Papafox's Daily TSLA Trading Charts

[Papafox]

Vgrinshpun reported over 200,000 short shares at Fidelity were taken out in preparations for market opening today. You can see the effect of short selling as the stock price zooms up and down as shorts tell a story of gloom and longs shrug it off and tell a hopeful story by bidding the stock back up. These deep dips within the green are a pretty good indication of short-selling and they make you wonder if we would have seen a substantial rally this morning without them. The good news is that few can afford to throw 200,000 short shares at TSLA every day, indefinitely. At some point, TSLA starts to rise and there's no holding it back.

The potential short activity that most caught my eye was this afternoon after the 12:45am dip, as the NASDAQ recovered from its dip and began a long, steady climb up. Why did TSLA level below 184 and trade horizontally for the remainder of the day when the NASDAQ it had been following was still climbing? I looked at Apple and Amazon and they climbed steadily in the afternoon, and Facebook climbed too, but at a shallower angle. Although it is possible that TSLA was affected by some news, it's more likely that we saw capping behavior by shorts, successfully keeping TSLA below 184 throughout the afternoon, during the low volume hours. I continue to believe that the low stock price we see for Tesla is far below what we'd see without the very substantial creative selling efforts of the shorts. Once TSLA returns to non-manipulated trading, the appreciation in SP could be substantial, in my opinion.

Note how well the NASDAQ outperformed the Dow today. This might be a sign that the rebalancing after the Trump victory is closer to completion.

Conditions:
* Dow up 54 (0.29%)
* NASDAQ up 57 (1.10%)
* TSLA 183.77, up 2.32 (1.28%)
* TSLA volume 3.9M shares
* SCTY 19.82, up 0.34 (1.75%)
* Oil 43.69, up 0.37 (0.85%)

 

[Off Shore]

few can afford to throw 200,000 short shares at TSLA every day, indefinitely

Thank you for your continued erudition, Papafox. Apropos of the quote, I wonder if you or others could help with a plot line for a story in a universe far far away where someone COULD afford such an attack. Within orders of magnitude, how much money would they need? Assume a vast and powerful organization with nearly unlimited resources, and an elaborate network of allies, not all of whom would necessarily be aware of the operation.

Apologies if this is too far off-topic, and thank you again for your work here. I learn something every day.

 

[Papafox]

Thank you for your continued erudition, Papafox. Apropos of the quote, I wonder if you or others could help with a plot line for a story in a universe far far away where someone COULD afford such an attack. Within orders of magnitude, how much money would they need? Assume a vast and powerful organization with nearly unlimited resources, and an elaborate network of allies, not all of whom would necessarily be aware of the operation.

Apologies if this is too far off-topic, and thank you again for your work here. I learn something every day.

Off Shore, I'm sure you're aware that your hypothetical situation is not so far-fetched. The oil and gas industry, the people who build peaker electrical plants, some utilities, and most of today's automotive industry see Tesla as a threat. So, let's go with the theory that a group of people with unlimited resources try to sink Tesla by short-selling its stock price down while Tesla seeks an equity raise.

The first thing you realize is that there's a limit to the number of short shares that can be made available. Telsa insiders such as Musk don't offer their shares for shorting, many longs don't either (out of a lack of knowledge how to do so or a conviction that it makes little sense to create an equal number of short shares to your long shares and then take the stock price hit for a mere 1% per year interest). So, there's a real limit to the number of short shares out there. There's also the issue of good news ahead. If Q4 is as good as many of us hope and guidance for 2017 is strong, we'll see a nice bump up in the stock price. Shorts simply won't have the volume of shares available to sell to overcome the longs who wish to buy and thereby bid the price higher.

An interesting crisis for the shorts (assuming their numbers keep climbing) would be a revolt by the longs. Why should we continue to trash the value of this stock and incur more dilution during an equity raise when the value we're getting for all this short-selling turmoil is a mere 1% per year? Why not begin a discussion among longs and say 10% is the minimum I will take for lending my shares, and I am recalling them until I get at least that interest rate. Mass recalls would induce a squeeze at some point if they were high enough. If they weren't high enough (which is quite possible), a large number of longs recalling shares with a demand for 10% interest would at least limit the additional shares available to short.

If shorts keep the pressure on TSLA until Model 3 starts rolling off the assembly lines in large numbers, they're going to lose big-time because Tesla will find a way to get to this moment. When revenues and profits begin to soar on Model 3 and Tesla Energy rev ups, there will simply be no holding TSLA back and the squeeze you see will be like nothing you have ever seen before with this stock.

 

[dha]

Telsa insiders such as Musk don't offer their shares for shorting

Elon currently has a $500 million margin loan from Goldman Sachs, secured by his TSLA and SCTY holdings. Some % of his position is surely available for shorts to borrow.

 

[Papafox]

Today was a tug-of-war with TSLA. Shorts wished to induce red prior to tomorrow's vote on SCTY merger, longs wanted to buy, thus the up and down movement. The big plunge at about 10:30 am is unrelated to any dips on broader markets. If it was the time that Chanos was speaking on CNBC, that would explain it, otherwise it is likely a short-induced dip because of the very quick recovery.

Expect turbulence tomorrow and possibly the day after. The captain has decided to leave the fasten-seatbelt sign illuminated during this period.

Notes:
* Yesterday's Oil number was an error. I had repeated the previous day's oil number a second day in a row
* Today was the second day in a row of the NASDAQ outperforming the Dow (another good sign about election portfolio rebalancing)

Conditions:
* Dow down 55 (0.29%)
* NASDAQ up 19 (0.36%)
* TSLA 183.93, up 0.16 (0.09%)
* TSLA volume 3.4M shares
* SCTY 19.83, up 0.01 (0.03%)
* Oil 45.43 down 0.37 (0.81%)

 

[Papafox]

Elon currently has a $500 million margin loan from Goldman Sachs, secured by his TSLA and SCTY holdings. Some % of his position is surely available for shorts to borrow.

Your point is well taken, but if we use an average value of $200 a share when the loans were made, then you have about 2.5 million shares that could be shorted. Elon owns greater than 25 million shares of TSLA, if I remember correctly, so you're only looking at about 10% of his holdings available to short.

 

[adiggs]

...
An interesting crisis for the shorts (assuming their numbers keep climbing) would be a revolt by the longs. Why should we continue to trash the value of this stock and incur more dilution during an equity raise when the value we're getting for all this short-selling turmoil is a mere 1% per year? Why not begin a discussion among longs and say 10% is the minimum I will take for lending my shares, and I am recalling them until I get at least that interest rate.....

I don't know where all the shares have come from for the shorts to borrow. If the number of shares short is reasonably steady near 30M, well 2 months ago, that translates into my retail shares at Fidelity being lent out for between 5 and 14% annual interest being paid to me (and thus around 10-30% annual interest being paid by the shorts).

Today at Fidelity, and this has been true for about a month or more now, Fidelity is paying 0% to borrow shares (they aren't borrowing them), and lending shares to Sell Short at 1% annual interest. TSLA is still classified as hard-to-borrow, but that doesn't translate into my retail level shares being lent out.

I hadn't thought much about it until replying, but this sort of sounds to me like there is a significant increase in the batch of shares that have been made available to borrow. I don't have a good theory where they've come from - I can only clearly identify that the current level of short shares cost 10-30% to borrow a few months ago, and today costs 1% to borrow. That's a huge shift.

 

[Off Shore]

Off Shore, I'm sure you're aware that your hypothetical situation is not so far-fetched. The oil and gas industry, the people who build peaker electrical plants, some utilities, and most of today's automotive industry see Tesla as a threat. So, let's go with the theory that a group of people with unlimited resources try to sink Tesla by short-selling its stock price down while Tesla seeks an equity raise...

[Much useful information]

Thank you, Papafox, and thanks for your contribution as well, adiggs. So with a finite budget it would be possible to supplement the shorting already going on to suppress the stock price, not necessarily to sink the target, but to weaken it and slow its progress while other activities (e.g. divesting stranded assets) were underway. The project could have multiple targets, and be managed by a fairly small staff. Very hard to detect.

Thanks again, and I will desist dragging the thread off-topic.

And thank you Papafox for "A Flight Instructor Teaches Tesla Autopilot." As a former flight student I found it very helpful. It should be available on the center display.

 

[Papafox]

Congratulations longs, if you held through the recent turbulence you are rewarded for your faith in Tesla. An approval rating of over 85% on the SCTY merger sealed the fate of the shorts who had been hoping that today's merger would be greeted as a downer by the market. Instead, it was just the opposite. Musk's statement that a Tesla roof would be less expensive than a comparable regular roof really brought to light the disruptive nature of this new product. His statement about the disappearance of subsidies would give Tesla a competitive advantage over the competition surely reduced some of the fears about the Trump presidency. Shorts have been punishing TSLA for months now, disguising their creative selling techniques as fears by investors about the upcoming election and the SCTY merger. Now that both of these event have come and gone without disrupting TSLA, it's time to make up for lost time and regain some of the stock price lost over the past few months. What particularly interests me is events such as this morning when you see TSLA climbing near vertically. Yes, there are plenty of longs on the sidelines and shorts who are fearful of a rapidly-rising TSLA. There's a good chance their fears will be realized in the not too distant future.

Looking at the trading chart today, you can see the very deliberate attempt to hold TSLA at 188 until closing. The shorts lacked the horsepower to hold 188 at the very end, and they're likely going to have difficulties working in unison in the future because plenty of shorts are going to be thinking of exiting really soon. The negative catalysts are gone, an excellent Q4 is underway, and it make little sense to retain a short position now. Yes, the shorts with malice will remain, hoping to spoil Elon's party, but at some point there will be a squeeze that decimates their ranks too.

For the time being, the captain leaves the fasten-seatbelt light on, but it is for updrafts, not downdrafts tomorrow. Glad to have you aboard!

Notes:
* TSLA and SCTY are now trading in unison at the 11 shares TSLA for 100 shares SCTY rate
* Today the NASDAQ again led the Dow, suggesting increased confidence in NASDAQ stocks

Conditions:
* Dow up 36 (0.19%)
* NASDAQ up 39 (0.74%)
* TSLA 188.66, up 4.73 (2.57%)
* TSLA volume 4.9M shares
* SCTY 20.40, up 0.57 (2.90%)
* Oil 44.97, down 0.60 (1.32%)

 

[dha]

Shorts have been punishing TSLA for months now, disguising their creative selling techniques as fears by investors about the upcoming election and the SCTY merger. Now that both of these event have come and gone without disrupting TSLA, it's time to make up for lost time and regain some of the stock price lost over the past few months.

I'm sorry but it is WAYYY too early to sound the all clear IMO. Despite the solid green today, the downtrend in TSLA is still definitely intact. As far as the SCTY merger goes--there hasn't even been a single day of regular trading yet. After hours is now basically flat on insignificant volume. There will be a flurry of analyst activity in the coming days and it is unlikely that most it will be as bullish on the merger as we are on this board--especially as other solar companies have been getting absolutely shredded in recent days.

Regarding the election: TSLA has underperformed the NASDAQ since last Tuesday. We are basically treading water due to broad market strength and we will likely bear the brunt of any macro selloff. Maybe the market will continue to rally into the holidays. But investors might get skittish as a possible December rate hike comes into focus.

At any rate, while I am cautiously optimistic it is certainly not clear skies at the moment. The markets are at all time highs while we're trading at levels first seen three years ago. I'd definitely caution against overconfidence here.

 

[3Victoria]

You may be right, since our collective predictive skills have been shown to be a little wanting lately. However, Tesla isn't a solar company, and its not a car company, its an energy company. Most of the uncertainty and angst around SC merger is done. EM made the point that subsidies are actually hurting Tesla, and if they disappeared that would be good for Tesla. That said, he would prefer they continue as it promotes EVs, but as they are not scalable it is letting manufacturers plan to have limited production, so they can take advantage of the limited rebates.

As always, I keep my fingers crossed, and being long I am not too concerned with the short ups and downs.

 

[Papafox]

I'm sorry but it is WAYYY too early to sound the all clear IMO. Despite the solid green today, the downtrend in TSLA is still definitely intact. As far as the SCTY merger goes--there hasn't even been a single day of regular trading yet. After hours is now basically flat on insignificant volume. There will be a flurry of analyst activity in the coming days and it is unlikely that most it will be as bullish on the merger as we are on this board--especially as other solar companies have been getting absolutely shredded in recent days.

Regarding the election: TSLA has underperformed the NASDAQ since last Tuesday. We are basically treading water due to broad market strength and we will likely bear the brunt of any macro selloff. Maybe the market will continue to rally into the holidays. But investors might get skittish as a possible December rate hike comes into focus.

At any rate, while I am cautiously optimistic it is certainly not clear skies at the moment. The markets are at all time highs while we're trading at levels first seen three years ago. I'd definitely caution against overconfidence here.

Thanks for the perspective, dha. Count me as an optimist, but I just don't see anything on the calendar for the shorts to hang their hopes on at this point, other than the persistent belief that their presence will prevent a reasonable equity raise by Tesla. So much of the systematic manipulation that has been done by the shorts was done to protect their current positions, but with the market showing signs today of embracing the SCTY acquisition, we now get to see which of the shorts are the stubborn, til-bankruptcy-do-us-part malicious types and which are the opportunistic, I'm going to make plenty of money on this short, types. I think the opportunists will be looking for exit opportunities now and the others will remain. The big question for me is: which group do the creative capping and late afternoon, thin volume selling shorts belong to? Tesla has always had shorts on the property but it has been the ones with strategic trading strategies that have so successfully knocked the stock price down. If we see an exit of a good many shorts and the creative selling tactics remain, that will be problematic. On the other hand, for the mandatory morning dip, the afternoon-selling, and the capping to remain effective, there needs to be some type of black cloud hanging over Tesla to rationalize the drop. Otherwise, longs will simply bid the stock back up. Similarly, these techniques can be profitable during a time of declining stock price, and once the stock begins to rise, the techniques become much more difficult to perform without losing money. I personally think it'll be a brave new world for the shorts out there, starting today.

 

[woof]

Thought experiment: How many shares and $ would it take for the longs to overpower the shorts? If, as you say, the shorts are working in unison to achieve a goal, cannot the longs work in unison on the opposite side of that? If everyone reading this set an offer price of $1.00 above the open at 9:01 tomorrow what would it take to get the actual price up $1.00 for a sustained period?

 

[larmor]

I'm sorry but it is WAYYY too early to sound the all clear IMO. Despite the solid green today, the downtrend in TSLA is still definitely intact. As far as the SCTY merger goes--there hasn't even been a single day of regular trading yet. After hours is now basically flat on insignificant volume. There will be a flurry of analyst activity in the coming days and it is unlikely that most it will be as bullish on the merger as we are on this board--especially as other solar companies have been getting absolutely shredded in recent days.

Regarding the election: TSLA has underperformed the NASDAQ since last Tuesday. We are basically treading water due to broad market strength and we will likely bear the brunt of any macro selloff. Maybe the market will continue to rally into the holidays. But investors might get skittish as a possible December rate hike comes into focus.

At any rate, while I am cautiously optimistic it is certainly not clear skies at the moment. The markets are at all time highs while we're trading at levels first seen three years ago. I'd definitely caution against overconfidence here.

Caution is always warranted when the overall market is oversold or high. However, since EPS beat from this past quarter, TM has gone down. Most publicly traded companies have positive market reaction to earnings beat (disclaimer: broad sweeping generalization). Is there a table showing earnings beat or fail and consequent market reaction for other securities?

 

[neroden]

OK, so this has been one weird chart today. I guess it probably has to do with the "witching hour". I'd love to see what Papafox thinks about it. SCTY and TSLA did synchronize as expected (no more merger arb), but the high open pre-market followed by two sharp drops is pretty weird.

 

[Papafox]

Well, the wolf lacked the ability to huff and puff and blow the house down during most the day, but some big investor with $185 puts almost brought TSLA to his needed mark at close. The wolf smiles nonetheless.

Taking a look at today's trading, you can see that in pre-market and in the first few minutes of trading longs wanted to take TSLA higher today. Unfortunately, today was an important day for shorts, because they wished to project an image of longs who were dissatisfied with the merger selling off. It didn't really work because buying by longs kept the short gains at just a couple dollars for most of the day. Notice the up and down trading as longs and shorts fought near opening. Notice the bumpy plateau on the bottom the the early morning deep dip. Such plateaus are not common when a stock dips on news and is sold by longs. At day's end, when volume was low, someone with a desire to bring the price down to $185 made a big play. The positive news is that the type of big dip that shorts were trying for today couldn't be pulled off with their resources.

The big chance the longs had at writing a different story today was at around 10:30am when the shorts could not push the stock much below 186 and it almost rose back to the green. If it had done so and continued up, some nervous shorts would have jumped ship and the story would have been much different. With nearly 200,000 shares to work with, though, the shorts had enough ammo to stop the rise.

The difference between the positive finish on Thursday and the negative finish today was the ability to power through the dip on Thursday and into the green in the late morning. One critical ingredient was a large long who placed a buy order that quickly pulled TSLA from red to green on Thursday. No such transaction materialized on Friday. Another critical difference was that TSLA had macro tailwinds on Thursday and macro headwinds today. If TSLA had received the necessary boost, the stock might have repeated Thursday's performance. Sometimes a critical moment can define the results for the day.

I'm optimistic that longs are not fearful of dips the way they used to be. The main reasons are that weak longs have already left this stock, the stock price is already low for the true value of the company, and longs are aware that the coming quarter and coming year hold many positive catalysts.

Shorting Tesla is quite a different business than shorting SCTY. Let's see in the coming week when the positions are converted to TSLA if the SCTY shorts start heading for the door. Many are in the money right now. What the Tesla shorts lack right now is a convincing story. True, they can say the SCTY merger places TSLA at risk, but the 85% of Tesla shareholders who voted in favor of the merger have spoken otherwise.

Tesla has positive catalysts coming in early January. The big question is whether this timeframe is compressed enough to persuade shorts to start closing their positions anytime soon. For now, I see a standoff between the shorts and longs. Shorts can manipulate and gain some ground, but the market generally wants to take TSLA up, not down. Let's see what's possible to break the stalemate in a positive fashion next week.

Conditions:
* Dow down 36 (0.19%)
* NASDAQ down 12 (0.23%)
* TSLA 185.02, down 3.64 (1.93%)
* TSLA volume 5.2M shares
* SCTY 20.34, down 0.06 (0.29%)
* Oil 45.58, up 0.16 (0.35%)

 

[neroden]

Thanks, Papafox.

I think, from anecdotes, that there may be a large reserve of longs whose "buy price target" is somewhere between 180 and 190, who load up on more stock at these prices. I was one of 'em. This would spur enough buying pressure to make it extremely hard for shorts to push the price down -- making 185 a *support* level.

I also suspect there was an effort by options market makers to kick SCTY down to 20, but it didn't succeed.

 

[Papafox]

Thought experiment: How many shares and $ would it take for the longs to overpower the shorts? If, as you say, the shorts are working in unison to achieve a goal, cannot the longs work in unison on the opposite side of that? If everyone reading this set an offer price of $1.00 above the open at 9:01 tomorrow what would it take to get the actual price up $1.00 for a sustained period?

I have often seen volume of 5,000 shares traded in a minute moving the stock. That number of shares equates to a bit less than $1 million. Most of us don't have that kind of change to throw around, but the big dogs do.

 

[Jayjs20]

So, how many events this month were identified by us as positive catalysts but ended up dropping the SP? All of them? I still think it has room to drop. Maybe dip to around 180.x, then stabilize around 182-183 before it moves up again. Calling 185 a support level is silly. It only stopped there because the bell rung; it would have dropped lower if it had more time.

 

[CALGARYARSENAL]

So, how many events this month were identified by us as positive catalysts but ended up dropping the SP? All of them? I still think it has room to drop. Maybe dip to around 180.x, then stabilize around 182-183 before it moves up again. Calling 185 a support level is silly. It only stopped there because the bell rung; it would have dropped lower if it had more time.

Saved by the bell....LOL