950 and above, and the put to call ratio has now dropped to about even. In other words, more traders have been buying calls than puts lately. That trend will require market makers to buy TSLA to delta-hedge and the stage is set for TSLA to resume its climb.

Tuesday was one of the few days in the past three weeks where the stock price closed significantly above the lower bollinger band. Let's hope that TSLA can quickly climb above the mid-bb soon so that we can get the bollinger bands curving upwards again.

Conditions:
* Dow up 561 (1.60%)
* NASDAQ up 360 (2.40%)
* SPY up 8 (1.78%)
* TSLA 938.53, up 38.59 (4.29%)
* TSLA volume 23.1M shares
* Oil 71.22
* IV 59.0, 53%
* Max Pain 965

 

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TSLA chart above

QQQ chart above

If you haven't heard, Elon exercised another tranche of his 2012 option awards on Wednesday while also selling the usual 934K shares to cover taxes. Prior to this announcement, both Tesla Facts and Rob Maurer agreed that Elon had approx. another 1.7 tranches worth of buying (and associated selling) to go. With Wednesday's 1 tranch of options exercising and associated selling out of the way now, only .7 tranch remains. That amount of selling is negligible given Wednesday's 7.5% rise while 1 tranch worth of the usual exercising and selling was going on. The market concluded that Elon's selling was close enough to being done, so it was time to back up the truck and start loading up on shares. I'd be surprised if Elon doesn't sell the remaining shares on Thursday to conclude the 2012 exercise of option awards prior to Christmas.

In case you missed the Elon Tweet that clarified that some additional exercising of options (and selling for tax payments) still lay ahead, When Tesmanian Tweeted on Wednesday that Elon had already hit his goal of selling 10% of his shares, Elon replied:

Scratch one tranch from that Elon statement now, and hopefully scratch the final portion of one on Thursday.

What to expect on Thursday? I suggest that Fear of Falling has disappeared at the moment and it is replaced by Fear of Missing Out. More climbing should occur to celebrate that the big, bad, selling spree is finally over.

Yawn (which is good)

Market makers simply aren't going to be able to push TSLA down near the 950 max pain level this week, I suspect. Word of Elon's selling effectively being complete will drive enough volume to overrule easy manipulations. Looking at the call mountains, I suspect the MMs might try to hold TSLA below 1050 and would certainly try to hold below 1100 if those prices are in play near close of trading on Thursday.

After about 3 weeks of hugging the lower bollinger band, TSLA has convincingly pulled away from the band these past two trading days.

Conditions:
* Dow up 261 (0.74%)
* NASDAQ up 181 (1.18%)
* SPY up 5 (1.00%)
* TSLA 1008.87, 70.34 (7.49%)
* TSLA volume 30.5M shares
* Oil 73.00
* IV 60.5, 58%
* Max Pain 950

 

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TSLA chart above

QQQ chart above

Thursday's trading left a question mark for many of us during the morning hours. Did Elon do some selling? The TSLA chart looked suspicious, but in retrospect the dips began in pre-market trading and those couldn't have been caused by Elon selling. Perhaps the market makers wished to discourage another big climb day with TSLA (it didn't work) or some hedge fund was so certain that Elon would sell that they started the front-running and Elon's sales guy said, "screw this, I'm going to skip today." When the NASDAQ and QQQ started climbing big time, TSLA did too at a higher multiple, and it turned out to be a great day. To be honest, nobody should be afraid of one more selling day ahead. Whatever is potentially lost that day (and it may well not even be a loss), the market will reward TSLA amply once word gets out that the selling is now complete. Volume was a very robust 30.5M shares. The big dogs are starting to accumulate.

Four factors are favoring TSLA stock price in the coming week:
* Momentum is upward as the "Elon is buying" dip gets unwound
* As @Curt Renz pointed out in the main thread, funds like to add some winners at quarter or year's end as window dressing to make themselves look smarter. Let me add that TSLA is up about 46% for the year and S&P500 up about 27%. Timid portfolio managers who failed to buy TSLA are being penalized big time. They will realize the safe position will be to be equal weight in TSLA going forward, and that leaves the door open to some nice buying
* The Production and Delivery Report for Q4 should be Monday, Jan. 3, and right now the numbers are looking good for a beat. Troy, who tends to be conservative with his estimates, on Dec 19 estimated 287K vs. 265K analyst consensus. I'm personally feeling more bullish about Q4 because production at Fremont and Shanghai appears strong (no big supply chain issues) as we near the end of the year. Further, the death (for now, at least) of BBB takes away incentive for delaying the delivery of a Tesla vehicle into the next year.
* Elon should sell his final stock this week to pay taxes on acquiring his final tranche of options. Expect the market to react positively to the news that the selling is over

The flip side of Q4 is that Interstate 80 over the Sierras is closed for multiple days due to heavy snow. This is a typical Q4 problem.

Coronavirus Update

You can now see the Omicron variant pushing US new cases quickly upward. This was expected. How the market reacts will be tempered by news of how less lethal the variant is, compared to Delta and the other forms. Unfortunately, the news tends to highlight the negative. Expect short-term disruptions to some businesses as the U.S. experiences the initial spike.

Meanwhile, South Africa is still tending to show a dip after the quick run higher in new cases as Omicron hit the country ahead of most other countries

A big step in bringing the pandemic under control this week was the FDA's approval of the Merk and Pfizer antiviral pills, which work to stop the replication of the virus. The Pfizer pill was shown to reduce deaths by nearly 90%. Now what we need is adequate supplies of these meds plus reasonably obtainable Covid tests.

Although max pain is at 950, the volume and momentum suggest that number will not be a factor this week. Instead, look at the massive call mountain at 1100. That is likely to be the location of a battle on Monday or later in the week.

Thanks @JimS for the maxP vs stock price chart. You can see that in big movements the maximum pain normally lags the stock price in whatever direction the stock is heading.

Want to see a convincing departure from a trend? Voila! We still have a good ways to go to top 1200 again. With the stock price above the mid bollinger band now, you can see the downtrend in the bollinger bands reversing.

For the week, TSLA closed at 1067.00, up 134.43 from the previous Friday's 932.57. Looking forward to the next couple weeks!

Conditions:
* Dow up 197 (0.55%)
* NASDAQ up 131 (0.85%)
* SPY up 3 (0.62%)
* TSLA 1067.00, up 58.13 (5.76%)
* TSLA volume 30.5M shares
* Oil 73.79
* IV 61.2, 61%
* Max Pain 950

 

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TSLA chart above

QQQ chart above

Let me be blunt. There's no reason why the recovery from the "Elon is selling" dip has to stop at 1100. In early November TSLA topped 1200. During the Elon is selling dip, TSLA rallied back above 1150 before the bear raid took us down to 900. The reason why TSLA descended back below 1100 on Monday is quite simple: a group of Wall Street pirates wanted it there. Let me explain.

News on Monday was positive for TSLA. Trip Chowdhry visited the Fremont factory on Christmas Day, saw the heavy activity, and declared that Q4 will be "massive". Negative stories were missing. Meanwhile, QQQ couldn't have been more stable in its climb until 2:45pm, where it took a 40 minute dip then resumed a climb to a point above the beginning of the 2:45pm dip.

TSLA, OTOH, peaked at 12 noon then started a slow descent downward, which accelerated after the 2:45pm QQQ dip, but when QQQ started its recovery climb TSLA did not. If you watch manipulations regularly this day's trading has all the telltale signs.

Last week we saw manipulations which were clearly not carried out by the market makers (because they were taking TSLA farther away from max pain). I wouldn't be surprised if some hedge funds have sold large quantities of 1100-strike calls for this Friday and are going to attempt defending 1100. Normally, you would expect to see a capping effort keep TSLA below 1100 on its run upwards. Unfortunately for the pirates, after TSLA's 10am Mandatory Morning Dip failed, TSLA shot higher in near vertical fashion, and with the NASDAQ climbing rapidly as well there was just no way they could stop the ascent. About 10:35am with TSLA about 1112 the first attempted cap then pushdown began, but with the NASDAQ and QQQ climbing steadily, that effort failed and TSLA peaked at about 12:01pm above 1116.

What the manipulators apparently wish to accomplish is to halt the upward momentum of TSLA right now. Should TSLA continue its climb this week that could be extremely expensive for option sellers who haven't fully delta-hedged. Call option buying has been robust ever since TSLA began its climb, and when call options are being bought, legitimate market makers are buying TSLA in order to delta-hedge those sold call options. The rising price brings about more option buying, which requires more delta-hedge buying, which raises the price further, and the cycle continues feeding upon itself. What they're trying to do is generate a down day for TSLA and stop, or at least slow down, that feedback loop. Ideally, they'd like to see TSLA close below 1100 on Friday.

What could ruin their plans would be good news. I had been hoping that Elon was selling on Monday so that the announcement of all selling completed would give another up day on Tuesday. Apparently the SEC forms were not filed by Monday night, so likely no Elon selling.

Ah, but what if some big dog investor found out something negative about Tesla and started selling on Monday? If that was the case, I really don't think that investor would be pushing down hard in the late afternoon hours when volume is light. It would have made more sense from a price standpoint to wait until volume picked up on Tuesday morning to resume the selling. Such was not what we saw.

Max pain continues to climb. Monday's 985 is a full $35 climb from Thursday's 950. Still, max pain lags the stock price considerably. Meanwhile, the put to call ratio on a typical week is about 1.20 (1.2 times as many put contracts than call contracts). During the recent bear raid during Elon's selling, we saw put to call ratio showing 3, which is extremely weighted to puts and seldom seen. Monday's put to call ratio was a mere 0.85. The rapid change in put to call ratio reflects a strong positive shift in sentiment.

Check out the 1100 strike calls. On Thursday we saw 14K, but on Monday the numbers are up to 20K. All that call buying puts upward pressure on the stock price as market makers buy TSLA to delta-hedge those sold calls. With all those 1100-strike calls expiring on Friday, do you think the option sellers (market makers and hedge funds) might be up to some mischief this week, trying to engineer a close not too high above 1100?

If market makers and/or hedge funds were busy pushing TSLA lower Monday afternoon to get it back below 1100, might there be some evidence of their activities? For Exhibit A I produce the percent of selling by short sellers chart. Notice that TSLA shorting as a percentage in the chart rose above 60% on Monday. We've been seeing clearly manipulative practices in the past three weeks when that number rises to the vicinity of 60%, including the big bear attack week that began with a flurry of FUD and the high shorting percentage lasted all week. For Exhibit B, let me point out that between the 4pm and 4:01pm trades on Monday, we saw nearly a million shares trade hands in those two minutes. Someone was busy covering their shorting for the day. Bottom line: the Wall Street pirates were shorting the sugar out of TSLA Monday afternoon in order to accomplish their push below 1100.

Here's how the week is shaping up. With about 7K 1150 strike calls open and upper bollinger band around 1159, I suspect we would expect the stock price to not exceed 1160 this week. With max pain of 985 and 20K 1100 strike calls expiring on Friday, the market makers will be pulling out the stops to try and put the brakes on this strong rally we're seeing. Who will win? Volume and news may well determine the winner.

Conditions:
* Dow up 352 (0.98%)
* NASDAQ up 218 (1.39%)
* SPY up 7 (1.42%)
* TSLA 1093.94, up 26.94 (2.52%)
* TSLA volume 23.6M shares
* Oil 75.91
* IV 61.5, 63%
* Max Pain 985

 

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TSLA chart above

QQQ chart above

TSLA gained $5 in after hours trading. Looks like the "Elon is done selling" pop is beginning in earnest

Congrats TSLA longs, Elon officially wrapped up his 2012 options award buying on Tuesday along with the associated selling to pay taxes. We were expecting that news this week because of Elon's desire to see the taxes in 2021 (so as to maximize his point about paying more taxes than any American in history). Wednesday should be payday as the last of the "Elon is selling" fence sitters have run out of reasons to wait any longer. Add that catalyst to the growing list of catalysts for this week (last week to buy ahead of Q4 Production and Delivery Report, end of year window dressing, short sellers closing out positions so as to take their losses this year, etc.).

Meanwhile, it looks like TSLA made it to year's end without any substantially negative effects from supply chain issues. Consequently, analysts are increasing their bullishness on the stock. Consider:
* RBC is betting TSLA delivers 285K vehicles in Q4, about 20K more than the current analyst consensus number. They're looking for a 58% year over year uptick in deliveries
* Zack's is rating TSLA as a strong buy
* Dan Ives of Wedbush says Tesla is in a clear position of strength leading into 2020 and he reiterates his $1400 price target and outperform rating
* Argus has raised its TSLA price target from 1010 to 1313

For a second day in a row on Tuesday, Selling by shorts was nearly 60%, indicating continued manipulations afoot.

Those 20K 1100 calls have grown to about 23K calls and there's sizeable growth in the 1150 and 1200 calls mountains as well. If market makers are not delta-hedged for these changes already they'll likely be buying Wednesday morning. Max pain on Tuesday was 1030, up from Monday's 985.

If Wednesday is a big climb, we may see the resistance on Wednesday at 1150 because of the 11K calls at that strike and the upper bollinger band lingering around 1150.

Conditions:
* Dow up 96 (0.26%)
* NASDAQ down 90 (0.56%)
* SPY down 0 (0.08%)
* TSLA 1088.47, down 5.47 (0.50%)
* TSLA volume 20.1M shares
* Oil 76.11
* IV 61.5, 62%
* Max Pain 1030

 

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TSLA chart above

QQQ chart above

In pre-market trading TSLA was doing about what you'd expect the day after Elon officially completed selling his shares. Prices exceeded 1110 in the early pre-market trading. Alas, as QQQ became a bit choppy shortly after market open and then fell about 10:15am, but the dip at a 0.6% max drop wasn't all that deep (although it looks dramatic on the chart above). In contrast, TSLA's dip at about the same time was about 2.1% or more than 3.5X QQQ's dip.

My feeling is that we saw some really expert tweaking of TSLA stock today by market makers. They really don't want TSLA closing above 1100 this Friday and are willing to expend energy to make it so. Well-disguised selling during a macro dip (but at inappropriately high multiples) is a great way to chase away the traders in the morning and thereby lower the volume (TSLA saw only 18.2M shares trade on Wednesday). That low volume makes manipulations easier. At times TSLA traded stronger than QQQ, but notice how little progress TSLA made above the red/green line throughout the day? I think the market makers were avoiding any excursion into the green that could excite the traders and bring them back into trading TSLA that day. All in all, we saw exaggerated TSLA dips (compared to QQQ), a game of whack-the-mole anytime TSLA started to look too strong, and a noticeable dip in the final minutes going into market close: all classic negative manipulations.

One headwind of the past week and Wednesday was additional TSLA selling by ARK invest. I follow ARKK and ARKG closely (because I own some) and Cathie Wood is not shy about stating how well some of the companies are performing in terms of growth and profits and yet how battered these same stocks have been. Part is a legitimate concern by investors that various companies (such as Zoom and Teledoc) won't perform as well as Covid goes away, and yet I'm in the camp that the Coronavirus has changed the way a lot of people will work and seek healthcare going forward. For example, many employees who have tried telecommuting have decided with their employers to continue indefinitely. This is one reason why Hawaii has seen an influx of new residents during the pandemic. Cathie is just moving funds from Tesla to much more heavily battered stocks until they recover. I'm sure her conviction remains very strong in Tesla.

News about Q4 remains positive. If TSLA doesn't run above 1100 this week, I suspect it will do so next week, as long as the deliveries approximate the numbers the various retail guestimators are telling us. We should see a nice beat over analyst expectations if our retail pundits are correct.

After days with low movement in the 10 yr Treasury Bond yields, on Wednesday we saw rates jump above 1.5%. When they get up around 1.7% the market reacts negatively toward growth stocks

FINA percent of selling by shorts fell from 60% to slightly below 50% on Wednesday. We have seen manipulations strong with a lower FINRA percent of selling by shorts in the past, and such strength is typically achieved by shorting TSLA from non-FINRA exchanges. Bottom line: it's sometimes tough to tell just how much manipulations are taking place on certain days.

TSLA Max pain continues its ascent. As of Wednesday it is now at 1045. One big change overnight is that the 1200-strike calls have grown from about 1600 in number to about 2200.

TSLA keeps falling from 1100 as the various market makers continue the pressure to keep TSLA below the 2200 tall, 1100 strike call mountain until Friday's close.

Conditions:
* Dow up 90 (0.25%)
* NASDAQ down 16 (0.10%)
* SPY up 1 (0.13%)
* TSLA 1086.19, down 2.28 (0.21%)
* TSLA volume 18.2M shares
* Oil 76.50
* IV 61.7, 63%
* Max Pain 1045

 

[Papafox]

TSLA chart above

QQQ chart above

I swear, I don't need to go to the movies when watching TSLA trading is at least as entertaining. On Thursday TSLA began market trading with a strongly negative twist as the media latched onto a story that Tesla had issued safety recalls affecting nearly half a million vehicles. The reality was that the minor fixes (inspecting a secondary frunk latch on some older Model S vehicles and possibly changing a cable to the trunk of some Model 3s) would be super inexpensive, would not affect utilization of the vehicles before the fixes were made, and that nobody had been hurt by either situation. Once again, Tesla had been proactive to ensure safety.

Shortly after market open, TSLA dipped 2.6% as CNBC and other outlets ran with the story. Gary Black pointed out how the cost of fixing the recalls would amount to about 5 cents per share. James Stephenson presented the other side of the fish tale:

Since TSLA actually dipped about 2.6% at its worst, it looks like the cost of repairs would have to be greater than $65,000 per vehicle to justify such a dip, which took the situation beyond ludicrous to something resembling plaid.

Just how could the market be so inaccurate handling such a story? It begins with a media (yes I'm looking at you CNBC) that is far too eager to blow any potentially negative Tesla story far out of proportion. Companies such as Reuters publish articles with titles such as "Tesla recalls almost half a million vehicles over safety issues". Algobots pick up on those titles and sell, assuming there's a life-threatening defect in half a million Teslas. Meanwhile, the early morning crew at the hedge funds are shorting TSLA to add steroids to the dip and then cover their shorting as close as possible to the bottom. Algobots see the quick descent, factor in the headlines, and sell even faster. Add uniformed retail longs selling "At over $1000 a share, this stock has a LONG way it could potentially fall if Teslas are dangerous!" and you get an oversized dip. While some hedge fund selling on dips is conducted for its own sake (it's profitable before day's end), additional short selling is done to protect call options sold by the hedge fund.

By noon the market had figured out that they had been duped and TSLA recovered to within $5 of $1100. Alas, the afternoon shift at the hedge fund was not about to be outdone by those morning shift weenies, and so when QQQ started a shallow descent in early afternoon, they had help from macros in bringing TSLA down too, but of course at a higher multiple. TSLA lost 2.2% from its afternoon high to its closing price, but QQQ lost much less. All told, TSLA descended at a 3X multiple of QQQ's descent from afternoon high to closing.

Aiding the manipulations is the fact that a fair number of buyers are waiting for the bumpiness with the stock price to resolve before buying. It's one of the strange dynamics of manipulating negatively because doing so reduces volumes (TSLA was at a mere 15M shares on Thursday after a steady drop all week) and low volumes makes the manipulations easier.

You can see the significant efforts that the hedge funds are willing to take to keep TSLA from running higher. It's not just about closing below $1100 on Friday and rendering all those 22,000 1100 strike calls worthless, though. There's serious call walls at 1150 and 1200, and with good news continuing to bolster Q4 expectations, call option selling are getting nervous about upcoming weeks, as well. The next two weeks don't yet have many bets, but take a look below the current max pain chart at the Jan 21 max pain chart. Yep, you read it right: over 26K 1000- strike calls, 22K 1100-strike calls, 23K 1200-strike calls, and several other strikes with 15K or more calls already bought. Imagine what this chart is going to look like in 3 weeks?

There's reason to believe that Q4 deliveries will exceed analyst consensus. Tesla survey of analysts show 266K deliveries, FactSet numbers are in the 270s, but our retail gurus are predicting in the high 280s (more details coming soon, but check out Rob Maurer's forecast for over 286.5K deliveries). If the numbers surprise substantially on the high side, you can see analyst upgrades, buying, volume increases, and market maker delta-hedging their call options, which adds to the upward pressure on the stock price. Once TSLA gets into a mega-climb, and we've seen several before, traders jump in, call sales become very heavy, and it's off to the races. You can understand why hedge funds with negative exposure plus market makers don't want to see TSLA enter such a strong climb again, and so they're working hard right now to cut off the climb before it develops. Good numbers on Jan 3's Production and Delivery Report could potentially let the genie out of the bottle.

One of the things that makes 2022 so intriguing is that analysts are so far behind on understanding what Tesla's capabilities will be in a few months. Dave Lee noticed in the Gary Black info I posted earlier that the analysts are only expecting about 1.28 million Tesla deliveries in 2022. Looks like Tesla will exit 2021 at a production rate nearly that high, and when you add Berlin and Austin gigafactories plus expand production at Fremont and Shanghai, there's plenty of opportunity to substantially beat expectations that year. Elon's talk about the vehicle roadmap during the Q4 ER conference call could really get things exciting.

Bottom line: Wall Street forces are presently at work keeping TSLA from breaking out into a strong climb. They may or may not succeed in the next few weeks. At some point, TSLA will break out (as it always does) and we will be able to climb above the ATH and explore new valuations sometime in 2022.

A slight retreat in 10 yr. treasury bond yields is a welcome sight for investors in high growth stocks

Thursday's max pain was 1050, only marginally higher than Wednesday's. Notice the continued climb in number of 1200-strike calls, even this close to the end of the week.

The Jan 21, 2022, max pain chart looks really scary to call options sellers, especially given recent expectations for Q4 production and deliveries. It's reasonable for the Wall Street pirates to be playing defense through Jan 21.

You can see the bounce off the blue 50 day moving average line. If the 50 DMA can continue to provide support, TSLA will be riding a rising line while we wait for good news to pull the stock higher.

Conditions:
* Dow down 91 (0.25%)
* NASDAQ down 25 (0.16%)
* SPY down 1 (0.28%)
* TSLA 1070.34, down 15.85 (1.46%)
* TSLA volume 15.4M shares
* Oil 76.39
* IV 61.0, 61%
* Max Pain 1050

 

[Papafox]

TSLA chart above

QQQ chart above

Friday got off to a good start with this Tweet from Tesla China Analyst saying that Tesla sold 70.5K vehicles within the country during December. For context, the November number was 29.5. Retail investors and others who feel this person is credible bid the stock up in pre-market trading. Unfortunately, the macros went into a descent throughout the day, with the NASDAQ closing down 0.61%. Normally, such a good delivery number rumor would cause TSLA to close up for the day, but this was option-close Friday and volume (a mere 13.3M shares traded) had been steadily decreasing all week after the pirates forced TSLA back below 1100 by close on Monday. Bottom line: it was an easy manipulation on that low volume and TSLA closed at 1056.78, less than $6 above the max pain number of 1050. For a better view of how the market makers navigated TSLA to a close near the max pain point, be sure to see JimS's chart below.

Much took place after Friday's close. Troy Teslike has found Tesla China Analyst credible in the past and the morning's numbers in Shanghai surely affected his computations because Troy delivered a delivery estimate for Q4 of 299,100. You may remember that Rob Maurer's Q4 delivery estimate was 286,600. I'll split the difference and expect 293K. With Wall Street estimates in the mid 260s, we'll see quite a beat if our retail delivery gurus are accurate. Expect to see Tesla's Q4 Production and Delivery Report made available Sunday evening.

News:
* Deutsche Bank raised its TSLA price target from $1000 to $1200
* Joe Tegtmeyer tweets he has heard that Austin Gigafactory begins actual production of vehicles in the coming week

On Twitter, Forward Cap presented a chart detailing how consistently Wall Street analysts have underestimated Tesla's revenue and profit growth. TMC's @The Accountant commented that the current estimates for 2022 were still too low, and he provided numbers, which I have placed to the right of the chart so that you get an idea of just how consistently TSLA growth is underestimated by Wall Street. This is an important point because it is the ability of retail to better estimate Tesla's growth and profitability that leads retail to realizing such excellent returns in recent years (and likely in upcoming years, too).

Max pain was again 1050 on Friday. Looking to next week, the massive call walls at 1100 and 1200 have dissipated. Consider for a second the huge profits the option sellers made on Friday. With fewer bets placed for the coming week, Monday may be a day for a very quick ascent if the P&D Report numbers are strong.

Thanks @JimS for the chart above. What I find fascinating is the trajectory of stock price and max pain, which were so far apart the previous Friday, to come together this past Friday so closely. It is almost like the option sellers had some control over the stock price /s

Coronavirus

To no one's great surprise, the Omicron numbers are spiking high in the U.S. in recent days. Thankfully, a far lower percentage of Omicron sufferers are going to hospitals and perishing, compared to other variants.

Looking at the South Africa chart, you can see the big spike in Omicron cases has already subsided tremendously.

Looking at the tech chart, TSLA didn't get much below the 50 day moving average on Friday. Should Production and Delivery Report numbers be good, the obvious resistance is the upper bollinger band, which is presently at 1129. The most interesting detail of the chart, IMO, is the steadily descending volume. Once volume got low enough, the option sellers gained more leverage for manipulating the stock price, which in turn discouraged more buying and thus an even lower volume the next trading day.

For the week, TSLA closed at 1056.78, down 10.22 from the previous Friday's 1067.00. For the year, Tesla closed at 1056.78, up 351.11 or 49.8% from Dec. 31, 2020's 705.67.

It's been a good year for TSLA longs, my friends. We fared far better than the shorts, who actually spent much of the year in the green, only to see the October and November rally place the shorts nearly $10.5 billion in the red on Ihor Dusaniwsky's December 7 post. TSLA is up a few dollars from that computation, meaning shorts are even deeper in the hole as we closed out 2021. When will they ever learn? Hoping you've all had a safe and enjoyable New Year! Can't wait for 2022 to unfold.

Conditions:
* Dow down 60 (0.16%)
* NASDAQ down 97 (0.61%)
* SPY down 1 (0.25%)
* TSLA 1056.78, down 13.56 (1.27%)
* TSLA volume 13.3M shares
* Oil 75.21
* IV 61.7, 63%
* Max Pain 1050