TSLA chart above
QQQ chart above
Let's start with a look at the past two weeks. Feb28-Mar4 was the week the hedge funds attacked ARK-Invest ETFs. TSLA is a large component of 3 ETFs managed by ARK-Invest and was a prime target for the week's downward pressure. Four of the five days saw percent of selling by shorts elevated to 66% (according to shorvolumes.com) suggesting lots of shorting in order to day-manipulate TSLA downward. We also received reports of significant spoofing from a TMC member with level 2 access. TSLA miraculously closed over $28 (3.5%) higher that week while the NASDAQ lost 2.6%.
The week of Mar7-11 was one of negative news for macros but very positive news for Tesla. Oil prices spiked well above $100/barrel, which caused
a surge in interest toward EVs. Some U.S. locations were seeing 100% increases in their already high demand for Tesla vehicles. With waiting times at least three or four months out (Shanghai demand is now catching up with Fremont), TSLA raised 3 and Y prices from both factories by $1000 (with a good chance those price increases were at least in part aimed to tone down the waiting times). Meanwhile, Europe came to the conclusion that depending upon Russian oil is an untenable situation and
plans to rapidly expand clean energy so that two-thirds of Russian gas can be replaced by year end. The enormous uptick of interest in Tesla EVs and overall solar and battery interest was massive, just as two new factories (one in Europe) are now just weeks away from opening. Tesla competition continued to stumble with Rivian reporting over $2 billion in losses for Q4. The clear message is that production is hard (as Elon keeps reminding us) and a robust EV competitor is still nowhere to be seen. How did TSLA fare with this deluge of positive news for the company? The NASDAQ closed down 3.6% while TSLA closed down 7.1%.
How does one explain such pricing of TSLA? I suppose one could suggest that TSLA outperforming the NASDAQ by 6.1% the previous week set TSLA up for a readjustment this past week. Still, the news this week was so positive for TSLA that I cannot agree that the market is making these pricing decisions without some manipulations involved.
Looking specifically at Friday, Mar. 11, the max pain number and TSLA stock price were closely aligned on Thursday, and so if market makers had their way you would expect TSLA to fall less than the NASDAQ's 2.2% dip. Instead, it fell more than twice as hard as the NASDAQ. Here's what I think happened.
Looking at Chinese EV makers, we saw NIO (-9.57%), BYDDY (-3.18%), and XPEV (-12.12%), we saw an early morning dip and then a leveling out in the afternoon that looked something like TSLA's trading. The explanation for the dips, however, was that the U.S. SEC is cracking down on Chinese companies on U.S. exchanges, requiring more audits in order to remain on the exchanges. That crackdown didn't include any EV manufacturers but it sent a chill through investors in these Chinese EV stocks. For this reason, I don't think the Chinese EV company dip was related to TSLA's dip on Friday. Ford only dropped 1.78% and GM 0.81%
A more likely explanation can be found by looking at the performance of ARK-Invest ETFs (ARKK -6.65%), ARKW (-6.07%), ARKQ (-3.59%), and ARKG (-6.61%). With other high-growth tech stocks doing not much worse than the NASDAQ, (NVDA -2.46%), it's entirely possible that the hedge funds were making another run on ARK-Invest ETFs on Friday and TSLA got included in the gunfire
and spoofing was once again used. We saw TSLA head down quickly, far quicker than the macros. At 11:42am, TSLA was barely above 800 and down 4.5% while QQQ was down only 1%. Mercy, that's a 4.5X multiple. As the day progressed, QQQ more than doubled its 11:42am dip but TSLA dipped only slightly more. Percent of selling by shorts exceeding 50% on Friday supports this theory. My guess would be that the market makers saw that wall of 800 puts and decided to keep them out of the money or at least not far into the money. TSLA closed at 795.35. If you look at the previous day's max pain chart, you'll see that there wasn't much of a difference between puts and calls between 800 and 835, so the hedge funds could toss a bone to the hedgies, but taking TSLA much below 800 was something not to be tolerated. To be honest, I cannot tell you if this guess of mine is correct or not, but it is the scenario that makes the most sense to me. Thus, I'm like the man who glued his autobiography to himself: "That's my story and I'm sticking to it".
Overall the week was extremely positive for Tesla the company with an enormous market opening up for EVs and energy products and domestic startup EV maker after EV maker stumbling in their efforts to profitably produce vehicles.
Looking at the week going forward, max pain is at 835, but just look at how closely the calls and puts are aligned at strike prices above 800. The 850 strike looks like a dead heat. We'll need to see more put or call buying before the market makers feel compelled to dampen any climbs.
As with the previous Thursday, TSLA was positioned for an easy move to Max Pain on Friday. The market makers on this past Friday drew a line for how far they'd allow another band of pirates to sink TSLA on option expiration Friday, and the stock didn't get much below 800. Chart courtesy of
@JimS .
The uptrend in 10 year treasury bond yields flattened out on Friday, slightly below 2%.
The tech chart is perhaps this week's most important chart because you can see the repeating patterns. Throughout most of February we saw a narrow trading range. After that we saw hard pushdowns below 800 occur three times. The first one lasted 2 days before the bounce above 800, the second lasted one trading day before the bounce, and TSLA has just entered the third. Notice that since mid-January TSLA has traded below the mid-bollinger band. It has also mostly traded above the (red) 200 day moving average and recovered quickly when below. We're in the week where the two cross and we'll see if TSLA continues staying below the mid-bb or follows the 200 DMA in a shallow climb. I think whichever way it goes, the trend will be disrupted by the April Production and Delivery Report, and perhaps the run higher in anticipation of that report. If it continues to stay below the mid-bollinger band but bounces each time after descending below 800, that would set up a narrowing wedge which would likely be resolved one way or the other with the P&D Report.
For the week, TSLA closed at 795.35, down 42.94 from the previous Friday's 838.29. Hoping you enjoyed your weekend and didn't fixate on stock prices and the Ukraine situation. We're getting closer to the end of quarter (little more than 2 weeks away) and at some point in that final week we could see a bidding up of the stock price in anticipation of yet another record Production and Deliveries Report. With the hedge funds and market makers taking advantage of market jitters to manipulate TSLA, nothing is set in stone in the short run. Eventually the Ukraine situation will be resolved and we'll see a big broad market bounce when that happens. Don't try to time that bounce or you'll really drive yourself nuts. Nonetheless, better days lay ahead.
Conditions:
* Dow down 230 (0.69%)
* NASDAQ down 286 (2.18%)
* SPY down 5 (1.27%)
* TSLA 795.35, down 42.95 (5.12%)
* TSLA volume 22.0M shares
* Oil 109.3
* IV 66.2, 82%
* Max Pain 835
* Percent of TSLA selling tagged to shorts: 51%
