Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

An investor could have come down with whiplash if watching the first hour of TSLA trading too carefully Monday morning. Pre-market QQQ and TSLA were well up leading into market open, with TSLA at times rising above 750. Right after open, TSLA managed to exceed 754 right before the bottom fell out for a $20 drop, and then a few minutes later TSLA is soaring above 750 for a short moment. By market close, both TSLA and NASDAQ were down less than 1%. What was going on?

TMC is one of the few spots many of us visit where manipulations are spoken about. I've yet to hear any of our popular Tesla Youtube stars mention manipulations in their explanations but on days such as Monday, it was indeed the dominant driver of the price action. Consider:
* Our TSLA max pain chart shows nearly 5K 750 strike contracts expiring this coming Friday
* Official max pain was 715 Monday morning
* In late morning TSLA was the only stock on my list of stocks that was still trading green. TSLA was strongly positive compared to the NASDAQ at open
* No news of significance came out during the day that would change TSLA's relative attractiveness to other growth stocks
* TMC member @viridi here and here mentioned the spoofing being used to cap the stock price

Consider that the market makers wanted TSLA to close above 700, below 750, and by Friday below 730 if at all possible. A rise above 750 going into market hours had to be stopped and we saw selling as high as 90-100,000 in a minute's time to bring the stock price down. Might a whale have been doing the selling in an attempt to unload his TSLA shares? Whales got to be that way by being savvy about how the market works, and no big investor would sell like that against strong buying, shortly after open. Instead, the selling would be reduced, allowing the stock price to rise, and then a more gradual and more profitable selling spree could follow. The speed at which the early morning selling took place, when juxtaposed with the strong buying, strongly suggests market makers selling like mad to take 750 off the table and then slowly working the stock price down below the red/green line so as to remove any hope of the day traders that TSLA was still going to rally. You can see the walkdown trajectory by drawing a line from the 754 opening price and placing that line upon the tops of the various peaks while TSLA was still green. About 11:45am the macros started falling and you can see TSLA quickly dipped below the trajectory line, otherwise TSLA wouldn't have crossed into the red until about 1pm due to the efforts of the market makers clipping TSLA's wings this Monday morning.

Stepping back, the Q2 production and delivery report should be on Saturday, July 2 and we'll be trading again on Tuesday, July 5. I'm not optimistic for a beat, especially with reports that some made in Berlin Performance Model Ys have a drive unit problem that needs correction before delivery. Still, Fremont is cranking out the vehicles furiously of late, Berlin is adding another shift on July 4, Shanghai will be expanding production in July, and other optimistic news for Q3 and beyond. Just in Q1 we saw Tesla surprise everyone with their delivery numbers. Many investors may be expecting a dip in TSLA with the P&D report and ER and then a rise as the price readjusts for Q3 and Q4 expectations. The problem with such an approach is if two many are expecting a dip and then a rise, there are always some who will beat others to the buying, which causes the dip to sometimes not be as big as expected and the rise to come earlier than expected. The market can surprise you with its timing.

My guess is that since Monday's antics by the market makers took away the momentum that came streaming into this week, Tuesday could be a calmer market open. We'll see.

Finally, for those of you who read my blurb on rolling call options in an IRA, let me emphasize that you really do want some cash in your trading account that can be used if the market doesn't do what you expect when halfway through your roll. It's entirely possible that a deep in the money call option could appreciate nearly $80,000 in the coming year if TSLA delivers what many of us think it can over the next year. You really don't want to lose an option if you misjudge the market and can't bail yourself out with some cash. An extra $3,000 could allow you to make a $30 mistake. It happens.

For the third day in a row, 10 yr. treasury bond yields were up, closing about 3.2%. The higher yields may be the reason why NASDAQ stocks are not looking quite as perky as Dow stocks in Monday evening's futures.

The percent of selling tagged to shorts was 46% on Monday, but didn't do justice to the quantity of manipulations thrown at TSLA that day

Max pain for this coming Friday is 715. You can see why market makers will be trying to get TSLA below 730 for Friday's close.

Monday's volumes of options. Those 750 calls were very active.

The bollinger bands continue to angle upward as TSLA close for yet another day above the mid-bb. Despite the crazy trading on market open, compare Monday's volume in the chart to previous days and you cna see why TSLA was a bit easier to manipulate on Monday.

Conditions:
* Dow down 62 (0.20%)
* NASDAQ down 83 (0.72%)
* SPY down 1 (0.38%)
* TSLA 734.76, down 2.36 (0.32%)
* TSLA volume 29.1M shares
* Oil 109.9
* IV 70.1, 86%
* Max Pain 715
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

Macros fell on Tuesday as consumer confidence numbers came in low. I hope you can appreciate the irony here that investor confidence in the market fell on Tuesday because consumer confidence was down. If follows that the falling prices of stocks will make consumers even less confident going forward. Rinse and repeat indefinitely. Further, we have the Fed raising rates to create additional cost of purchasing large items so that demand will retreat a bit and bring prices down in the process (thereby reducing inflation). At the same time, various federal and state (California) efforts are underway to either cut the tax on gasoline or pay consumers cash to help compensate for inflation. The problem is that these efforts work to keep demand elevated and contradict the Fed's efforts to ease demand in order to ease prices and inflation. The level of economic pain of this period is small compared to the true stagflation of the 1970s, but the U.S. economy has roared forward so strongly in recent times that many young people have never experienced a substantial recession as adults. Thus the overreaction (including consumer confidence numbers) and the market being afraid of its own shadow. This too shall pass in good time. In the meantime, hedge funds and market makers love it. Their power to manipulate is highest when fear is in the air.

So, as TSLA and other stocks sank for most the day, no doubt the hedge funds jumped in there and profitably shorted the dip. A robust 586K shares traded hands at 4pm, giving lots of opportunity to cover that shorting. As you can see in the max pain chart below, there's a Put wall nearly 9K contracts high at 700-strike, for expirations this Friday. Market makers don't want to see the stock price remain below 700 as the week progresses, and so you can see that even though QQQ kept falling for most the day, TSLA approached 700 about 1pm and never dipped too far below it.

On a big down day such as Tuesday, let me just remind you that Tesla is in a unique position with strong pricing power and more demand than it can meet in many months. Once Q2 is out of the way, Tesla recommences its march of steadily improving quarters with delivery numbers and profits that will embarrass Tesla's critics. My personal strategy of dealing with this crazy market is simple: don't do something stupid such as getting strung out on margin or betting on call options that are too far out of the money or expire too soon. Thursday marks the end of Q2. Things get better for Tesla investors in Q3 and beyond.

News:
* About 200 (edited number on 6/29) Tesla employees in California involved in "labeling" various objects in autopilot images will be laid off. Various TMC members commented on the layoffs with some suggested that autolabeling might be reaching a point where this number of human labelers is no longer needed, and therefore the layoffs are actually showing progress.

Percent of selling by shorts was 50%

Thankfully, after three days of climbing in a row, yields on 10 yr. treasury bonds ended the day at less than 3.2%

Max pain Tuesday morning was 720. Look at that enormous Put wall at 700 and you can guess that the market makers would really like to get TSLA above 700 on Wednesday unless the macros take another dip. If Wednesday is a green day, TSLA is going to find resistance at 730 again, which is a call wall growing to nearly 6K contracts high now.

Tuesday's options volume

Unfortunately, Tuesday's dip brought TSLA below the mid-bollinger band.

Conditions:
* Dow down 491 (1.56%)
* NASDAQ down 343 (2.98%)
* SPY down 8 (2.04%)
* TSLA 697.99, down 36.77 (5.00%)
* TSLA volume 30.1M shares
* Oil 111.9
* IV 73.1, 90%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday was a day with QQQ running up and down less than 1% above or below Tuesday's close (once the MMD was over). QQQ managed to close slightly in the green while the NASDAQ closed near even. How then do you explain the 5% dip of TSLA before it recovered most of those losses? First of all, with max pain at 715, it wouldn't be market makers pushing downward. With no negative Tesla news of importance and benign macros, I suspect hedge funds or shorts who hope to cover or buy low after the Production and Delivery Report or ER were trying to give the stock a head start moving downward. Market makers probably weren't too pleased and may have helped push TSLA upward in the low volume afternoon hours or the recovery could have simply been investors picking up TSLA at these sub-700 bargain prices.

As we get closer to Saturday's P&D Report, the situation is looking less scary. In this recent Tweet, Gary Black said that Tesla's recent compilation of analyst delivery estimates came in at 256,700 for those analysts who revised their numbers to reflect the Shanghai shutdown, which isn't far from the very common 250K-255K estimates we're seeing. What I suspect will happen is that a few analysts won't upgrade their estimates and sketchy media sites such as Business Insider will call "miss" after the P&D Report comes out. CNBC will likely want to add color to whatever consensus estimates were used and explain the issue with Giga Shanghai during May so that they appear insightful. As long as Tesla delivers over 250,000 vehicles in Q2, I don't see fireworks. This is a good P&D Report to release toward the beginning of a 3 day weekend because come Tuesday morning, investors should have been able to digest the reasonable explanations of what transpired. We've also seen TSLA surprise us with better than expected delivery numbers, such as 2022 Q1's. Multiple sources have confirmed that Giga Texas has really ramped up production now that 2170 cells are being used in some of the vehicles. Electrek offered the most controversial take, saying "One source said that Tesla is making as many as 5,000 vehicles available to deliver per week from Gigafactory Texas", but the source did not know if that was a sustainable number and many TMC members have been questioning Electrek's veracity on the matter. Nonetheless, Austin is finally turning out the vehicles in quantities to perhaps give Berlin a run for its money.

My biggest point of interest with Q2 will be an estimate of when 4680 production will ramp up and an explanation of the bottleneck. If that issue is satisfactorily addressed and no new problems pop up, Q3 is going to look ready to impress Wall Street when all is said and done.

We saw quite a nice dip in 10 yr. treasury bond yields, down to 3.1% on Wednesday. Growth stocks should have perked up with this news.

Percent of selling tagged to shorts came in at 48%

Max pain Wednesday morning was 715. There's a growing number of calls popping up at 700, but puts still rule at 700 and the market makers would like us to climb above that number by Friday if possible.

Wednesday's options volume

Lower volume has made three down days in a row possible.

Conditions:
* Dow up 82 (0.27%)
* NASDAQ down 4 (0.03%)
* SPY down 0 (0.08%)
* TSLA 685.47, down 12.52 (1.79%)
* TSLA volume 27.4M shares
* Oil 109.8
* IV 75.0, 94%
* Max Pain 715
* Percent of TSLA selling tagged to shorts: 48%

 

[Papafox]

Tesla chart above

QQQ chart above

On Thursday we saw the return of the serious manipulation machine as TSLA refused to dip with the NASDAQ right after market open. Instead, it spent several minutes running up and down and thereby delaying the start of the big dip the rest of the NASDAQ was going through. At 10:06 that dip bottomed out for QQQ at about 2.8% and then we saw a rather quick recovery. As for TSLA, the hedge funds, big shorts, and other pirates who were frustrated by TSLA's reluctance to dip (even with their extensive short-selling) turned up the juice and as the NASDAQ slid lower, TSLA finally began to dive, but the dip was way behind schedule. Consequently, we saw percent of selling by shorts head way up to 63% on Thursday. In order to get TSLA down to 3.9%, the dip lasted until 10:44am, a full 38 minutes after QQQ had bottomed out and long ago started back up again. Whereas QQQ touched the red/green line once, TSLA touched it 4 times and a mini-game of Whack-the-mole was necessary to prevent TSLA from showing green on Thursday.

The reason why shorts and hedgies are trying so hard to push TSLA lower is that the easy dipping may possibly soon be over. This is the same reason why they're calling in favors from their favored media sources to unleash additional Tesla FUD. It's bad enough that Shanghai is back to normal on output, maybe a bit above it now, Fremont is cranking, and both Berlin and Austin have seen noteworthy increases in the output over the past couple weeks. Now Tesla has filed a permit for a 500,000 Sq/ft expansion at Giga Shanghai.

Moreover, there are signs that core inflation is continuing to cool, even though oil and food remain high. Check out this TMC post by TMC's @The Accountant. That lower than expected inflation number caused the 10 yr. treasury bond yields to fall yet again, to below 3% for most of the day. CNBC took notice. Good news like this could help growth stocks to rally, so of course some type of proactive response was needed to stoke the fear. Thus the late and excessively deep dip of TSLA Thursday morning.

Q2 ended on Thursday. The kindest thing I can think of saying to Q2 is "don't let the calendar page hit you in the butt on your way out." Time for Q3, but first we have to get through the Production and Delivery report and the ER.

The soon-to-be-released P & D Report
Troy has released his Q2 delivery estimates, along with analyst expectations. They are:

Meanwhile, Rob Maurer has released his Q2 estimated delivery numbers in this video as: 258.801

In a very scientific experiment, I add Troy's estimate to Rob's, divide by 2, and come up with 256,400, the Papafox estimate. Troy is typically low, Rob is typically high and so you see my logic. Now look at the consensus numbers. Tesla's consensus is extremely close to mine, FactSet's is more than 8,000 vehicles higher (because some analysts never corrected their numbers), and Bloomberg's consensus must be for another planet.

If we were seeing the stock trading shortly after the release of the numbers then I would expect a dip like you saw Thursday morning and then a recovery. I think the bears will do their best to push down in pre-market if the results are at all negative, with the hope of coloring the results in the most negative fashion. Since investors will have days this weekend to ponder the results, though, we may not see such gyrations. I'm basically prepared for anything, good or bad, and will simply ride the situation out until the promise of Q3 once again elevates the stock.

Percent of selling tagged to shorts was way, way up at 63%, suggesting LOTS of manipulations

Yields on 10 yr. treasury bonds fell below 3% for much of Thursday but rose above 3% just prior to close.

Max pain is 700, but notice that calls now outnumber puts at that strike. Thus, the market makers have no incentive to push TSLA above 700 any more. There are lots of puts at 650 and 680, so the MMs will try to get TSLA above either if they are close.

Thursday's options trading volumes

Look at how close the opening and closing numbers of TSLA came to each other on Thursday.

Conditions:
* Dow down 254 (0.82%)
* NASDAQ down 149 (1.33%)
* SPY down 3 (0.81%)
* TSLA 673.42, down 12.05 (1.76%)
* TSLA volume 31.1M shares
* Oil 105.8
* IV 77.8, 96%
* Max Pain 700
* Percent of TSLA selling tagged to shorts: 63%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday began with an energetic run to 690 before the inevitable retreat came. I say inevitable because without macro support or positive Tesla news to generate sufficiently high volume, the hedge funds were sure to short the "sugar" out of TSLA once the morning zoom peaked and profitably push it back down. Years ago, we used to refer to the first hour of market trading as "amateur hour". You can see why. Often the dips and climbs of the first hour get overridden by the rest of the day's trading.

TSLA endured a game of whack the mole that lasted most the day until the NASDAQ made a run higher in the final 3 hours of market trading and during that final half hour TSLA broke free of the cap and rose to 681.xx. For the day, TSLA closed about 1.4X the NASDAQ's climb, which is below its normal 2.1X beta and was especially inappropriate because TSLA showed considerably more strength than the NASDAQ throughout most the day. Lowish volume of 24.8M made the manipulations possible and 60% of selling tagged to shorts suggested LOTS of manipulations were used to tame TSLA on Friday.

Production and Delivery Report
On Saturday TSLA released the Q2 P&D Report:

* Deliveries came out very close to expectations of both analysts and retail Tesla gurus. Troy guessed 254,000 and nailed it.
* Very significantly, Tesla mentioned that June production was the best month in Tesla history. That's extremely important because it shows the reduced deliveries issue was resolved by June and therefore Q3 looks to be strong, especially with Berlin and Austin showing significant increases in the past couple weeks
* The Q2 Earnings Report will be July 20.

Naturally, those entities that are going to bat for their hedge fund/short seller buddies are working to spin the results negatively. The Wall Street Journal article and one by Reuters are in full negative spin mode. Those entities not willing to be criticized for throwing a curve ball, such as this Barron's post and this CNBC piece by Lora Kolodny of all people, were pretty fair and factual. My hope is that with two full days to digest the news, investors will stumble upon at least one fair depiction of the results and be level-headed come Tuesday morning's market open.

My feeling is that the negative-spinners may work to convince the market that TSLA should have a down day on Tuesday. Plenty of buyers may show up, however, and thwart or reverse their plan. Whether Tuesday is an up day or a down day may depend on what the macros are doing that day. The market can be fickle. Personally, I'm bullish on the remainder of the year, particularly after looking at @The Accountant 's Q2 profit projections here on TMC and then the Q3 and Q4 profit projections in this post right below it.

The dip in 10 yr. treasury bond yields continues. On June 13 yields reached just below 3.5%. On Friday yields were below 2.9%. This is not what bond yields look like if the bond market thinks inflation is out of control.

Percent of selling tagged to shorts remained very high on Friday, 60%, suggesting LOTS of manipulations.

Max pain was 695 on Friday morning as a 700-strike call wall towered 12K contracts tall. The big put wall at 680 gave way to call option domination.

Friday's option volume. Notice how concentrated.

For this coming Friday, max pain is 700. The 700 strike is once again dominated by puts. That tall call wall at 800 would provide resistance should we be lucky enough to see a rally in the coming week

Going into Friday's trading we had been seeing a tall put wall at 680, and thus my red dot temporary target for market makers. The 680 domination by puts disappeared as the day went on and a close near 680 served the market makers well this week. Notice how well the market makers did on these four Fridays, either approaching their max pain numbers or settling near their temporary red dot targets.

Since mid-May, TSLA has been gyrating up and down a bit but really hasn't gone anywhere. Now that we're out of Q2 and June was a very strong production month, TSLA has a chance of breaking out of these doldrums.

For the week, TSLA closed at 681.79, down 55.33 from the previous Friday. 737.12. It's been a long, long quarter my friends. Looking forward to Q3 and better times ahead. Enjoy your weekend!

Conditions:
* Dow up 322 (1.05%)
* NASDAQ up 99 (0.90%)
* SPY up 4 (1.06%)
* TSLA 681.79, up 8.37 (1.24%)
* TSLA volume 24.8M shares
* Oil 108.4
* IV 76.3, 95%
* Max Pain 695 for past Friday, 700 for coming Friday
* Percent of TSLA selling tagged to shorts: 60%

 

[Papafox]

TSLA chart above

NASDAQ chart above (QQQ got gorked by spike)

I like days such as Tuesday because if you were wondering what would happen if macros fell and also wondered what would happen if macros rose, you had a chance to see both in the same day. First we saw the NASDAQ dip significantly as market hours trading begun. If you compared TSLA's chart to the QQQ chart or other high growth NASDAQ stocks, you would notice that the shorts and/or hedge funds got in there right at open and hammered TSLA in a way no other stock was being hammered. The idea, of course, was to create the illusion that the market was spooked from TSLA Q2 P&D Report. Alas, the NASDAQ recovered shortly after noon and continued its rise into close. TSLA managed to shake off the losses as well but its climb once in the green was not nearly as steep compared to the NASDAQ as it was in the morning, and TSLA closed up 2.55% to the NASDAQ's 1.75%, for a 1.45X multiplier. That diminished multiplier was needed because a 2.1X multiplier would have put TSLA above 700 at close, and the market makers are not yet willing to allow those 700-strike sold call options to move into the money. It's fair to say that the pirates took advantage of TSLA when macros were dipping and TSLA climbed stronger than the NASDAQ when the NASDAQ climbed. Right now TSLA is still taking its primary cues from the macros.

Notice that the Dow closed down 0.42% compared to the NASDAQ's rise of 1.75%. Part of the NASDAQ's relative strength could be that oil (more of a Dow type stock) fell to 100 and NASDAQ growth stocks benefited from yet another dip in the 10 yr. treasury bond yields. Thus, money was moving in the general direction of Dow to NASDAQ on Tuesday, for a pleasant change.

Expect the market makers to continue protecting 700 if they can this week.

Percent of selling by shorts came in at a robust 61%, suggesting much manipulations

Yields on 10 yr. treasury bonds fell to just above 2.8% on Tuesday

Max pain on Tuesday was 695, which makes sense because below 690 Puts rule and at 700 and above Calls rule. Notice the tall Put wall at 650 and the Call wall at 700. Notice that TSLA bottomed out at 650 and topped out pennies below 700. Any questions?

Tuesday's volume

It's been two green days in a row and TSLA closed above the mid bollinger band

Conditions:
* Dow down 129 (0.42%)
* NASDAQ up 194 (1.75%)
* SPY up 1 (0.19%)
* TSLA 699.20, up 17.41 (2.55%)
* TSLA volume 28.1M shares
* Oil 100.8
* IV 71.0, 85%
* Max Pain 695
* Percent of TSLA selling tagged to shorts: 61%

 

[Papafox]

TSLA chart above

QQQ chart above

In many ways, Wednesday's TSLA trading was much like Tuesday's. The macros had an upward trajectory on both days and TSLA's trading definitely was influenced by NASDAQ movements. What's different is that on Tuesday TSLA trading at an increased multiplier to QQQ (and NASDAQ) both on the low side and the high side. On Wednesday, TSLA underperformed QQQ all day. Why the difference? I suspect TSLA closing near 700 and the max pain number on Tuesday was the difference. The market makers don't want TSLA closing above 700 on Friday and since this is a short week, they're more likely to get their way than in a week with five trading days.

A bigger factor than the wants of the market makers on Wednesday, though, was a move that was likely made by short-sellers/hedge funds, which was to expand the number of 600-strike puts from 10K on Tuesday to 16K on Wednesday (thanks @SOULPEDL for the heads up in the main thread). The market makers were happy to do some selling to delta-hedge these put purchases and you have instant reason for TSLA's apparent weakness on Wednesday vs. QQQ or NASDAQ. Remember, we don't play in an honest casino.

What could pry TSLA out of it's sub-700 trading this week? A big macro rise at market open when volume is high could allow TSLA to rise high enough that it is not pushed back below 700 by day's end. Some substantially positive Tesla news could do the same, but don't hold your breath this week.

News:
* The South China Morning Post reports that after Giga Shanghai's current modifications to assembly lines, Tesla should see a 30% increase in vehicle output, up to 22,000 vehicles per week starting in August. Unfortunately the news organization is running headlines that say Tesla has been dethroned by BYD as the largest producer of EVs when in reality BYD only takes the #1 position if you count hybrids.
* @The Accountant pointed out in this TMC post that the following inflation numbers are coming in July:
CPI comes out on July 13
PPI comes out on July 14
PCE comes out on July 29
Many of us are expecting to see month over month inflation drops
* WTI Oil has dropped below $100/barrel after trading above $120/barrel not long ago

Percent of selling by shorts fell to 47% on Wednesday, suggesting lower levels of manipulation

10 yr. treasury bond yields rose to a bit above 2.9% on Wednesday

Max pain dipped to 680 on Wednesday, reflecting that calls now dominate at 680 and 685 strike where they did not on the previous day

Wednesday's options volume

For the past two trading days, the stock price ended up very close to the mid bollinger band, which may be coincidence since this band is just below the 700 strike sold call options that the market makers are defending this week.

Conditions:
* Dow up 70 (0.23%)
* NASDAQ up 40 (0.35%)
* SPY up 1 (0.34%)
* TSLA 695.20, down 4.00 (0.57%)
* TSLA volume 23.5M shares
* Oil 98.17
* IV 69.8, 83%
* Max Pain 680
* Percent of TSLA selling tagged to shorts: 47%

 

[Papafox]

TSLA chart above

QQQ chart above

I just love a trading day when the good guys win one for a change. Four-day trading weeks in summer are notorious for lower volumes and manipulations. It looked as though the market makers were going to hold TSLA below 700 through the end of week. Alas, we know that a nice macro rally right after market open can rev up the volumes and negate the efforts of market makers to cap TSLA, and that's exactly what happened. Moreover, the NASDAQ kept climbing steadily throughout Thursday which led to strong TSLA trading throughout the day.

By 2pm we saw a very shallow dip begin for TSLA. Perhaps it was simply profit taking for day traders, perhaps market makers caught up on their delta-hedge buying around 2pm, or perhaps we saw the type of engineered descent that big dogs such as market makers and hedge funds can pull off. With percent of selling tagged to shorts at an unusually low 39%, the manipulators would have had to acquired their short shares at non-FINRA exchanges, which is entirely possible. Volume at the 4pm minute was over 400K shares, giving ample opportunity for covering should substantial shorting have occurred.

Friday will be a guessing game. Market makers and hedgies would love to exaggerate any macro dip, which is entirely possible. An upturn in the macros could rekindle TSLA FOMO.

News:
* Goldman-Sachs' analyst Mark Delaney said that Tesla opening up its supercharger network to non-Tesla vehicles could increase earnings by about 75 cents/share.

Percent of selling by shorts fell to an unusually low 39% on Thursday

Yields on 10 yr. treasury bonds rose to slightly above 3% on Thursday

Max pain was 685 on Thursday. Every strike below 685 was put-dominated, every strike above was call-dominated. The strike 720 is a big call wall below the current stock price and a number that market makers would like to get below on Friday. If the stock runs higher, expect serious effort to keep TSLA below 750.

Thursday's option volumes

TSLA rose to within $18 of the upper bollinger band on Thursday. If you take a look, TSLA hasn't been that close to the upper bb in months.

Conditions:
* Dow up 347 (1.12%)
* NASDAQ up 259 (2.28%)
* SPY up 6 (1.50%)
* TSLA 733.63, up 38.43 (5.53%)
* TSLA volume 27.2M shares
* Oil 102.5
* IV 67.3, 77%
* Max Pain 685
* Percent of TSLA selling tagged to shorts: 39%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday morning the jobs report showed stronger than expected growth, which initially had a negative effect upon the NASDAQ and QQQ (because of fears the Fed is more likely to continue its aggressive interest rate posture), but as the day wore on the market warmed up to the indication that the economy is doing ok and QQQ closed green.

TSLA has been in potential breakout mode since July 5 when we started trading with knowledge that the Q2 Production and Delivery Report wasn't worse than expected but Tesla June production was a new record. When combined with good macros, TSLA has been climbing at more then double the NASDAQ's climb during the July 1-8 period. The big test will be this Wednesday, July 13, when the CPI numbers come out an hour before market open. They could become a catalyst for more TSLA growth or a wet blanket that spoils the party. Fingers crossed for the former.

Looking at specific trading action on Friday, TSLA stalled (was capped?) around 760. One possibility was that 760 was the lowest level at which TSLA's strong ascent could be capped. When QQQ dipped in early afternoon TSLA dipped as well but continued trading far stronger than the NASDAQ, even though it now looked to be capped at 750. In the mid afternoon when QQQ began climbing again, I like to believe that you can see that aggressive downward pressure approaching 3pm when market makers managed to send TSLA briefly below 750 again. Only a last minute run higher in the final 15 minutes prevented the market makers from holding TSLA below 750. The question is: how much of Friday's strength and particularly the final 15 minutes of market trading can be attributed to leaks about Elon's decision to bail out of the Twitter deal? Volume on Friday was a robust 30.8M shares, which made manipulations more difficult. For that matter, how much of the past week's strength of TSLA could be tied to leaks of Elon's Twitter move?

The big jump upwards in after-hours trading was all about news of Elon's Twitter bail. TSLA gained nearly 3% in after hours trading on the news. Don't hold your breath on a near-term purchase of TSLA by Elon because much of his money is still tied up in Twitter stock and there are prohibitions on how soon an executive can rebuy shares in a company after selling.

Friday's after hours trading suggest Monday's TSLA trading could potentially be frisky

I continue to believe that the 1000 lb. gorilla in the room is 4680 cell making. If the bottleneck can be resolved before the July 20 Q2 Earnings Report and Elon can report that progress, it's off to the races. If not, Wall Street might remain skeptical on Tesla growth until the battery cell situation is clarified. Cybertruck, new factories, and much at Tesla depends upon 4680 cell making reaching a high speed. Since 4680 is not absolutely needed until 2023, the market may grant Tesla more time to get 4680 production ramped up, but the clock is ticking.

News:
* Gene Munster says the Tesla growth story is misunderstood

With continued good news about the economy there's more speculation that the Fed will continue its aggressive rate hikes, and thus 10 yr. treasury bond yields have now climbed to nearly 3.1% again

With percent of selling tagged to shorts at a low 43% but with visible manipulations on Friday, I think the market makers just went non-FINRA so that their shorting would pass under the radar.

The max pain chart for this past Friday, July 8,m showed tall call walls at 700, 720, and 750. Max pain was listed as 685. The market makers no doubt put lots of effort into keeping TSLA below 750, and almost succeeded.

Friday's options volume

For this coming Friday, July 15, 750 is the biggest call wall and if TSLA continues to rise the market makers will have to contend with a tall wall at 800. Max pain is listed as 720. At the moment, the 800 strike has nearly as many puts as calls, so it'd be a good price to hit on the dot if TSLA is strong next week and cannot be pushed down.

With the exception of June 24, we saw that on the past 5 Fridays that the market makers were able to either land very close to their max pain number or (more often) land very close to their alternate target when it was clear that the max pain number simply was out of reach

Notice that TSLA's run higher began on Jul 1, the trading day before Q2 P & D report was released. That's part of the explanation, but also keep in mind that between July 1 and July 8, the NASDAQ rose 4.6% and TSLA rose 10.3%. I think the combination of TSLA buying underway again and macro upward pressure prevented the market makers from succeeding in their efforts to hold TSLA near max pain. The failure of manipulations has been a prime indicator to me that we could be ready to see a substantial rise in the stock price.

For the week, TSLA closed at 752.29, up 70.50 from the previous Friday's 681.79. It's been a good week, my friends. Enjoy the remainder of your weekend!

Conditions:
* Dow down 46 (0.15%)
* NASDAQ up 14 (0.12%)
* SPY down 0 (0.08%)
* TSLA 752.29, up 18.66 (2.54%)
* TSLA volume 32.8M shares
* Oil 104.8
* IV 66.0, 70%
* Max Pain 685 for past Friday, 720 for coming Friday
* Percent of TSLA selling tagged to shorts: 43%

 

[Papafox]

TSLA chart above

QQQ chart above
Note: little chance to research today, shooting from the hip

When you consider that TSLA was trading in the green during pre-market while QQQ was well in the red, and then TSLA ended the day down nearly 3X the NASDAQ's dip, something is indeed afoot.

A good first start would be to look at Gary Black's Tweets where he says Chinese EV companies down 5-10% on Monday because of new COVID outbreak in the country and there's worries in the U.S. about recession and Elon's possible drawn out legal battle with Twitter.

What's missing from Gary's analysis is what's missing from all the most popular Twitter and YouTube summaries: there's not a peep about manipulations, even though percent of selling tagged to shorts rose to 59%. It's quite profitable for the hedge funds to short like crazy on a day like Monday when the broader market is in freefall and TSLA can be coaxed to descend quite a bit steeper than the NASDAQ or QQQ. Compare how TSLA fared in the morning hours when volume was high and then compare to QQQ in late morning and afternoon when volume slipped.

Another factor to consider is the staggering quantity of 700-strike Puts out there: nearly 20K contracts representing 2 million shares at that strike price alone. Some of these puts may well be held by longs who are hedging against bad CPI numbers on Wednesday, but some are likely also held by hedge funds who were very actively pushing TSLA lower today.

In any event, Monday's dip keeps TSLA well within the 620-750 trading range where TSLA has been floundering since mid-May. A scuttling for now of a potential TSLA breakout beginning last week now keeps the stock and its outsized options trading within the highly profitable range for the market makers to enjoy for another week.

Percent of selling tagged to shorts ran way up to 59%, indicating lots of manipulations

Yields on 10 yr. treasury bonds dipped on Monday to below 3% again.

Max pain Monday morning was listed as 720. If you look at the max pain chart above you can see that 700 and below are firmly dominated by puts, 710-740 is a no-man's land where put domination is mixed with call domination, and 750 and above are dominated by call options. Market makers would prefer to keep TSLA above 700 this week, might be rather ambivalent through 740, and definitely would like to keep TSLA below 750 come Friday.

Monday's options volume

The good news is that even with Monday's big dip, TSLA still closed above the mid bollinger band.

Conditions:
* Dow down 164 (0.52%)
* NASDAQ down 263 (2.26%)
* SPY down 4 (1.14%)
* TSLA 703.03, down 49.26 (6.55%)
* TSLA volume 32.8M shares
* Oil 103.1
* IV 69.2, 81%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 59%

 

[Papafox]

TSLA chart above

NASDAQ chart above
Note: Getting ready to travel, no serious research done today

A few impressions... Both the NASDAQ and TSLA spent most of the day bopping above and below their respective red/green lines. TSLA was quick to dip with the NASDAQ's 3pm-ish dip but even though the NASDAQ retained most of that dip going into close, TSLA shrugged most of the dip off and climb to nearly 700 for the close.

CPI inflation numbers come out an hour before market open on Wednesday. Those numbers will set the trajectory for the remainder of this week's market trading. Fingers crossed for a noticeable month over month improvement.

10 year treasury bond yields once again closed below 3%

Percent of selling by shorts dipped to 51%

Max pain on Tuesday morning was 720. If you look at the max pain chart above, you can see that the quantity of puts and calls at 700 is coming closer together, so that 700 doesn't necessarily need protecting by the market makers. Likewise, 720,725, and 730 are pretty neutral. If the market moves higher this week, the market makers probably won't feel much need to diminish the climb until it gets in the 740 range. They definitely will try to avoid a move above 750.

Tuesday's options volume. Note how strong call and put trading both were at 700-strike

Despite the move down on Tuesday, TSLA still close a few dollars above the mid bollinger band

Conditions:
* Dow down 193 (0.62%)
* NASDAQ down 108 (0.95%)
* SPY down 3 (0.88%)
* TSLA 699.21, down 3.82 (0.54%)
* TSLA volume 29.1M shares
* Oil 94.45
* IV 68.9, 81%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 51%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday began on a negative note with CPI numbers coming in at 9.1%, vs. expectations of 8.8%, according to this CNBC post. Moreover the core component of inflation exceeded expectations as well (by 0.2%). We saw a strange green pop upwards in QQQ right before the index plunged, suggesting that someone was expecting the numbers to be positive or had done a bad job programming the bots. Strangely, QQQ and the NASDAQ recovered into the green before 11am, and TSLA reached that mark before 10am. One should expect the Fed to stay on course and raise interest rates 0.75% later in July and some pundits are even suggesting a 1% rise. Although 10 yr. treasury yields spiked upward at market open (while stock prices were falling fast), the market reconsidered the situation and and treasury yields fell for the day.

Longer term, the picture looks rosier. Oil prices didn't start falling until mid June and they're substantially lower in July ($96 on Wednesday vs. 120ish peak). Moreover, lots of commodity prices have been falling in the past month as well. July's inflation data presented in August should be a noticeable improvement from June's. Tesla in particular should be moving away from the Q2 worries soon as the market turns its attention to a likely record-setting Q3. Tesla's strength on Wednesday could possibly be attributed to heavy call options activity which necessitated delta-hedge shares buying by the market makers. Why now? I suspect many Wall Street big dogs may be ready to start buying up the bargain stocks now that they expected today's CPI numbers to have been a bit better. They want to beat the retail and other buyers. When the CPI numbers didn't turn out to match their "the worst is over" scenario, they simply swept the numbers under the rug and proceeded today as if the numbers were ok. In the longer run, the numbers in another month will be better, but my guess is that the big dogs don't want the bear market to come roaring back as they've been buying in. Let's hope the PPI numbers on Thursday morning don't rattle the market and spoil the party.

News:
* Panasonic has announced an EV battery facility in De Soto, Kansas, a $4 billion investment, according to the governor. Hello Panasonic-made 4680 cells.
* Andrej Karpathy announced after his long sabbatical that he is leaving Tesla's AI program. The parting appears amicable. No doubt the pundits will try to spin this as negatively as possible, but this is just the way that brilliant people work. I think he feels he has contributed what he can to Tesla's projects. Autopilot appears to be well-positioned going forward.

Yields on 10 year treasury bonds initially rose above 3% Wednesday morning but closed the day near 2.9%

Percent of selling tagged to shorts came down slightly to 48%

Max pain remained at 720 Wednesday morning. Puts dominate at 700 and below, 710-730 is no-man's land, and 740 and above is call domination.

Options volume was high on Wednesday

After the market open dip, a recovery of TSLA to over the mid bollinger band was a welcome relief

Conditions:
* Dow down 209 (0.67%)
* NASDAQ down 17 (0.15%)
* SPY down 2 (0.53%)
* TSLA 711.12, up 11.91 (1.70%)
* TSLA volume 32.3M shares
* Oil 96.13
* IV 67.9, 79%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 48%

 

[Papafox]

TSLA chart above

QQQ chart above

Although the PPI numbers released Thursday morning also came in hot, once again the market shrugged off this indicator of continued inflation and both TSLA and the NASDAQ closed higher. Many of us are used to TSLA performing well during the high volume morning hours but being pushed down during the lighter afternoon hours. For the past couple weeks, we've often been seeing just the opposite with morning weakness but afternoon strength. One way of considering the situation is that the high-volume morning hours could best be equated with market sentiment and the substantially different trading in lighter-volume afternoon hours could be considered the manipulator's spin. If that's the case, then we've seen a few weeks already where the manipulators are actually pushing upward on TSLA during afternoon hours. Volume on Thursday was a pretty typical 25.9M shares. With max pain of 715 and a climb from below 690 in the morning to nearly 715 at close, I suspect the market makers had their hand in this afternoon's levitation perhaps both on the macro level and with TSLA.

I now have my final Sept 22 ITM call option in the process of being rolled to Nov 22 for little or no cost. Rather than selling on the morning dip after opening, I opted for what I believed to be a safer bet, which was to let the stock price bottom out and then to buy on the recovery. This technique has two advantages over selling on a dip: 1) the overall trajectory of TSLA this 3rd quarter should almost certainly be upward. If I guess wrong this week, I'll still eventually win as long as I don't sell too early. We also have the recent trends of the stock price tanking after open and then recovering in the afternoon. I need about $20 of stock price improvement for my roll forward, and I'm close enough I hope to complete the roll at open Friday morning. When all my Sept 22 calls are transitioned to Nov 22 calls, then I begin work on taking those Nov 22s and rolling them forward into Jan 23s.

News:
* Electrek says that Tesla has been given the right to sell the vehicles made in Berlin during the "test phase". This development could add a couple thousand additional deliveries to Q3.

10 year treasury bond yields remained below 3% on Thursday

selling tagged to shorts came in at 50% on Thursday

Max pain dipped to 715 on Thursday morning. 700-strike and below are solid Put-dominated, 710-725 are slightly favoring calls, and 730 and above are strongly favoring call options.

Thursday's option volumes

Once again the stock price is above the mid-bollinger band and climbing. Don't be surprised to see TSLA close near the max pain number this week.

Conditions:
* Dow down 143 (0.46%)
* NASDAQ up 4 (0.03%)
* SPY down 1 (0.24%)
* TSLA 714.94, up 3.82 (0.54%)
* TSLA volume 25.9M shares
* Oil 96.23
* IV 66.8, 72%
* Max Pain 715
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday's TSLA trading was pretty straightforward. Market makers wanted TSLA near the 715 max pain and so when TSLA threatened to climb to 730 shortly after market open, the market makers turned on their sledge-o-matic machine and managed to drive TSLA twice into the red during morning hours, even though QQQ remained strong and in the green. The pushdown of TSLA for no apparent reason had the desired effect, which was to reduce the day's volume (we saw only 22.8M shares traded) and thus enable fairly easy steering of the stock price as TSLA entered the low volume afternoon hours. Within 12 minutes of close, TSLA was trading around 717, which was just about right for the market makers, but a macro rally in the final few minutes of the day pushed TSLA up to 720 for the close.

The Dow was up 2.15% for the day, NASDAQ up 1.79%, and TSLA was shackled to a 0.74% climb in order to come close to max pain. Anyone surprised?

Fortunately, the exuberant climb of TSLA right after market open allowed me to sell my last Sept 22 call option at the same price I had recently purchased a November 22 call. It's now time to start moving those Nov 22s to Jan 23 expiration dates in my IRA.

Tesla's Q2 Earnings report will be this coming Wednesday, July 20, after market close. @The Accountant did a nice job in this post of summarizing the non-GAAP projections of various retail gurus and Wall Street analysts. Bottom line: Tesla can play this ER as they wish in terms of which costs and revenues to include, thus there's no certainty whether we'll see a beat or miss on Wednesday. How to play the ER? Quite simply, a short term bet is just gambling, but if you have a year or two at least in your investing horizon you should be amply rewarded for your efforts. Q3 and especially Q4 of 2022 should be real eye openers for Wall Street as four factories start producing progressively higher numbers of Tesla EVs.

Biggest worries of the coming week are a possible repeat of the Monday dip so as to bring TSLA closer to its 700 max pain price. Also, with earnings reports coming out, weakness in other companies could adversely affect TSLA's stock price. Personally, I'm willing to ride out whatever turbulence comes our way in order to be fully invested for Q3 and Q4 2022.

News:
* A Twitter user named VidaPrime reported in this tweet that the Model Y production line at Shanghai has come back up after the early July shutdown to make configuration changes that will increase production going forward. I know of at least one indirect-confirmation of this report. It's all good.

Yields on 10 yr. treasury bonds remained near 2.925%, which is a good thing for high growth stocks such as TSLA

49% of selling was tagged to shorts on Friday, a percent that's not particularly high or low

Max pain was 715 this past Friday. TSLA closed at 720.2 and would have closed around 717 if not for a macro rally in the final 12 minutes of market trading. Needless to say, TSLA being within about $2 of max pain within 12 minutes of closing was anything but coincidence. Notice how massive the option levels were that expired on Friday. Strikes at 600, 650, 700, 750, and 800 all exceeded 15K contracts.

For Friday July 22, max pain is currently 700, but volumes are way below last week's and there's room for the max pain number to climb if the option buyers start to reference their buying around the current stock price.

Friday's options volume

Notice how close market makers have been directing TSLA's trading to either the max pain of that Friday or the alternate target (red dot) after it became clear that max pain was going to be unachievable. Chart courtesy of @JimS

Comparing the past two weeks you can see the teaser of a breakout in the week that ended Jul10, followed by the big Monday dip. Likewise, this past week we saw a second half of week climb that just might be yet another teaser. TSLA will need to climb convincingly above 750 and hold onto that climb before we can chalk up a breakout from the trading range of the past two months. If Q2 ER surprises to the high side, that might be just the break we need.

For the week, TSLA closed at 720.20, down 32.09 from the previous Friday's close of 752.29. Getting Q2 ER out of the way brings us one step closer to realizing the likely strength Tesla will be showing in Q3 and Q4 of 2022. Have a great weekend!

Conditions:
* Dow up 658 (2.15%)
* NASDAQ up 201 (1.79%)
* SPY up 7 (1.91%)
* TSLA 720.20, up 5.26 (0.74%)
* TSLA volume 22.8M shares
* Oil 97.59
* IV 63.8, 61%
* Max Pain 715 for past Friday, 700 for coming Friday
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

TSLA Chart above

QQQ Chart above

Market makers who may have wanted to push TSLA lower on Monday morning were initially out of luck, due to strong macros and strong volume of TSLA buying. TSLA momentarily exceeded 750 but the inevitable pushdown held TSLA in the mid 740s for much of the day. Alas, word came out that Apple was going to reduce hiring in some divisions and the market lost its bullishness. As the NASDAQ started down, that was a perfect opportunity for the big dogs on Wall Street to profitably short-sell TSLA during the macro dip and get it closer to the 700 max pain for this week. And so it went.

QQQ actually started a slow decline shortly after noon, but it wasn't until 1:30ish before the dip really accelerated. TSLA actually remained strong and in the mid 740s until the 1:30pm dip, at which point the serious pushdowns through shorting began. With 53% of selling tagged to shorts and with 790K shares traded during the 4pm minute, plenty of evidence exists that TSLA had help on its descent after 1:30pm.

Why was TSLA so much stronger than QQQ and NASDAQ on Monday? One possible explanation is that TSLA option buying is favoring call options and those purchased calls on Monday necessitated market maker delta-hedge share buying. All in all, I'm happy with TSLA's strength today because it shows that with macro support, there are plenty of buyers out there for TSLA as we wrap up Q2 business. I believe there are lots of buyers out there sitting on the sidelines because of economy and interest rate worries but eager to get into TSLA before a strong rise occurs. A surprise to the high side on the ER could unleash some nice buying. OTOH, a negative or mew result will give the market makers the excuse they need to hold TSLA below 750 for a bit longer. Personally, I can't wait to get this ER out of the way so that TSLA can run higher in Q3.

Percent of selling tagged to shorts came in at 53% on Monday, suggesting moderately-high levels of manipulation

The scale of the chart above exaggerates the movement of yields for 10 yr. treasury bonds. We saw movements between 2.92 and 3.02% on Monday.

Max pain was 700 on Monday. Looking at the chart above, you can see 700-strike and below strongly put dominated, 710-720 fairly neutral, and 730 and above call dominated.

Monday's options volume

Easy come, easy go. The trading range for the past two months has mostly been between 620 and 750, which gives the market makers a strong incentive to push TSLA down when it threatens to climb above 750. Add the heavy call wall at 750 and market makers are even more inspired to try holding the line.

Conditions:
* Dow down 216 (0.69%)
* NASDAQ down 92 (0.81%)
* SPY down 3 (0.83%)
* TSLA 721.64, up 1.44 (0.20%)
* TSLA volume 27.4M shares
* Oil 102.6
* IV 63.6, 60%
* Max Pain 700
* Percent of TSLA selling tagged to shorts: 53%

 

[Papafox]

I'm beginning Tuesday's post with the big picture of how TSLA stock has moved in the past. It's helpful to be reminded of some of the twists and turns of the past so that you might recognize patterns in the future, particularly around the time of earnings reports.

First please note that TSLA is known for its periods of slow price appreciation, broken up with a couple massive rallies. The rally of 2013 was kicked off by a quarter that offered a surprise profit as Model S was increasing in volume production. The 6 yr. period of 2014-2020 saw lots of progress as dual-engine Model S came online, followed by Model X, followed by autopilot, then followed by Model 3. The lack of serious price appreciation can be explained two ways. First, we saw a cadence of cash flow rises as new models came up in volume and then falls as money was poured into bringing the next model online. That bumpy road disguised the very significant growth in value of TSLA to such an extent that mainstream Wall Street analysts failed to signal the likelihood of an upward explosion. Second, market makers were making lots of money keeping TSLA restrained to longtime trading ranges and short-sellers controlled a major chunk of the trading. Bottom line: the forces concentrating on holding TSLA within narrow trading ranges had the upper hand right up until the time they lots control of the stock price and it climbed away like a Falcon 9 rocket.

Consider, for example, the autumn 2019 breakout, which was related to Q3 results. Here's a timetable:
* Sept 26, 2019- Electrek publishes a leaked email from Elon to employees saying Q3 deliveries of 100,000 vehicles were possible- TSLA up 6%
* Oct 2, 2019- Q3 2019 P&D Report shows 97K vehicles delivered. TSLA dips 5% over next 2 days because analysts wanted 98K deliveries
* mid-Oct 2019- TSLA strings together 9 consecutive up days in a row and gains nearly 14%
* Oct 23, 2019- TSLA Earnings Report shows $150M GAAP profit with 22.8% GM, TSLA up nearly 18% the next day
The Wall Street Journal first said "Tesla Headed for Another Quarterly Loss", then after results "Tesla stock charge will have limited range"
* Oct 25, 2019- TSLA adds another 9.5% gain. The short squeeze is definitely underway
* Feb 19, 2020- TSLA closes at 917 a gain of over 260% in 119 days. The coronavirus dip began the next trading day
What I want you to consider is the number of false signals that were sent. In particular, the dip of TSLA immediately following the excellent Q3 19 delivery numbers was one of the most blatant, as was the WSJ article that the rally following the Q3 19 ER would have "limited range".

Monday and Tuesday of the current week have been up days for the market as investors start contemplating that the bottom of the current "stagflation" worries dip is already in place. Earnings reported in the next week or two will have a big hand in deciding if the macro buying accelerates or diminishes. Meanwhile, Tesla will get its Q2 Earnings Report out of the way on Wednesday. If guidance for Q3 and Q4 is strong, as expected, and if macros continue to show a recovery, then I suspect there's little to hold TSLA back. Efforts to hold TSLA below 750 would not survive such a powerful one, two punch. The big wildcard is how successful market makers and hedge funds could be in pushing down the stock price following a real or imagined weakness in the report. Nonetheless, I really wouldn't want to be on the sidelines with two potential positive developments, one TSLA and one macro, happening simultaneously. Seatbelt snugged up as there's no guarantee of things working out as I expect, but ready for the ride!

TSLA chart above

QQQ chart above

Tuesday saw the NASDAQ climb steadily, up more than 3% and yet TSLA barely eked out a 2% gain. NVDA was up 5.5% while ARKK was up more than 4%. With its high beta, this is the range where TSLA should have been. Why the underperformance? First, I look for signs of mischief. Percent of selling by shorts was up to 57%, which suggests lots of manipulations. Check out the abrupt dips and climbs of TSLA on a day when the QQQ chart shows a strong, steady rise, especially the $24 plunge from open to 34 minutes later. Any reason to panic sell and create those deep dips? Nope. Shares traded at 4pm was a mere 100. Looks to my eye like no buyers. Then I look at motive. I suspect the market makers really want to keep TSLA below 750 this week, which has nearly 9K call contracts expiring on Friday. The more headroom between the stock price going into the ER and 750, the better in their mind. They've got nearly $14 with which to play this week. A strong climb like NVDA's would have put TSLA over 750 on Tuesday. All in all, I think this week's trading and manipulations is all about positioning for the ER.

TSLA and QQQ continued to rise in after hours trading, driven primarily by Netflix doing well with their Q2 Earnings Report. TSLA climbed steeper than QQQ because (I suspect) TSLA market makers had more delta-hedge buying to do after the closing cross yielded practically no shares to buy.

News:
* @The Accountant published an updated table of Earnings projections here

Percent of selling tagged to shorts rose to 57%, suggesting lots of mischief underway on Tuesday

Yields on 10 year treasury yields climbed above 3% on Tuesday.

Max pain was 720 on Tuesday, up $20 from Monday. All strikes at 720 and below are now put-dominated as both call and put buyers move their expectations upward.

Tuesday's options volume

Notice how closely the upper and lower bollinger bands are to each other as the market makers really work to constrain the trading range. Notice that Tuesday was up day number 5 in a row. Tick, tick, tick.

Conditions:
* Dow up 754 (2.43%)
* NASDAQ up 353 (3.11%)
* SPY up 10 (2.70%)
* TSLA 736.59, up 14.95 (2.07%)
* TSLA volume 26.5M shares
* Oil 104.2
* IV 61.9, 54%
* Max Pain 720
* Percent of TSLA selling tagged to shorts: 57%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday's trading, briefly. It was much like Tuesday's trading as market makers aspire to keep TSLA below 750 for the week. On Tuesday, TSLA climbed about two-thirds of the NASDAQ's gains, on Wednesday it was about half. Just as with Tuesday you can see the rather abrupt ups and downs of trading which characterizes pushdowns and recoveries. On both days we saw a high 57% of selling tagged to short-sellers. Whereas on Tuesday TSLA wasn't allowed over 740, Wednesday's strategy was a whack on the noggin for TSLA any time it dared approach 750. 'Nuff said.

Congratulations, longs, Tesla did fine with it's Q2 Earnings Report. It managed to bring $2.27 non-GAAP earnings per share and automotive gross margin came in at 27.9%. In comparison, Wall St. analysts expected $1.77/share and @The Accountant went for $2.01/share. Troy came even closer. When you realize what a drag Austin and Berlin were on margins, it's impressive. Now that production is increasing noticeably at the two new GFs and Shanghai is being configured for a nice production increase, Q3 and Q4 look to be strong. We heard that some weeks Tesla has produced 30,000 vehicles (1.5M annualized rate) and hopes to end the year at 40,000 vehicles per week rate (2M annualized rate). We're on track for the strong second half that we've been waiting for!

With all this good news, why did TSLA descend from over 770/share right after the ER was released and settled a bit under 750 before jumping above 750 during the conference call? Dare I say that someone with big pockets wants TSLA to close below 750 this week and is trying the old "there's nothing to see here, move along" maneuver? Yessiree Bob.

My best guess is that even if the market makers make a valiant attempt at holding TSLA back this week, the stock is going to inevitably run higher as investors digest the good news and use the stated vehicles/wk numbers to estimate Q3 and Q4 production, deliveries, and profits. Should macro weakness and manipulation strength squash a run higher initially, call options will be bought which will necessitate that the market makers start buying stock to delta-hedge, and off we go. Glad I'm already all in.

Tuesday's post was intended to help you identify false signals. I strongly believe that Wednesday's after-hours dip that momentarily took TSLA into the 730s was a strong, intentional false signal. Likewise, the Wall Street Journal published the most negative title possible for Tesla's Q2 ER: Tesla Ends Streak of Record Quarterly Profits After China Factory Shutdown . At least those pirates are consistent over the years.

Percent of selling tagged to shorts remained level at 57% on Wednesday, suggesting lots of manipulations

Yields on 10 yr treasury bonds rose again on Wednesday, to about 3.03%, a very slight move

Max pain has been rising throughout the week and is at 722.5. The chart above shows 720 and below solidly dominated by puts, 725 and 730 is no man's land, and 740 and above is dominated by calls.

Wednesday's options volume

Welcome to green day 6 in a row for TSLA. What catches my eye is that the last 4 days of rising stock price are all represented with the black candles, symbolizing an overall gain in stock price but with the closing price being lower than the market open price. In fact the distances from open price to close price has been very small these past 4 days. I suggest the opening price is more indicative of investor sentiment and the closing price is what you get after the manipulations are completed. Translation: TSLA would be well ahead of where it is on Wednesday if allowed to run with the market but someone has the idea it should remain below 750 through Friday. They likely will be disappointed unless macros go too red on us.

I made a second post this evening right below, regarding rolling call options. No need to read if that's not on your list of things to do.

Conditions:
* Dow up 48 (0.15%)
* NASDAQ up 185 (1.58%)
* SPY up 3 (0.64%)
* TSLA 742.50, up 5.91 (0.80%)
* TSLA volume 26.5M shares
* Oil 102.3
* IV 62.2, 57%
* Max Pain 722.50
* Percent of TSLA selling tagged to shorts: 57%

 

[Papafox]

To those of you who would like to try rolling call options in IRAs where individual trades are not taxed...

The technique has worked well for me, but there are of course lots of gottchas if you're not careful. Let's get into them.

Will your brokerage allow buying with the uncleared proceeds of your sale?
I have an IRA with margin. I can't buy stocks or options with margin (because it's an IRA) but I can trade with uncleared cash. I can sell an option and one minute later buy another with the proceeds. This is only available if you have margin. Be sure you understand whether your sale needs to clear (takes days) before you can use those funds to buy.

Selling first, buying later in an up market
On Wednesday I bought a Jan 23 500 strike call and plan to sell my Nov22 500 strike call when it is of equal value. There's an excellent chance that the deal will be completed Thursday. If not, then next week, if not then next month. I have Tesla's long-term up trend working in my favor, so it's a pretty safe bet.

Trying to sell first on a dipping day and buy later is really risky now that Tesla has advertised that Q3 and Q4 are likely to be really strong. You might complete your transaction on a strongly negative macro day, but if you don't complete in one day, going overnight with a sold call and hoping to buy the next day can be disastrous if the stock price gaps up to begin the next day's trading.

Take a look at what kind of a price change will be needed:
To move a Jan23 500 strike call to Mar23 500 strike, you would see that the difference in price is $13.40 on Wednesday. It'll be different on Thursday. You'll need a bigger movement in the Tesla stock price than that, however, because the delta of most options is less than 1. For moving from a Mar23 500 to a Jun23 500 on Wednesday you'd see a difference in price of $18.70/share of $1870 for the contract. Again, the stock price would need to change more than this amount ($18.70) because of delta for you to have a no-cost exchange of one call for the next.

The kind of day that is best for a sell first, buy later roll is one where bad macro news comes out after the market has opened and the market along with TSLA is rampaging downward. The problem with trading on a day with bad news the night before is that TSLA will have gapped down already when the market opens and the potential dip during the day is therefor reduced.

My first suggestion would be to if at all possible bring in additional capital so that you could afford to buy the later expiration call first and then sell the earlier expiration call when it reaches equal value. It's a much safer bet in a market where Tesla is ready to run higher.

If you just can't find the capital to buy first and sell later, then use one of these techniques to save the day if the market turns against your trade.

Techniques to salvage a no-longer-zero-cost roll
* Consider having more than enough money in your account to complete the call roll by paying the difference. For example, if the difference in price between the call you want to buy and the one you want to sell is $1340, consider having at least $2000 available in your account. If the market turns against you, watch the midpoint between bid and ask like a hawk and be ready to spend some cash should the market turn against you.

* If you don't have enough money to complete your desired roll, then execute a Plan B option swap that you can afford. I once was helping a friend roll an option and the market turned against us in a sell first, buy later roll. The best recovery given the circumstances was to buy an option with a slightly higher strike price but with a later expiration date than originally planned. It was a loser of a transaction, but with what the market was doing it was better than being an option lower when the market looked to be perking up short term and looked likely to go higher long term. Have in mind a Plan B before selling the first call.

Summary
Please think through these suggestions and make sure that your brokerage will allow you to do what you plan. You might try a couple dry runs where you pretend to buy or sell an option at a certain point and then see if you can complete the trade in the same day. If your percentage of success is uncomfortably low, consider holding off on the real roll until you become more skilled in choosing situations that lead to a high likelihood of success. When in doubt, wait for a different day.

 

[Papafox]

TSLA chart above

QQQ chart above
I love it when retail drives circles around Wall Street in understanding what TSLA is going to do. To no great surprise, investors waiting on the sidelines started jumping back into TSLA on Thursday, spurred on by Q2 threats now behind the company, macro fears diminishing, and the expected growth of Q3, Q4, and 2023 looking mighty attractive. Volume was 46.9M shares, about double Tesla's normal number of shares traded.

You would think that with such heavy volume and such positive news from Wednesday's ER that Tesla would climb like a steamroller throughout market hours, but oddly enough we saw a slight decline in the stock price from 2pm until 4pm. Meanwhile, QQQ continued to head higher during this time period. Some of that settling could be profit-taking, but much could have been market makers adding some artificial downward pressure in order to keep TSLA close enough to 800 for a downward push on Friday. Percent of selling by shorts ran to 59% as efforts were made to avoid crossing 800 in late morning and then to dampen the climb in Thursday's final two hours of trading. We'll see if a Mandatory Morning Dip can be generated that will give at least a day of pause to the buyers as market makers seek to minimize the damage from TSLA's strong climb of more than $72 and a gain of almost 10%.

Compare the TSLA chart to the QQQ chart. Notice how QQQ was going red but as Tesla's rally continued QQQ turned around and climbed as well. On super strong days like Thursday, TSLA is actually having a noticeable impact on QQQ and the NASDAQ's trajectory, not so much because of TSLA's size as a component of the index but rather because of it's outsized influence over the index.

The strength of the market reaction of Thursday strongly suggests that weakness of TSLA in after hours trading on Wednesday was indeed a false signal being sent. Reuters decided to send a false signal of its own on Thursday with this post entitled Tesla Investors bet on recovery and fantasy, which states that TSLA is grossly overpriced. Elon himself called Reuters out by Tweeting back with some lyrics from Queen's Bohemian Rhapsody.

Ihor Dusaniwsky tweeted that TSLA shorts lost over $1 billion on Thursday's climb.

@Artful Dodger pointed out in this TMC post that Twitter's TESLA BOOMER MAMA is a TMC member who worked for one of the rating companies and expects that TSLA will be upgraded to investment grade for its bonds sometime in the next 3 to 4 weeks. Add one more likely catalyst to your growing list.

With red macro futures, seven simultaneous up days for TSLA, and a $72 gain on Thursday, don't be surprised if we see a red day on Friday. Relax, though, because the future for TSLA looks very positive as Tesla gets set to start producing record-setting quarters, one after another, interspersed with miscellaneous positive catalysts. Wall Street truly doesn't understand how strong Tesla's profitability and growth are likely to be in the coming year. Don't miss it. We're about to enter a realm of tailwinds caused by market makers buying shares to hedge their sold call options and short-sellers trimming their short positions by buying shares. Welcome to the post-breakout portion of 2022.

Yields on 10 yr treasury bonds fell to 2.9%, which is good for high growth companies

Max pain rose to 730 on Thursday morning and you should expect an additional rise on Friday as Wednesday's stock gains influence the option market. You can see that 800-strike calls now exceed 18,000 contracts and the market makers will likely use any market weakness on Friday to try for a push below 800. After Thursday's big gain, max pain is irrelevant for Friday and market makers will likely set their eye on forcing TSLA below 800.

Thursday's options volumes

Want to see what a breakout looks like? Voila! Six positive trading days in a row were constrained by the forces of Wall Street but Thursday's volume of nearly 47M shares was too great to hold back and TSLA steamrolled its way well above 800.

Conditions:
* Dow up 162 (0.51%)
* NASDAQ up 162 (1.36%)
* SPY up 4 (1.02%)
* TSLA 815.12, up 72.62 (9.78%)
* TSLA volume 46.9M shares
* Oil 96.34
* IV 57.8, 36%
* Max Pain 730
* Percent of TSLA selling tagged to shorts: 59%

 

[Papafox]

TSLA chart above

QQQ chart above
Note: traveling this weekend, limited report but with time to research
Friday looked to be the day that the market makers would leverage their power and bring TSLA back to a more profitable closing price, relative to max pain. In the weekly version of the max pain charts below I placed a big red dot on 800 as the likely target of market makers since that was the location of an enormous call wall for Friday, 7/22 and the official max pain well down in the 700s wasn't possible. Unfortunately for the MMs, despite bad macros which were suspiciously down on tiny Snap's bad earnings and guidance (and Twitter's weakness too) volume of TSLA reached a strong 34.3M shares traded and manipulations became very difficult with that much buying. What we saw was investors (I'm guessing retail) buying on TSLA runs upward due to FOMO fears, some force (likely MM capping) stopping those climbs then selling hard for steep dips, and another group of buyers (I'm guessing institutional) buying the dips. So, as hard as the MMs tried to push TSLA down toward 800 there was just too much buying of the dips to succeed. Even when QQQ was at its low around 2pm and down more than 2%, TSLA was bottoming out very near the red/green line. TSLA actually managed to close up 0.20%, giving it eight days in a row of climbing. Bravo! TSLA is showing its strength.

On the weekly max pain chart I added a small circle at 820 since that was the lowest achievable stock price that TSLA could be pushed down to that had a substantial number of call contracts expiring 7/22.

News:
* @The Accountant pointed out in this post how TSLA achieved 11.3% margins for energy and 3.8% for service. These are big increases and records. The growing margins for non-vehicle sales revenue bodes well for 3rd and 4th quarters.
* It's important to point out to Tesla investors that Elon evidently remains a man of integrity. According to Elon in this Tweet, the Wall Street Journal story of Google co-founder Sergey Brin and his wife filing for divorce because of a Musk affair was absolute BS. The FUD was made believable because of a news story of Musk fathering children with a 3rd woman, but as it turns out, allegations that he seduced a woman married to a friend of his (an underhanded thing to do) was pure fiction, according to Elon. Such strong FUD following an unexpectedly good quarterly earnings call suggests the extent of the dismay being felt by shorts and other forces who lose money when TSLA rises faster than expected. Don't underestimate the ability of this stock price to climb coming out of a quarter like Q2 and heading into quarters like Q3 and Q4.

Percent of selling tagged to shorts remained high at 58%, suggesting continue high levels of attempted manipulations

Yields on 10 yr. treasury bonds fell below 2.8% on Friday, a development that favors high growth companies

Looking at the week ahead, max pain stands at 745, a number not likely to be achievable unless macros plunge. For the coming week, 850 looks to be the next challenge for TSLA to rise above and 800 looks to be the most attractive push-down target

Friday's options volumes

Weekly options max pain chart courtesy of @JimS with red dots added by yours truly

TSLA now has eight green days in a row. Considering Friday's TSLA strength relative to the NASDAQ on Friday, don't let that number scare you.

For the week, TSLA closed at 816.73, up 96.53 from the previous Friday's 720.20. As soon as the market works through a few more earnings reports in the coming week the big bad Q2 22 will be dead and it'll be on to better things. Hoping you enjoyed your weekend.

Conditions:
* Dow down 138 (0.43%)
* NASDAQ down 226 (1.87%)
* SPY down 4 (0.93%)
* TSLA 816.73, up 1.61 (0.20%)
* TSLA volume 34.3M shares
* Oil 94.70
* IV 56.0, 33%
* Max Pain 770 for past Friday, 745 for coming Friday
* Percent of TSLA selling tagged to shorts: 58%