Papafox's Daily TSLA Trading Charts

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.

Daily Trading Charts

TSLA chart above

QQQ chart above

How is it possible for TSLA to close up nearly 6% on Friday and I still feel like I had my pockets picked? Read on. TSLA volume was 30 million shares on Friday as tech stocks rallied. The NASDAQ closed up 3.82%, placing TSLA's gains of 5.71% well below its normal 2.1X beta. Moreover, the trading showed the fingerprints of manipulations with percent of TSLA selling rising to 61% (see chart below). For comparison purposes, on Friday NVDA closed up 9.5%, ARKK up 11.8%, Ford up 8.5% and GM up 7.5%.

Here's how the day went. As TSLA approached market open, it was up 4.2X QQQ's gains. Slightly after noon when both QQQ and TSLA temporarily peaked, TSLA was up 8% and QQQ up 4% for a 2X multiple. Unfortunately, as the day progressed you could see the usual afternoon dip into close being engineered with TSLA, and it closed at a mere 1.5X multiple to QQQ.

Could TSLA have done worse than expected because of news? Actually, the news was significantly positive for TSLA on Friday. Elon had tweeted that his acquisition of Twitter was on hold. Previously, Gary Black had suggested a 10% bump upward if Elon bowed out of his Twitter acquisition, but of course Elon did not do so, he put the acquisition on hold pending a look into Twitter's claim that only 5% of its userbase consists of bots. Typically, the market will discount such news according to how likely the news is to lead to Elon dropping his acquisition, so we should have see at least a portion of that +10% reflected in TSLA's Friday trading. Even if the acquisition goes through, however, there's now a likelihood of a renegotiation of the price of Twitter (especially in light of the huge dip we saw in the market over recent weeks). A lower price paid for Twitter would mean less financial liability for Elon both because of the lower price and because the lower price would attract more investors. Thus, with this news TSLA really should have been trading at more than its normal 2.1X multiple to the NASDAQ, not less.

So, who would be working on manipulating TSLA so that its climb was reigned in on Friday? Let's look at two groups: market makers and everybody else. Market makers were committed to keep TSLA from running above the call wall at 800 and would do best with a closing price near Friday's max pain of 780. The 765 closing price of TSLA suited these needs nicely. Might the market rally early in the coming week when it realizes TSLA was artificially constrained on Friday? Of course, and guess what? Max pain for this coming Friday is 900! Friday May 20 is a monthly options expiration and for this reason we have lots of bets that were placed when TSLA was quite a bit higher. In the max pain open interest chart, look at all those strike prices where calls and puts are both sky high? TSLA could gain more than $130 this coming week and the option sellers will still make out like bandits. The MMs just needed to keep TSLA down on Friday and they succeeded.

How about the other manipulators out there? You have big shorts, you have hedge funds which are net short in TSLA, big dogs who plan to load up on TSLA but want an even lower buy-in price, and you even have big money individuals who want to keep Elon from acquiring Twitter (for political or personal reasons). Keeping price pressure on TSLA as long as possible suits the needs of these forces.

The big question for the coming week is whether the big money will start buying back into tech (as was happening on Friday) or will they try to manipulate the market lower for better buy-in prices? I've come to regard the afternoon turnaround of tech stocks as perhaps the kind of manipulations we've seen frequently with TSLA but including a few other very visible tech companies and involving multiple hedge funds. Once these stocks start turning down, the rest of the market follows. There's enormous pricing control if this theory is in fact true.

A rise to 61% of selling by shorts suggests substantial manipulations on Friday. If you liked TSLA's rise, you would have REALLY liked the rise without these efforts

10 yr. treasury bond yields ended the week just a smidgen under 2.95%

Max pain for this coming Friday is 900. If TSLA rallies early in the week that max pain number will rise. Market makers have little to worry about if TSLA gets frisky going into the new week. Looking at specific call and put walls, the MMs would like TSLA to at least close above that 800 put wall. It's strange but even 950 is neutral in terms of puts vs. calls.

Here's a chart of option volumes for expiration this past Friday

Despite the ginormous fluctuations in stock price the past four weeks, look at how closely max pain and stock price have come together each Friday. Coincidence? You already know the answer. (chart thanks to @JimS ). I just have a request for Jim: could you please give us a chart next week where the green line goes mostly up and to the right?

What's interesting about the tech chart is how closely TSLA closed to its opening price on such a strong macro day. Add this to your list of signs that manipulations have been underway (provided negative news was absent).

For the week, TSLA closed at 769.59, down 96.06 from the previous Friday's 865.65. With any luck, the NASDAQ may have bottomed out on Thursday. Looking forward to the ride back up, when it comes. Hoping you enjoy your weekend.

Conditions:
* Dow up 466 (1.47%)
* NASDAQ up 434 (3.82%)
* SPY up 9 (2.39%)
* TSLA 769.59, up 41.59 (5.71%)
* TSLA volume 30.5M shares
* Oil 110.5
* IV 74.6, 97%
* Max Pain 780
* Percent of TSLA selling tagged to shorts: 61%

 

[Papafox]

TSLA chart above

QQQ chart above

Monday was a classic day of manipulations to maximize TSLA's dip. Volume was 28 million shares, so it was light enough to manipulate with some real effort, and boy was there effort. The chart below shows that a near max level of 64% of selling was tagged to short-sellers. Mercy.

Here's how they did it. You can see the two dips around 10am on both QQQ and TSLA. The difference is that QQQ's dip was closer to 1% and TSLA's was over 3%. Thus, you need to do some calibrating to compare the charts honestly. Both charts rose to near the red/green line about 10:20ish, and then both dropped quickly. The difference is the QQQ dip barely went lower than the 10am-ish dips but the TSLA dip went double that amount down. After the noon hour, QQQ recovered most of its dip, but look at the anemic recovery of TSLA at this same time. When QQQ headed down again about 1pm, so did TSLA but the difference is that QQQ's dip was about even with the 10am-ish dip but TSLA's dip was now about 3X its 10am-ish dip. It's the old technique of pushing down many times harder than the macro dip but when recovery of the macro dip comes, the manipulator allows TSLA only a small fraction of that recovery. As 3pm approached, QQQ actually managed to climb briefly into the green, but once again look at that tiny TSLA recovery. Also, notice that the biggest pushdown compared to the macros typically occurs in afternoon, when volume is lighter. Looks like the pirates had their A Team working TSLA today.

Also, take a look at the net results of restraining TSLA climbs on green days and exaggerating TSLA dips on red days. On Friday, NASDAQ closed up 3.8% and TSLA up 5.7%. On Monday NASDAQ was down 1.2% and TSLA was down 5.9%. That works out as a net gain for NASDAQ of approx. 2.6% and a net loss for TSLA of approx. 0.2% for the two days. Such manipulations add up hugely over time. Eventually, TSLA enters another monster rally and runs up to its fair price. In time the manipulation cycle begins anew, but at a much higher price point.

We are, by all appearances, potentially dancing around the very bottom of this big macro dip, and that's the time when the big dogs who want to sink TSLA put in max effort. Did you notice one of our long-time trolls returning to the main investing thread in recent weeks? Notice a big uptick in FUD? Notice the percent of selling by shorts chart rising above 60% again and blatant manipulation patterns reappearing? It's a sign that the big dogs are trying for that final pushdown before those that are short start covering and those that want to go long start acquiring. This is how things work, my friends.

Ah, you say, maybe bad news is responsible for TSLA underperforming the NASDAQ by nearly 5X. It's true that this Reuters article says that the Shanghai factory won't return to pre-Lockdown production numbers for at least an additional week. Some estimate a loss of 10,000 vehicles produced in the 2nd quarter. Let me ask you, though, would a dip of 3% in total production in a quarter for something that will not likely ever occur again justify reducing the value of Tesla by nearly 6%? Of course not, especially if you are predicating your value of TSLA for an output level several years in the future.

Hang in there, better days lay ahead.

Percent of selling tagged to short-sellers rose to a nose-bleedingly high 64% on Monday

Meanwhile, 10 yr. treasury bond yields dropped to 2.9%

Though max pain had previously been listed as 900, on Monday it dipped to 875. The reason for the dip is because the stock price was more than $100 below May 20 max pain as last week ended. Sure enough, the most popular call for trading was 800 strike and within another day calls will tower above puts at 800. Such changes result in the max pain number falling.

Volume chart

With the lower bollinger band at 688 and the upper bb at 1068, there's limited room for a deep dip from this price point but lots of room for a big run higher, should conditions allow. Keep in mind that serious news overrides technicals.

Conditions:
* Dow up 27 (0.08%)
* NASDAQ down 142 (1.20%)
* SPY down 2 (0.41%)
* TSLA 724.37, down 45.22 (5.88%)
* TSLA volume 28.3M shares
* Oil 114.1
* IV 75.2, 97%
* Max Pain 875
* Percent of TSLA selling tagged to shorts: 64%

 

[Papafox]

TSLA chart above

QQQ chart above

No one said the ride would be smooth. The macros are still undecided whether to go up or down and a number of Fed representatives including Powell speaking on Tuesday at different times didn't exactly calm the market. Nonetheless, the market was ready to reverse Monday's losses and the day's 2.76% climb easily outweighed Monday's 1.20% NASDAQ dip. Alas, for TSLA we still see the exaggerated multiplier on down days and a muted multiplier on up days. TSLA's volume of 26M shares was not far from Monday's 28M shares and both were low enough so that the pirates of Wall Street could do their dirty work.

In particular, the first run upwards of the morning, about 12 minutes after market open, brought TSLA up just shy of double QQQ's gains. The macro dip at 11am was substantially exaggerated with TSLA. TSLA made many attempts to exceed 760 but either bounced off this number or couldn't hold it for more than a couple minutes. Instead, TSLA kept being returned to 750. It took a major climb in the final minutes of market trading for TSLA to finally win 760. Clearly someone had ideas on how high TSLA should climb. TSLA traded at a 1.86X multiple of the NASDAQ on Tuesday, which is below TSLA's 2.1 beta but at least on Tuesday we started closing the gap.

Will Thursday's dip of last week be the bottom for this sizeable macro dip? We just don't know yet, but the higher we climb above it, the more chance there is for that to be the case (see bottom chart).

TMC's @Gigapress posted an excellent summary here of reasons why Tesla is going to pull even further ahead of the competition. Highly recommended.

News:
* Most of the chatter about Tesla on Tuesday was about Elon's interview on the All In podcast. Rob Maurer covered the interview most concisely, with Dave Lee giving an excellent overview, as well. For Tesla investors, Elon started listed the many areas of Tesla that are not covered by a conventional auto manufacturer.
* ARK Invest has a base case target in 2026 for TSLA at $4600, as detailed in this Solving The Money Problem podcast

Percent of selling tagged to shorts at 59% on a big climb day suggests lots of manipulations. We often see that percent number higher on down days because of the day-shorting that is profitable when it accelerates the downward movement of the stock

Yields on 10 yr. treasury bonds closed just below 3.0% on Tuesday

Listed max pain fell $25 yet again to 850. Looking at the chart, 800-strikes and above now have strong domination by calls. Why is max pain at 850 instead of 800, then? Take a look at all the in-the-money puts at 850, 900, 950, and 1000. That's over 8K put contracts open at 1,000 that will expire on Friday. Market makers need to keep the stock price from being too low and thereby overly-rewarding these buyers of puts at high strike prices.

Options volume

You can see that Tuesday's gains didn't make up for Monday's losses.

Conditions:
* Dow up 431 (1.34%)
* NASDAQ up 322 (2.76%)
* SPY up 8 (2.06%)
* TSLA 761.61, up 37.24 (5.14%)
* TSLA volume 26.2M shares
* Oil 113.8
* IV 64.8, 78%
* Max Pain 850
* Percent of TSLA selling tagged to shorts: 59%

 

[Papafox]

TSLA chart above

QQQ chart above

So far this week: big drop, big rise, big drop. Wednesday's macro fear de jour was again inflation, but instead of seeing tech stocks take the brunt of the lashings, the pain was more evenly distributed with NASDAQ down 4.73% and Dow down 3.56%. We saw somewhat above average volume with TSLA at 28.8M shares and it closed down 6.8%. Since the usual beta of TSLA is 2.1X, a 9.4% dip wouldn't have been out of the question. Fortunately, other high beta stocks traded closer to the NASDAQ including NVDA also down 6.8%, AMZN down 7.2%, and ARKK down 4.4%. I find ARKK's light dip particularly positive in that investors are starting to pull away from dropping all stocks at typical beta multiples and instead starting to look for bargains.

Part of the reason for TSLA's more mild decline (vs. similar dips recently) can be seen by comparing the two charts above. Approaching 2pm, TSLA was nearing 700. These even numbers tend to be support because many buyers expect resistance and try to buy just above. Additionally, the options open interest chart below shows 16K put contracts open at 700 strike. Market makers are in no mood to see that many contracts drift into the money, and so I believe they added to the resistance as TSLA approached 700. There's no guarantee that TSLA will stay above 700 on Thursday if it's a big down day, but that price point really was helpful on Wednesday.

Did the day's extensive political Tweeting by Elon sink TSLA? Did the ludicrous expulsion of Tesla from S&P's tiny ESG index hurt TSLA? The answer is no to both questions if you compare TSLA's <1.5% multiplier to the NASDAQ's performance.

Tesla continues to kick fenders and take names. This chart from Rob Maurer's Wednesday podcast for the entire 1st quarter is really mind blowing when you realize that 2 Tesla models just captured the top position in California sales of all vehicles.

A demonstration of a useful Tesla bot could actually shake some analysts into understanding there's real money associated with this project.

With TSLA so depressed, should you take out margin and buy more? If you're thinking of doing so, consider this video by Meet Kevin in which he says that retail has been buying this dip and doing so heavily on margin. What could go wrong? Remember how retail investors ended up costing a few hedge funds billions of dollars during the Gamestop short squeeze? The hedge funds still remember, I assure you, and if we have an event that dips the stock significantly, they're likely of a mind to generate an additional dip thereafter simply to profit at the expense of retail investors getting margin called and thereby causing stocks to drop even further. Of course there would be a bounce before long, but if you had to sell at blue light special prices to cover your margin calls, the damage would be irreparable. Just keep in mind that this is not an honest casino in which we're playing.

Is the market heading for a recession? I don't really care. A recession is two consecutive quarters of descending GDP. It's not the great depression and it's not 2008 financial meltdown all over again. Keep that perspective in mind. Further, TSLA has so much demand for its vehicles that a recession shouldn't affect deliveries but it will likely affect inflation in a positive fashion. Breathe and get some exercise. Really.

So, what is this volatility good for? If you have an IRA it's great for rolling call options without cost if you pick the right day. Wednesday would have been a great day for selling the call option in question and then buying the same strike option with a later expiration date when the market makes that option available at the same price. On strong up days you buy the new expiration date of the option first and then sell the older option (same strike) when it's valuable enough to pay for the call with the later expiration date. I deal with deep in the money options, so the two expiration dates are within $2 and $20 of each other. I don't do this particular rolling in non-IRA accounts because of the tax consequences, but in certain circumstances (slight gain on the sale and not a loss) it might make sense to do so.

News:
* Tesla Boomer Mama does a great job here of showing why Tesla should have long ago already been upgraded to investment grade bonds.
* The SEC has been directed to remove all references to bond ratings in its rules. Here's a sample of what may be coming soon.

Market makers had no reason to push downward on the stock price and you can see the big change from earlier this week (only 50% of selling was tagged to shorts). That number is still high, but not nosebleed high like on Monday.

10 yr. treasury bond yields closed below 2.9%.

Instead of dropping $25, Max Pain dropped $30 by Wednesday morning, to 820.

Options volume on Tuesday

Volume has been pretty steady around 26M to 29M this week. Again, I'd really like to see TSLA get into the 900s soon enough to keep the blue 50 day moving average from crossing below the red 200 day moving average. Such crossings give technical traders the willies.

Conditions:
* Dow down 1161 (3.56%)
* NASDAQ down 566 (4.73%)
* SPY down 16 (3.92%)
* TSLA 709.81, down 51.80 (6.80%)
* TSLA volume 28.8M shares
* Oil 109.3
* IV 76.2, 97%
* Max Pain 820
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

The times are changing and you can see some diminished fear as the week has progressed. On Monday, The Dow closed up slightly, NASDAQ down 1.2%, and TSLA was down nearly 5X the NASDAQ's dip. Lots of manipulations were at work on TSLA that day. On Tuesday, The NASDAQ closed up 2.76% with TSLA not quite at its 2.1X beta, but at least outclimbing the index by over 1.8X. Wednesday was another down day with the NASDAQ down 4.73% but the Dow was down more than 3.5%, suggesting the hit on tech stocks is waning. TSLA closed down at a less than 1.5X multiple of the NASDAQ. Again, there is movement away from tech stock fear.

Finally, Thursday arrived with the Dow down 0.75%, NASDAQ down 0.26 and TSLA down 0.05%. Thus, on Thursday we see the NASDAQ outperforming the Dow and TSLA dipping less than the NASDAQ, a reversal of the selloff pattern that brought us into this dip. Further, we see stocks like ARKK up 4.4% as money is flowing back into the stocks that were most beaten up during the dip. Cathie Wood knew this part of the recovery was coming when she sold substantial TSLA shares and moved the money into the beaten up stocks. At some point the ARKK Invest money needs to start flowing back into TSLA, and it will. These are all signs that the dip is losing momentum. Bad news can rekindle the fear, but in its absence we are certainly closer to the reversal.

Comparing the two charts above, you will notice that TSLA dipped below 700 for a few minutes around 10am, but its recovery was quick as the market makers need to protect their sold 700-strike puts through Friday's market close. Similarly, when QQQ dipped into the red with about half an hour left in market trading, TSLA remained in the green or near the red/green line. Again, I think this was just a little protective manipulation by the MMs.

Here's hoping no negative news comes out on Friday and we continue to see the trend develop further.

News:
* More Elon political Tweets and a claim of improper Elon behavior during an inflight massage came out but did not appear to affect the TSLA stock price
* Wedbush Analyst Dan Ives appeared on CNBC and dropped his TSLA price target from 1400 to 1000, suggesting that China output should be sluggish in the 2nd half of 2022. The claim makes zero sense when you realize the recent Covid19 lockdowns were the reason for TSLA's weakness so far in Shanghai during Q2. The news came out before market open Thursday and appeared to not have much affect on trading.

10 year treasury bond yields closed below 2.9% on Thursday

Percent of selling tagged to short-sellers dropped to a pretty typical 46% on Thursday. My take? With macros making frequent but rather small gyrations and market makers protecting their sold 700-strike puts by preventing a stock price dip below 700, there wasn't much money to be made by trying to short TSLA.

Max pain was 800 on Thursday, a $20 dip from Wednesday. We see a big put wall at 700 and a gigantic call wall at 800. Am I sticking my neck out to suggest TSLA closes between 700 and 800 on Friday? Obviously a big negative macro move could push below 700, but a small one such as we saw on Thursday lacked the horsepower to do so. Interestingly, 750 is near even with calls and puts, so we really don't see much reason why TSLA couldn't head up to 750 if macros smile upon it.

700-strike puts and 800 strike calls dominated options trading on Wednesday

A positive development this week was slowly growing volume as the week progressed. That made manipulations that much harder.

Conditions:
* Dow down 237 (0.75%)
* NASDAQ down 29.66 (0.26%)
* SPY down 2.40 (0.61%)
* TSLA 709.42, down 0.39 (0.05%)
* TSLA volume 30.1M shares
* Oil 110.8
* IV 72.7l, 95%
* Max Pain 800
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

As we last left off, I had predicted a close this week between 700 and 800, as the market makers had been defending 700 nicely. Unfortunately, no one foresaw the ferocious bear attack that TSLA encountered on Friday, and so 700 was breached.

The Friday dip offers reasons for hope, however. Last week I alluded to the possibility that toward the bottom of the dip, shorts and hedge funds might run a bear attack to see if they could scoop up cheap TSLA shares by a hard pushdown that would result in margin calls for over-margined TSLA investors. It's also a chance to buy from investors who set stop-loss limits. I think Friday was just such an attack, with even a manufactured sexual accusation thrown in for good measure precisely when it would in theory do the most harm. The attack may suggest that the manipulators believe that this dip is getting close to a bottom. The negative would be if we saw Monday selling to satisfy those margin calls. The positive is that if the bottom of a dip is a deep, manufactured dip by manipulation rather than a sign of market sentiment, this stock would be well prepped for a strong rebound.

Here's why I think TSLA's dip was primarily a manipulation. We had gone through the week with lots of eye-rolling about Elon's Tweets but without significant effect upon TSLA's share price. Nothing essential changed on Friday. Instead, we saw a few strong growth stocks, including TSLA and NVDA, pushed down right from market open. Sentiment was positive going into the market open for most stocks as TSLA, NVDA, and the NASDAQ all traded positively. Some change of market sentiment about strong growth stocks is always possible, but I latch onto the manipulation explanation because of certain details in how TSLA traded. For example, notice how QQQ didn't trade in the red until nearly 11am. The NASDAQ wasn't pulling TSLA down, it was the other way around. With some big names such as TSLA and NVDA falling hard soon after market open (pushed down, I should say), that was enough to spook this market which is afraid of its own shadow, and QQQ (NASDAQ too, of course) started down, too. The macro dip amplified TSLA and NVDA's dip, which in turn amplified the macro dip. Notice that TSLA hit 10% down and very shortly thereafter leveled off with the uptick rule coming into effect. Without the power of shorting to push the stock price down, it leveled and ultimately recovered. Approaching 2pm, the market figured out it had been tricked and started running uphill quickly, recovering most of the lost share prices from the dip. Look at TSLA, though, which recovered less than half its dip. Reasonable? No. This is a classic manipulation play where the shorts and hedge funds cap a recovering stock going into close to keep the closing price low. I responded to the dip by buying an in the money leap with mid 2023 expiration date shortly after the bottom. I'll use that leap to retire at no extra cost a same-strike leap that expires in Sept 2022. I'm patient. Of course if manipulators were artificially pulled TSLA down on Friday, you would expect to see lots of shorting taking place, and with 61% of selling tagged to shorts, that's a good indication we were watching lots of day-shorting. A robust 683K of trading in the 4:00pm minute gave the pirates an opportunity to close their shorts prior to the weekend.

Of course none of us retail investors know precisely when the bottom will be hit. It'l happen when the pirates simply cannot push the market any lower, and that's why watching for failed manipulations is important.

Friday's dip pulled TSLA's price low enough so that it's PE for a growth stock now is ridiculously low. Rest assured there will be plenty of buyers when a dip bottom is found. I offer this explanation from Gary Black:

Who can imagine TSLA on sale at this price?

One obstacle to a recovery from the macro dip is the Fed's hawkish behavior at the moment. In this video, Cathie Wood and Piper-Sandler's Nancy Lazar suggest that inflation isn't going to be as bad as the market expects. First, they say that three huge retailers: Walmart, Target, and Home Depot are sitting on an excess 40% of inventory. Even discounted for inflation that's more than a 30% excess of products. They believe these retailers will do some discounting before long to reduce that inventory. The theory is that without the government checks from last year going into consumer pockets and a big uptick in travel spending, there's not as much money to spend on retail as before. Discounting in big retail outlets would have a substantial impact upon inflation numbers going forward (Feds tend to look past the fuel and food costs and more at the other numbers). Secondly, The drop in 10 yr. treasury bond yields we've seen in the past couple weeks appears to be more than a transitory situation. The two ladies suggest that the bond market is guessing inflation will ease and they're buying bonds at these yields because they expect yields to fall further, not rise. We shall see.

An essential ingredient in getting TSLA to rise is reducing worries about the company's 2nd quarter results. In this Tesmanian post, we learn that Berlin has just added a second shift in an effort to increase its output. We learn that as with Giga Shanghai, issues with Chinese parts producers reduced Giga Berlin's output. Now those shortfalls are disappearing, as evidenced by Berlin's willingness to add a second shift. With any luck, we'll see Fremont, Shanghai, Berlin, and Austin cranking out the cars in June. Analysts will learn of Giga Shanghai's May production numbers in early June, and we should see some downward adjustments in expected Q2 production and deliveries. If June is poised to surprise to the high side, Q2 fears may start to fade, giving more reason for the stock price to rise.

Regarding Elon's Tweets over the Twitter acquisition, let me just say that Elon is not going off the deep end but is rather remaining true to character. He sees a danger if Twitter or a new, alternative platform is not kept accessible and neutral for public discussions, because otherwise you end up with the left and right gravitating toward their own echo chambers (which is what's going on in mainstream media, at the moment). I wouldn't trust anyone more than Elon to come up with a system that is not pulling for the left or the right. This is important because he sees China's economy poised to become 2-3 times bigger than that of the U.S. and suggests Americans need to stop bickering amongst ourselves and instead get to work. I believe he'll be a force encouraging political parties to migrate toward the middle, rather than to the extremes in order to galvanize their bases. He's making plenty of enemies and I think he's quite sincere about hiring lawyers and going after those who libel him. Look past his most inflammatory Tweets and you'll see a voice of reason.

On Friday, percent of selling tagged to short-sellers zoomed back up to 61%, suggesting substantial manipulations

Initially when we saw 10 yr. treasury bond yields dipping, the theory was that demand for bonds as investors were ditching equities was the cause. With rates peaking and then receding, some observers such as Cathie Wood and Nancy Lazar in this video suggest that the bond market is repricing the bonds with expectations that we may not see as much inflation and interest rate growth as originally expected.

Max pain for 5/27/22 is showing 775, continuing the trend of max pain decreases of about $25/day. Still, a max pain number that is more than $100 above the stock price gives market makers incentive to see the stock price rise. Forces other than the MMs are behind Friday's manipulative pushdown. Looking at the chart above, there's a clear transition from puts dominating to calls dominating once the price reaches 750, so that's the price right now where MMs may begin to hold TSLA back if it reaches that level this week.

Thursday's volume, looking toward 5/20/22 expiration date

When I asked @JimS to give me a chart this week where the closing price line was going up and to the right he responded with the above chart, turned on its side. I further clarified the request, and as soon as @JimS learns to draw the chart correctly we can be done with this dip. Not putting any pressure on you Jim.

I placed a red dot on 700 for Friday's close because that would have been the logical market maker goal to end the week. Instead, we saw a massive bear attack that even the market makers didn't want to buck.

Want to see what a massive bear attack near the end of a dip looks like? Here you go. It looks like the blue 50 day moving average will dip below the red 200 day moving average sometime in the coming week. Notice (as @Curt Renz pointed out in the main thread) that TSLA bounced shortly after descending below the lower bollinger band. Add the imposition of the alternative uptick rule at about $638.50 and you have ample reason for a reversal.

Conditions:
* Dow up 9 (0.03%)
* NASDAQ down 34 (0.30%)
* SPY up 0 (0.04%)
* TSLA 663.90, down 45.52 (6.42%)
* TSLA volume 47.9M shares
* Oil 110.3
* IV 81.2, 98%
* Max Pain 790
* Percent of TSLA selling tagged to shorts: 61%

 

[saniflash]

Max pain for 5/27/22 is showing 575

* $775

 

[Papafox]

* $775

Corrected, thx.

My assistant gave the max pain number of 790 in the conditions report, and it likely applied to an expiration date of Friday, May 20. In my open interest chart for max pain, the chart clearly listed for date 5/27, and I offered the correct number $775. Let me catch the max pain charts Friday morning, see what they're referring to, compare to the Friday evening numbers, and see what additional info to add so that we can avoid this confusion.

 

[Papafox]

TSLA chart above

QQQ chart above

The first hour of Monday trading saw wild fluctuations of TSLA and high volume as bulls and bears both threw punches and danced around the ring. Just 9 minutes after market open, TSLA was down 3.6%. A mere 8 minutes later TSLA was back to previous close and then another massive mandatory morning dip occurred. At 10:31am, 108K shares were purchased, which brought TSLA out of the deep red and into the green. It really isn't a matter of whether the market's fear of its own shadow was at play or whether the wildest gyrations belonged to manipulators. Without a doubt, both forces were at work. Since percent of selling tagged to shorts was a robust 56%, and because the NASDAQ didn't show nearly this level of morning volatility, I'm going to give most responsibility for the morning volatility to the manipulators.

We saw both FUD and anti-FUD on Monday. The Street launched a post with title: Tesla Stock Lags on Report of More Shanghai Factory Production Delays. This title made it into the broader news distribution for Tesla and typical readers would guess another week to three weeks delay. In truth, the delay was for one more single day. That's intentional misdirection. OTOH, Gwynne Shotwell, SpaceX President defended Elon Musk against sexual allegations by saying, "Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations." I believe she's right.

You can see a big after-hours dip in TSLA and other stocks, beginning at about 5:10pm. That drop was caused by Snap's CEO stating that the social media company will miss revenue and earnings estimates and will slow hiring. Such a company's issues have really nothing to do with Tesla's ability to do well going forward, but that's how the market works. Futures are deep red for Tuesday. It's anyone's guess exactly when the market decides the bottom is in.

Factors suggesting it's time to be bullish with TSLA again:
* According to this Gary Black Tweet, the average Factset estimate of Q2 TSLA deliveries is 276K, down from 320K a month ago
* According to Oppenheimer Tesla Analyst Colin Rusch in this CNBC video, he is expecting Tesla to deliver over 300K vehicles in Q2
* According to this Telarati article, Tesla Shanghai is expected to resume pre-lockdown output, beginning May 24
* According to this The Street article, A recent Bank of America global fund manager survey showed that investment managers have the highest cash balances since September, 2001.
* According to the same The Street article, The 5-year average multiple on the S&P 500 is 18.6 times and the market is currently trading at 17 times 2022 earnings per share and 15.5 times 2023 consensus EPS.
* Giga Berlin has just added their second shift
* 10 yr treasury bond yields remain below 3%. The substantial PE Compression we've seen cannot be justified with such low interest rates

Factors suggesting it's still time to be wary:
* We don't play in an honest casino
* The market is afraid of its own shadow and could be for longer than makes any sense
* Because TSLA has spawned such an enormous quantity of options, it remains a prime target for future manipulations

On a personal note, I sold a Sept22 500-strike call on Monday to mostly offset the expense of buying a mid-2023 500-strike call on Friday. Volatility can be your friend.

With 56% of selling tagged to shorts on Monday, manipulations were almost certainly substantial and part of the reason why TSLA barely kept up with the NASDAQ on Monday

10 year treasury bond yields remained below 2.9% on Monday

Max pain for Friday is listed as 730, which is a full $55 higher than Monday's closing price. There's a big Puts/Calls dividing line between 700 and 710, so I suspect the market makers would really like to see TSLA close above 700 on Friday.

Volume chart

Check out the bounce off the lower bollinger band for the second trading day in a row. Meanwhile, the blue 50 day moving average and red 200 day moving average are preparing to "death cross", which surely will give heartburn to a few technical traders.

Conditions:
* Dow up 618 (1.98%)
* NASDAQ up 181 (1.59%)
* SPY up 7 (1.87%)
* TSLA 674.90, up 11.00 (1.66%)
* TSLA volume 29.0M shares
* Oil 109.7
* IV 74.4, 95%
* Max Pain 730
* Percent of TSLA selling tagged to shorts: 56%

 

[Papafox]

TSLA chart above

QQQ chart above

So here we are in a dip that exceeds all reason and although we know it'll bottom out and then recover, we don't know the timetable. My post on Monday emphasized positive developments in Tesla's operations. Unfortunately, good news about the actual workings of Tesla is getting lost in the macro dips that are then accelerated at TSLA by manipulations by those who benefit from the stock price falling. Let me explain.

Percent of selling by shorts was at an elevated 54% on Tuesday, supporting the theory of manipulations. Now compare the two charts above. After 1pm, QQQ began a steady recovery from the day's lows. TSLA, OTOH, continued to dip during this time period, despite no news on consequence regarding the company. Have you noticed how TSLA tends to diverge from QQQ and the NASDAQ in the lower volume afternoon hours and sink into the close (or be capped and trade horizontally into the close while the broader market is heading upward}. You can believe that TSLA just has a tough time trading during afternoon hours or you can believe in manipulations. I believe in the latter. The afternoon manipulations allowed the pirates to pull TSLA down 3X compared to the NASDAQ.

Haha, Meet Kevin was thinking just what I was today when I saw this quote from Bill Ackman. Ackman is trying to stoke fear in gullible investors with terms like "out of control". No wonder the market is afraid of its own shadow. Let's hope that shorts unleashing the boogey man on us is a sign we're getting close to the bottom. According to the St. Louis Fed, regarding definitions, the US Breakeven 5 Year Index is, "The latest value implies what market participants expect inflation to be in the next 5 years, on average."

Note: In 2020 Ackman's hedge fund made $2.6 billion after he appeared on CNBC in 2020 and said he expected Covid to kill over a million people in the country and other tales of gloom and doom.

The two pieces of information most responsible for investor fears at the moment are speculation that the dip could go on for months and the realization that each week stocks are diving immensely. The rate of dip is simply incompatible with the projected timeline for the dip to resolve. Most investors don't consider that stocks would have negative values if the trajectory of this dip went on for months. Avoid margin, options with excessively optimistic price expectations, or option plays lacking sufficient time to resolve. That way, you really will enjoy the ride back up when it inevitably comes.

News:
* ARK invest is buying TSLA again. Say what you will about Cathie Wood, but she managed to move money into some of ARK's most beaten down stocks, and now it's time to start moving money back into TSLA to benefit from the dip recovery, when it comes.

With percent of selling tagged to short-sellers registering 54% on Tuesday, the numbers suggest quite a bit of manipulations and, unfortunately, the daily TSLA chart verifies that suspicion.

10 yr. treasury bond yields fell below 2.8% on Tuesday, further suggesting that parts of the investment community (bond traders) are expecting less of a rise in rates than equity traders

Max pain is listed as 695. Market makers want to prevent the 700-strike call wall from coming into the money, but anything above 670 takes care of the put-dominated prices, and so the market makers might be happy just keeping TSLA above 670. Last week we saw max pain fall about $25/day and with stock price a good $65 below max pain, some erosion of max pain should be expected as the week progresses. OTOH, if the stock price starts dropping, MMs would really like to keep TSLA above the 600-strike put wall, the same way they tried to keep TSLA above the 700-strike put wall last week. A massive bear raid on Friday allowed 700 to be breached.

Monday's volume

We should see the death cross of 50 DMA passing below 200 DMA this week. I wonder if CNBC will bring a technical trader on to amplify the crossing. Once again, the daily dip remained above the lower bollinger band. Except for the biggest down days, notice how uniform volume has been in the past couple of weeks.

Conditions:
* Dow up 48 (0.15%)
* NASDAQ down 271 (2.35%)
* SPY down 3 (0.76%)
* TSLA 628.16, down 46.74 (6.93%)
* TSLA volume 29.2M shares
* Oil 110.7
* IV 80.0, 98%
* Max Pain 695
* Percent of TSLA selling tagged to shorts: 54%

 

[Papafox]

TSLA chart above

QQQ chart above

On Wednesday TSLA took a break from the relentless dip and climbed 4.88%, over 3X the NASDAQ's gains. At 29.9M shares traded, volume remained amazingly consistent over the past couple weeks. The Dow closed up only 0.60%. NVDA closed up 5% prior to its Q1 earnings release, then fell in after hours trading on a forecast of Q2 being lighter than Q1, due to Russia Invasion of Ukraine and China lockdown. That dip caused a short dip in QQQ and also in TSLA after hours. Amazon closed up 2.6%, ARKK 4.6%. Ford and GM were both up over 2%.

The last time we saw TSLA with two positive days in a row was in the first week of May. I think we have various parties working TSLA and the broader markets, stoking the fears and keeping the recovery at bay as long as possible. Possible reasons:
* You have hedge fund operators such as Bill Ackman who are clearly working to push this market as low as possible, for massive gains, of course
* Once the market has bottomed, and it is possible we may be there or close, there's incentive from the big dogs who are buying to continue stoking the fears so that they can continue to load up at these bargain prices without sparking a rally
* Others would like to see the Fed ease rates and its current monetary policy tightening out of recession fears (and the low stock market adds to those fears). According to this article,
"It may be necessary for the market to become more confident than it is that financial conditions tightening has been sufficient and that the Fed has delivered and signaled enough tightening," Chang said in a note on Monday. "Monetary policy has historically stopped tightening about three months before equities bottom, and shifted to easing about two months afterwards." I would argue this is not a normal dip, with the market's plunge way too steep for the conditions we're in, and I adjust my expectations accordingly.

So, it's possible the recovery could be a ways off yet, but I suggest that the big dogs who will be buying will work to make you think the reversal is farther off than what actually happens, simply to beat you to the buying. You are not supposed to buy until they're done feeding at the trough. I look at quotes from big Wall Street operators as ideas that they want you to believe, not necessarily what they believe themselves.

Nonetheless, if there's a prolonged wait for a substantial turnaround, avoiding short-duration options and hodling will serve an investor's needs. In the meantime, no two positive days in a row and the floggings will continue until morale improves.

News:
* Drive Tesla Canada says Tesla officially files application to expand Giga Berlin
* Gary Black Tweeted that Tesla filed docs showing no margin loan will be used in the acquisition of Twitter. This news should be seen as a TSLA positive as it reduces the chance that Elon would ever receive a margin call on his TSLA holdings
* Jefferies analyst Phillipe Houchoise raised his 2022 and 2023 TSLA EPS estimates but nonetheless dropped his TSLA price target from 1250 to 1050, due to higher interest rates

Another calm day for 10 year treasury bond yields

Percent of selling by shorts was an elevated 54% for the second day in a row, suggesting continued manipulations of moderate intensity

Max pain dropped from 695 to 680 by Wednesday morning. morning. You can see the 670, 680, and 690 call hills growing in height, with the 700-strike call wall being something the market makers really want to protect this week.

Tuesday's option volume

Volumes remains very level, except for big pushdown days. May 4 was the last date when we saw two or more positive days in a row.

Conditions:
* Dow up 192 (0.60%)
* NASDAQ up 170 (1.51%)
* SPY up 3 (0.88%)
* TSLA 658.80, up 30.64 (4.88%)
* TSLA volume 29.9M shares
* Oil 110.8
* IV 73.1, 94%
* Max Pain 680
* Percent of TSLA selling tagged to shorts: 54%

 

[Papafox]

TSLA chart above

QQQ chart above

Congratulations, longs, Thursday was an important day in this dip. TSLA broke its pattern of no two positive days in a row (since May 4) in a big way. Another positive change? Market makers failed to protect their 700-strike sold call options. Rest assured they're going to try like mischief to end Friday below 700. Volume finally climbed above 30 million (35.3M to be exact) on a day without significant price reduction. Yep, several breakthroughs took place and I regard failed manipulations as an important hint that market sentiment is indeed changing.

Looking at the TSLA chart, you can see for about 40 minutes, starting at 11am, the market makers were fending off the attack on 700. They failed and TSLA kept climbing until it was a bit above 718 around 1pm. From that time to market close, you can see the subtle downward slope of TSLA as market makers slowly worked the lower volume afternoon hours in an attempt to return TSLA below 700. A slight macro dip starting around 3pm gave them a chance to accelerate that dip in TSLA and they brought the stock all the way down to 701. The macro recovery lifted TSLA too and a close nearly $8 above 700 ensued. I will rejoice when I see a manipulated dip into close (such as today's) thoroughly overridden on a future trading day.

Here's why the climb above 700 was important. Just one day earlier, on Wednesday in pre-market trading, you could have purchased TSLA for less than 620 a share. The price is over 700 now. Even if we see a dip into the 690s on Friday something important has happened to the psychology of investors: they have experienced the dreaded 'I should have bought yesterday" syndrome. The antidote to this syndrome is for the investor to say "next time TSLA goes down to 620, or maybe even 650, I'll buy and won't let the opportunity get away from me then." This is the beginning of FOMO.

Granted, there's no way of guessing what happens to the stock price in the short term. Another bad earnings report from a big company or a hawkish-sounding comment from Jerome Powell and we could see bears roar again. Don't be surprised to see a Mandatory Morning Dip on Friday as the pirates try to pull TSLA down a few notches. OTOH, I believe some of the big dogs have been accumulating in the past week and at some point smaller investors will take the plunge as well. At least for this evening, you have investors asking themselves, "have I missed the bottom already?"

Also, we very often see short-sellers miss covering near the bottom and ride the stock back up again. Some do cover, however, and I wish we had more visibility because I believe the past two days were positively affected by some shorts finally covering. In particular, Bill Gates looks bad because of the size of his short position in EV stock TSLA. If he closes it out now, he will not only look greener but also smart for making money with his short. Fingers crossed he closes the short and gets word out that he has done so, because his doing so would prompt some other shorts to follow his lead. I'm not holding my breath.

Max pain Thursday morning was listed as 670, up $10, which makes sense as the call hill at 670 has grown higher. With the stock price above 700, market makers will be working to bring TSLA back below the 10,000 contract-high 700-strike call wall by Friday market close.

Wednesday's volume showed 700-strike calls as the hot item. Notice that volume is more than 10X open interest, which gives some idea of how furiously these calls trade in a day

All of that capping the market makers did today to keep TSLA from running too high above 700 took some serious shorting, and one shouldn't be surprised to see percent of selling by shorts back up to 64%

Yet another ho hum day for 10 yr. treasury bond yields, which is of course good for growth stocks like TSLA

We finally saw that dreaded "death cross" of the 50 DMA dropping below the 200 DMA on Thursday, but there's little mention of it because TSLA has been climbing well for the past two days and it's hard to predict gloom and doom for a stock that's climbing like a Falcon 9.

Conditions:
* Dow up 517 (1.61%)
* NASDAQ up 306 (2.68%)
* SPY up 8 (2.00%)
* TSLA 707.73, up 48.93 (7.43%)
* TSLA volume 35.3M shares
* Oil 114.0
* IV 69.8, 90%
* Max Pain 670
* Percent of TSLA selling tagged to shorts: 64%

 

[Papafox]

TSLA chart above

QQQ chart above

Congratulations longs, TSLA has climbed nearly 21% in the last 3 days of the week. This marketwide rally should greatly reduce the fear factor in the recent dip and encourage FOMO. With the largest quantity of money on the equity sidelines since September of 2011, there's plenty of room for more growth. Volume was 29.5 million shares. One reason for Friday's macro gains? The Fed's favorite measure of inflation, core personal consumption expenditures, came in as expected for April, showing a decrease in inflation from the month before.

Looking at the charts above, you can see a very noticeable leveling off of TSLA after it crested 750. Methinks the market makers were trying to hold it close to that number in case of an opportunity to push down. Likewise, we saw TSLA remaining below 760 in the final hour of market trading while QQQ continued to rise. If you look at the tech chart (bottom chart) you'll see that the dip that bottomed out in mid-March turned around just below 760. That support when the stock was falling became resistance when the stock was climbing. Further, the volume chart for this past Friday shows lots of call trading at 760-strike, which suggests an incentive for the MMs to hold TSLA just shy of 760 on Friday.

Where we go from here depends much on the macros. TSLA has risen 21% in 3 days while the NASDAQ is up about 6.8%, so TSLA has been rising at about a 3X multiple, which is very encouraging. The multiple is so high because the manipulators have been losing control of the stock price and it is making up for lost time. The range of scenarios include on one extreme a rally such as we saw beginning in mid-March when TSLA rose over $250 in two weeks (see tech chart at bottom). OTOH, negative macro news could cause additional dips. My standby position, if I had dry powder to deploy, would tend to favor an investment soon because you can always ride out future dips, but if the stock rallies you may never get a chance to buy at this level again. Consider that an entry at $650 vs. $750 doesn't make that much of a difference once the stock be trading above $1500.

Then again there's the question of Tesla's upcoming Q2 performance. Both Rob Maurer and Dave Lee commented on Q2. Rob pointed out how the 2nd half of each year is typically quite a bit stronger than the first half. His estimate for Q2 production is about 260K vehicles. Likewise, Dave Lee assumed an approximate 250K deliveries in Q2 and worked the numbers. His GAAP was about 1.5B and non-GAAP about 2.0B profits are still very respectable in his scenario. In my opinion, guidance for a strong Q3 and Q4 as Berlin and Austin crank up could offset the effects of Shanghai losing the better part of a month's production in Q2. Alex Voigt Tweeted that that an additional 500 employees began work at Berlin last week to help support the two shifts begun this past week.

From an Elon Tweet we learned that Bill Gates would need to spend $1.5 to $2 billion to close his TSLA short position. Looks like he has had the position open for a long time and certainly couldn't close with a profit this week. Don't hold your breath on him closing anytime soon.

Percent of selling by shorts was once again very high at 64%, suggesting LOTS of manipulations to keep TSLA from climbing even higher on Friday

Looking at a monthly view of the 10 yr. treasury bond yields better shows the dip taken in the last third of May

Max pain for Friday is 700. The real game for market makers will be minimizing the call walls. The first biggy is at 750, and other large walls lie at 800 and 820. Normally, the put to call ratio is a positive number, meaning there are more puts than calls being bet. For this coming Friday, it's an amazingly low 0.5897. A quick look at the chart and you can see that bets for TSLA to rise are significantly more numerous than bets for it to fall. The placing of these bets on Friday likely pushed the stock price higher as market makers had to buy shares to delta-hedge the new calls.

Here's Friday's volume chart for last Friday expiration. Note that volume of 760 calls traded was above 100K and likely the market makers were protecting 760 calls in the afternoon.

Someone in the main TMC thread said max pain is now irrelevant, and I disagree to the extent that when a big price move makes max pain unachievable, the market makers adjust their target to protect the next realistic target, and that new target often is close to where the stock price lands. Friday the 20th, that target was 700 and this Friday the 27th it was 750, based on protecting tall walls of options. (Thanks again to @JimS who finally got around to creating a chart with the stock price moving up and to the right).

Here's the current U.S. new cases of Covid

And here's the deaths that result. Notice that despite the upswing in Covid cases since April, the deaths remain low. For now, I do not fear Covid gorking the U.S. market anytime soon, unless China gets out of hand again.

Check out the steeper-than V-shaped recovery underway from the market finding a local bottom. The past three days will be very significant in changing market perspectives. Other dips can/will occur, but the power behind this three day recovery will influence how deep those dips go. Now, let's see if this recovery has more room to run.

For the week, TSLA closed at 759.63, up 95.73 from 663.90 the previous week. It's been a good week my friends. Enjoy your weekend.

Conditions:
* Dow up 576 (1.76%)
* NASDAQ up 390 (3.33%)
* SPY up 10 (2.45%)
* TSLA 759.63, up 51.90 (7.33%)
* TSLA volume 29.5M shares
* Oil 115.1
* IV 66.3, 82%
* Max Pain 685
* Percent of TSLA selling tagged to shorts: 64%

 

[Papafox]

TSLA chart above

QQQ chart above

'Twas an interesting start of the week for both QQQ/NASDAQ and TSLA. In both cases, I believe the parties that benefit from pushing the market or stock down (or at least restraining its climb) went to work to insure that we wouldn't see Day 4 in a row of big climbing. On the QQQ front, we saw a deep dip right after market open that pulled QQQ down about 1.3% in an attempt to see if some fear could be generated. Around noon, QQQ returned to the green, suggesting that investor sentiment has indeed changed for the better after last week's three positive days in a row. As for TSLA, it's dip shortly after 10am was a breathtaking 3.3% (works out to be 2.5X the QQQ dip), and the stock bounced back into the green much quicker than QQQ. The strength of TSLA vs. QQQ became apparent as the two both reached temporary peaks around 1pm (QQQ up about 0.5% and TSLA up 2.2%). Both got pulled back to the red/green line, but when they rose into the next peak, TSLA's was quite a bit more subdued than QQQ's. In the 3rd peak of the day, about half an hour before market close, QQQ's was not that much less than its first peak, but TSLA's was barely above the red/green line. Translation: the pirates of Wall Street went to work on TSLA as they usually do in the lower volume afternoons and by capping and shorting managed to get TSLA to underperform QQQ even though for the first half of the day TSLA was considerably stronger than QQQ. You're welcome to drink the Kool-aid and think that there's just something odd about TSLA that keeps it from trading well in the afternoons, but I think most of us know that ease of afternoon manipulations when volume is low is the actual explanation.

Volume for the day was a higher than normal 32.6 million shares. With that much volume, you'd expect the percent of selling by shorts to be high if TSLA could be manipulated down relative to QQQ in the afternoon. Yep, percent of selling by shorts was a high 62%. Of course there's a need to cover the daily shorting with so much of the effort taking place shortly before close, and a 4:00pm trading volume in the closing cross minute of 1.5 million shares in a single minute certainly gave the pirates a wonderful chance to cover.

In the main thread, @The Accountant spoke of a managed fund manager who typically stays out of stocks trading sideways until they're ready to run higher. His timetable was a rally somewhere between now and October, with a nod to possible Q2 doldrums. I share similar thoughts that since Q2 will be the year's weak quarter, some money may well stay on the sidelines until after the Q2 ER (or Production and Delivery Report if it beats). I choose to remain invested because I'd rather sit through sideways or volatile up and down trading than miss the big move that leads into the big rally. In the meantime, I continue to use the volatility to move some IRA leaps from Sept. 22 expiration to Nov. 22, at no cost. From there I'll move them to Jan 23, so as to benefit from Q4 22.

There hasn't been much discussion yet on the investor forums about how much cash will be generated when Teslas come off lease and then are sold. We're seeing the first of the lease returns beginning now, and I look forward to their positive contribution to the bottom line going forward.

News:
* The new IDRA 9,000 ton press is destined for Tesla Cybertruck, says Elon in this Tweet

Percent of selling by shorts remained at a high level on Monday, 62%, suggesting lots of manipulations

Yields on 10 yr. treasury bonds rose on Monday, No higher, please. Monday's rise likely negatively affected the day's TSLA trading.

Max pain for Friday was 700 as we began the week. With the stock price some $60 higher, that big wall of calls at 750 is the immediate target below which the market makers would like to see the stock price fall this week. Notice how the 820-strike calls have sold considerably more than the 800-strike calls. Should TSLA take off in a big climb this week, the MMs will be determined to hold it below 820, which is actually only about $60 above where TSLA is at the moment.

800-strike calls were the big ticket during Monday's trading

Looking at the tech chart, you can see the stock price sitting within pennies of the mid-bollinger band. This is a positive development because if it lasts, we will see the descending bands start to level off.

Conditions:
* Dow down 223 (0.67%)
* NASDAQ down 50 (0.41%)
* SPY down 2 (0.56%)
* TSLA 758.26, down 1.37 (0.18%)
* TSLA volume 32.6M shares
* Oil 115.3
* IV 68.1, 88%
* Max Pain 700
* Percent of TSLA selling tagged to shorts: 62%

 

[Papafox]

TSLA chart above

QQQ chart above

Not to beat a dead horse, but Wednesday was much like Tuesday: macros showed volatility but closed not far below the previous day's close. TSLA took a sizeable dip in early afternoon with QQQ, but while QQQ recovered all of the dip before 3pm, TSLA was capped and remained more than 3X below QQQ's performance on close. One of the biggest negatives for growth stocks on Wednesday was a second day of climbing yields on 10 year treasury bonds. Nothing earthshaking happened in the afternoon to warrant the usual manipulation pattern of capping a recovery so that TSLA closed noticeably below QQQ. Volume was lighter on Wednesday, only 25M shares, which made manipulations easier. Nonetheless, it took 64% of selling being tagged to shorts to generate enough short shares during the day for the manipulations.

Summertime and short weeks are a favored time for bear attacks because the combination of summer and holiday weeks catches many investors in recreation mode instead of investing mode, and volumes typically fall, which facilitates manipulations.

News:
* Electrek says that Tesla has received 4680 sample cells from Panasonic for testing. Although 2022 output of vehicles is not expected to be battery constrained, 2023 output is, and so a successful ramping up of 4680 production is essential.

64% of selling being tagged to shorts on Wednesday suggests lots of manipulations underway. Lets see... how about that prolonged capping of TSLA this afternoon as QQQ was recovering all if the dip's previous losses?

Max pain was 725, a good $25 higher than Tuesday, as options move to to higher strikes, which moves max pain higher, too. The 750 strike has the highest open interest, but the 800, 820, and 850 strike calls are plentiful as well. No wonder the market makers are in no mood to see TSLA continue its rally.

Here's Wednesday's TSLA options trading volume stats

Looking at the tech chart, the closing stock price has been remaining close to the mid-bollinger band for the second day in a row.

Conditions:
* Dow down 177 (0.54%)
* NASDAQ down 87 (0.72%)
* SPY down 3 (0.81%)
* TSLA 740.37, down 17.89 (2.36%)
* TSLA volume 25.0M shares
* Oil 113.0
* IV 66.9, 83%
* Max Pain 725
* Percent of TSLA selling tagged to shorts: 64%

 

[Papafox]

TSLA chart above

QQQ chart above

Today was a big up day for the macros, with this Reuters article stating that Tesla and Nvidia led the markets into a rally on Thursday. Both QQQ and TSLA fended off a mandatory morning dip shortly after market open, but TSLA recovered into the green and started climbing hard about an hour before QQQ and the NASDAQ began their climbs. NVDA also began the early climb, but so did ARKK. I think today's rally was really started by money moving into beaten down high-growth tech stocks.

At 11:50am, TSLA topped 791 and was on pace for ascending through 800. If you remember from Wednesday, there were over 13K 800-strike contracts set to expire on Friday, and Thursday morning's tally of those 800-strike calls rose above 18K. So, instead of delta-hedging, like you would typically see, it looks like the market makers managed a push-down instead to prevent those 800-strike calls from moving into the money. Normally, when on rather modest volume you see TSLA rise nearly 7% within a few hours of market open, the TSLA chart will be rather smooth from there with gradual climbing as the market makers work to complete their delta-hedging by market close. Instead, we saw the steady dip of TSLA after the noon hour with no negative news to explain the price loss and both the NASDAQ and other high growth Tech stocks retained or added to their morning gains.

To be specific, at 11:50am, TSLA was up 6.9%, QQQ up 1.4%, for a 4.9X multiple. At close, TSLA's multiple had shrunk to 1.7X.

What to learn about this week's manipulations? First, we don't play in an honest casino, so please avoid the short-term bets and the over-use of margin. Second, if we know that manipulations are impeding TSLA's stock price growth and we can see when those manipulations become ineffective because of strong demand for TSLA, we stand a better chance of understand when we are in "the big climb". You can also see that dips like Thursday afternoon's are not a sign of TSLA falling out of favor or "somebody knows something." Finally, many of us who are patient with TSLA have made boatloads of money by not getting rattled by manipulations, and in the long run the stock price will go where investors are willing to send it (Mars, anyone?), despite the short-term antics of the manipulators.

News:
* According to an Elon Tweet on Thursday, AI Day has been pushed back to Sept 30, in order to allow a possible appearance by a Tesla bot. If the demonstration is impressive enough, and expected start of delivery dates are expected to be soon enough, analysts will in the future start giving Tesla's AI efforts value moving forward. Think about it: Tesla is a big enough company that it can perform this research without hardly being noticeable in earnings, and yet the company may be creating a product that could potentially bring in more profits than the auto side someday. Moreover, Tesla already is attracting the brightest engineering and innovation minds today.
* Gary Black in this Tweet believes that Tesla is setting itself up for a pop, such as what this Barron's article is suggesting may be happening at Amazon, which is set to split next week and could be followed by TSLA.

It takes a lot of work including short-selling to stop a big rally in its tracks (like we saw today) and sure enough the percent of selling by short-sellers has remained high at 61%

Yields on 10 year treasury bonds finished the day just above 2.9%, a rather level day following yesterday's climb.

Max pain is now listed as 725, but at this point market makers are trying to keep TSLA below 800 on Friday and if the macros fall significantly then perhaps trying for a dip below 750. It's all about protecting those big call walls.

No big surprise, by 8pm New York time on Thursday, 800-strike calls saw no less than 120,000 transactions, but only about 18,000 contracts in open interest.

Thursday's rally brought TSLA well above the mid-bollinger band. With any luck it'll stay there and we can start bending all three bands upwards going forward.

Conditions:
* Dow up 435 (1.33%)
* NASDAQ up 322 (2.69%)
* SPY up 8 (1.90%)
* TSLA 775.00, up 34.63 (4.68%)
* TSLA volume 30.6M shares
* Oil 117.2
* IV 67.7, 87%
* Max Pain 735
* Percent of TSLA selling tagged to shorts: 61%

 

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TSLA chart above

QQQ chart above

Pardon the brevity in this and the coming Monday's posts, I am in travel mode. So, a good jobs report was seen as a reason for the Fed to keep increasing interest rates, but I suggest that TSLA's big dip on Friday was a major catalyst for the extent of that macro dip. What makes the TSLA dip so notable was that much of the dip was the result of dishonest reporting. We started with Reuters saying that Tesla was cutting 10% of its jobs, which of course sends the message that the growth story is over for the moment. Every major media outlet ran with this distorted story when in fact the cuts were only for salaried workers. Why? Quite simply, the media doesn't like this company that refuses to advertise and more shocking headlines, even if dishonest, bring more clicks.

Looking at the charts above you can see TSLA descending close to 10% but never crossing the 10% threshold and triggering the alternative uptick rule. Coincidence? You know the answer. Moreover, in the chart below you can see that percent of selling by shorts continued to be in the stratosphere, 63% to be exact, strongly suggesting lots of manipulations used to get TSLA down so far.

What happens on Monday? This is the third time that Tesla has announced layoffs even though the overall growth trajectory is heavily upward. I link this layoff to Elon's previous Tweet about no working from home. I see Elon realizing there's fat to cut in the salaried workers at Tesla, individuals who have been identified as not carrying their weight, and Elon's stated concerns about the economy is a reliable reason for justifying these layoffs. Do I think Tesla's growth will be hampered by cutting the least productive 10% of salaried employees? Nope. A rational Wall Street would understand this is a good, not a bad, thing. Many stocks go up when management announces a job cut. So, I think now that the full story is out we could see some recovery on Monday. The exception would be investors who are just too tired of seeing Elon's comments negatively affect the stock price. There are a few, but the majority understand that Elon Musk is a strong positive for Tesla despite some of his communications. Naturally, the market makers and many hedge funds would try to temper a recovery on Monday.

I wracked my brain for potential internal reasons for Elon to be inspired to shore up Tesla's finances. The one obvious possible weakness would be delays in getting 4680 production ramped up. As a prudent investor, I will be scrutinizing Austin vehicle output especially to see if we see signs that 4680 production is improving.

Percent of selling by shorts was 63% on Friday, suggesting that the dip of over 9% had plenty of help on the way down

Yields on 10 year treasury bonds rose to just below 2.95% on Friday. Cresting above 3% might give the market a chill, so keep an eye on the chart come Monday.

Max pain for this coming Friday is 740. Note that big call wall at 735, which should be the real target that market makers will be trying to prevent TSLA from climbing above during the early part of this week.

Friday's volume was dominated by the purchase of 700-strike puts. Naturally, those puts remained out of the money throughout the close.

TSLA was on track to close the week close to max pain, but the layoff news created far too strong a downdraft. MMs were able to keep TSLA above 700 and protect all of those sold puts, however. Chart by @JimS

Notice that these big down days bring quite a bit more volume than the typical 29M or less.

For the week, TSLA closed at 703.55, down 56.08 from the previous Friday's 759.63. Hoping you enjoyed your weekend.

Conditions:
* Dow down 349 (1.05%)
* NASDAQ down 304 (2.47%)
* SPY down 7 (1.64%)
* TSLA 703.55, down 71.45 (9.22%)
* TSLA volume 37.5M shares
* Oil 118.9
* IV 73.8, 94%
* Max Pain 750
* Percent of TSLA selling tagged to shorts: 63%

 

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Very little commentary today... I've been traveling from before sunrise to beyond sunset. No research time. Airlines really need to get Starlink service ; )

TSLA chart above

QQQ chart above
Shooting from the hip... We knew Friday's 9%+ dip was a gross overexaggeration. It made sense for there to be a bounce back on Monday, but of course we knew the usual suspects would be playing the stock to keep that rise tempered. Right at market open we saw what many would consider a reasonable recovery. Alas, that Mandatory Morning Dip was a doosie. The fact that the entities holding TSLA back got by with only 49% of selling tagged to shorts suggests the task wasn't difficult. Perhaps rising 10 yr. treasury bond yields shortly after market open did much of the work for them. Volume was a rather typical 27.7M shares.

10 yr. treasury bond yields have made a strong climb above 3%, and high growth stocks will feel the climb the most.

Percent of selling by shorts fell to a fairly reasonable 49% on Monday

Max pain was 730 and we didn't spend more than a few minutes above 730 on Monday. There's a wall of about 5K call options open at 735 strike, so you can expect resistance at 735. OTOH a tall put wall at 700 suggests the market makers would help keep TSLA above 700.

Mondays option volumes

TSLA has been spending enough time near the mid bollinger band, and you can now see the upper and lower BBs moving inward

Conditions:
* Dow up 16 (0.05%)
* NASDAQ up 49 (0.40%)
* SPY up 1 (0.30%)
* TSLA 714.84, up 11.29 (1.60%)
* TSLA volume 27.7M shares
* Oil 118.9
* IV 70.7, 91%
* Max Pain 730
* Percent of TSLA selling tagged to shorts: 49%

 

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TSLA chart above

QQQ chart above

The market got off to a rocky start on Tuesday as it digested Target's warnings about reduced expectations. In particular, Target is hoping to better match inventory with demand and will do some discounting to make it happen. This is precisely what Cathie Wood was talking about within the past week. The discounting is anti-inflationary, so perhaps this is the reason why we saw a dip in 10 yr. treasury bond yields on Tuesday. All of this is relatively small potatoes compared to the CPI numbers which will be announced an hour before market open on Friday. The market has a good day or a bad day on Friday, but probably nothing in between. You see those 800-strike calls that are open for Friday? I suspect those betters are hoping the macros go wild on Friday with a significant lowering of CPI numbers. For this reason, the market makers may be working to hold TSLA well below 800 just in case the Friday CPI numbers ignite a market rally. OTOH, if the numbers are disappointing, then the MMs pay for quite a few puts they sold.

TSLA underperformed the NASDAQ on Tuesday and should have closed with a 2% gain, given its 2.1X beta. I think the low volume allowed market makers to hold TSLA back fairly easily, trying to protect those 800 calls on Friday if the CPI numbers show a significant dip compared to the previous month.

In other news, @The Accountant subtracted the required 40 days notice time from Tesla's annual meeting date of August 4 and arrived at June 25 as the day by which we should learn the number of shares that Tesla is seeking as maximum authorized (a needed step before a split can be announced). News of the number of possible shares will be a reminder to Wall Street that a split (and likely stock value rise) is coming and will hopefully provide a bump in the stock price.

10 year treasury bond yields dipped below 3% on Tuesday, hurrah.

For the second day in a row, percent of selling by shorts fell below 50%, suggesting reduced manipulations

Max pain on Tuesday morning fell $5 to 725. Unfortunately, as the number of calls at 700 strike grow, the market makers have less incentive to protect 700 in another dip. Still, with 700 worth protecting on the down side and 735, 750, and 800 strike calls needing to be protected on the up side, a close at 716 positions the market makers well for this point in the week.

Tuesday's option volumes

Volume of only 24M shares made TSLA vulnerable to manipulations Tuesday

Conditions:
* Dow up 264 (0.80%)
* NASDAQ up 114 (0.94%)
* SPY up 4 (0.96%)
* TSLA 716.66, up 1.82 (0.25%)
* TSLA volume 24.0M shares
* Oil 119.7
* IV 67.3, 84%
* Max Pain 725
* Percent of TSLA selling tagged to shorts: 47%

 

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TSLA chart above

QQQ chart above

Wednesday saw TSLA green in pre-market while QQQ was mired in red. Looks like TSLA's Falcon 9 liftoff right after market open brought it to 4.5% while QQQ was only up about 0.5%, but QQQ and the NASDAQ were pulled up by TSLA's strength. By close, QQQ was down 0.72% to TSLA's gain of 1.25%, or about a 2% difference. A macro dip makes it really easy for market makers and hedgies to pull TSLA down and I'm sure TSLA's loss of 2% relative to QQQ was an easy manipulation. The macro dip really was a gift, because they can tweak TSLA's dip to suit their needs and nobody is the wiser. Market makers don't want TSLA trading at nearly 750 when there are lots of 735 and 750 calls and a good CPI number on Friday could put TSLA over that huge call wall at 800.

What caused TSLA's big jump Wednesday morning? I had very similar thoughts, but @Todd Burch framed it best in the main investors' thread with "Elon's layoff announcement last week instilled (completely irrational) views that Tesla demand is hurting and the company is collapsing. Lithium and battery purchase news has allayed those fears. ..."

Within a few hours of my writing this post, we'll know the Shanghai factory performance for May. Since the numbers are of course way down from Q1 typical months, the media could seize the opportunity to paint Tesla as having problems. OTOH, if the numbers surprise to the high side of the already low expectations, an opposite reaction could occur.

The big daddy for causing macros to climb or descend will still be Friday morning, one hour prior to market open, when CPI numbers are released. There are guarded expectations of lower annual increase in inflation (because May 2021 was elevated) and if the expectations are improved upon, the market will rally. The opposite is true if inflation turns out to be higher than expected.

News:
* Shanghai factory to exit 'closed loop' on June 11 as Covid is reduced in China
* Troy is predicting Shanghai production in May of 32,443. Production numbers are the ones that count since Tesla can sell every vehicle it manufactures

Well, so much for yields on 10 yr treasury bonds remaining below 3%. Expect the market and bond prices to be jumping while waiting for Friday's CPI numbers.

Max pain Wednesday morning was 720, down $5 from Tuesday. This downward movement makes sense as more calls are purchased, but at mostly established strike prices. The transition point between puts dominating and calls dominating is right around 720.

Wednesday morning's rally led to lots of volume in 750 and 800 strike calls

With all the craziness of Wednesday's trading, at least TSLA closed above the mid-bollinger band.

Conditions:
* Dow down 269 (0.81%)
* NASDAQ down 89 (0.73%)
* SPY down 5 (1.09%)
* TSLA 725.60, up 8.94 (1.25%)
* TSLA volume 25.3M shares
* Oil 122.1
* IV 67.1, 83%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 49%