Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Friday was the culmination of a strong week for TSLA. Despite the stock only rising about 1.2% for the week, when you consider the NASDAQ fell about 6% during that time, TSLA showed considerable strength. We saw both QQQ and TSLA dip significantly in the morning but TSLA began a climb after about 11am that would bring it close to the red/green line by day's end. In the final half hour of trading, TSLA took a significant dip to bring it near 300 (the likely target for market makers) while QQQ showed only a minor dip. Then just a few minutes before close TSLA shot higher to 303.35 (without a similar jump in QQQ). I suggest the reason for that last-minute rise of TSLA would be a massive closing cross starting to take a hold of the stock price. Altogether, nearly 23 million shares traded hands in that closing cross.

We know who the buyers of that closing cross were: funds adding TSLA shares during a scheduled S&P500 rebalancing. The guesswork comes when grasping who did the selling. Market makers could have shorted to add enough liquidity for the buying and would need to cover that shorting in the weeks ahead, which would place some upward pressure on TSLA. OTOH, perhaps the market makers or hedge funds anticipated this demand for shares, picked up shares specifically to sell at Friday's closing cross, and the purchasing of those shares to sell helped propel TSLA higher when the NASDAQ was sinking. We should get some clarity on what happened when we see how TSLA trades in the coming week. As a reminder, because of the manipulations, because of the lack of clarity of what's happening behind the scenes, and because of macro volatility, short-term bets on TSLA tend to be dubious as investments.

In the long-term, however, TSLA has seldom looked stronger. On Friday Deutsche Bank raised its TSLA price target from $375 to $400. Thanks @2daMoon for this post which summarizes latest analysts rating of TSLA as follows: 12 Buy, 15 Outperform, 10 Hold, 3 Underperform, and 3 Sell. Tesla just announced the production of the 10,000th Model Y from Giga Texas, and Electrek announced this week that AAPL now has more shorting than TSLA. Further, we learned about Tesla's lithium factory coming to Texas, which shows Tesla fast at work optimizing the operation to take advantage of all government incentives and to also realize a stable supply of battery materials in the future. You gotta love it.

In the coming week, we have the announcement on 2nd day of Fed meeting, Wednesday, Sept. 21, when the Fed will announce the latest interest rate addition. The market is strongly expecting a 0.75% raise, so that info shouldn't much move the market, but the comments going forward, whether they're hawkish or showing inclination towards a pause or at least decrease in future raises, will most certainly impact the market.

Meanwhile, percent of selling tagged to shorts fell to 44% on Friday. The NASDAQ's weakness through 2pm probably made the job of holding TSLA back easier.

Yields on 10 yr. treasury bonds remained mostly level on Friday

Friday morning began with a max pain of 280. As @Artful Dodger pointed out in the main investors' thread, on these triple witching Fridays a good percentage of the options were bought months ago, have long been delta-hedged, and therefore the listed max pain number no longer matches the most profitable closing price for individual market makers. Looking at the chart above, with huge put and call walls at 300 (many placed in recent days, see volume chart below), with market makers clearly opposing any TSLA climb above 300 in recent days, and with puts dominating below and calls dominating above 300, that number becomes the effective max pain for all practical purposes.

Thursday's options volume

For this coming Friday, max pain is 295, and the 300 strike once again marks the transition between put domination and call domination. Fortunately, this is just a weekly options closing and open interest is not nearly as ginormous as this past week's (which suggests market makers will not be so frantic to protect their sold options).

Market makers weren't willing to allow TSLA to get much above 300, no matter how much it tried this week. Effective max pain was 300, and the pull upwards for the closing cross in final minutes kept market makers from hitting the number more closely. Chart courtesy of @JimS

TSLA consolidated its climb above 300 for yet another week. As AI day on Sept. 30 gets nearer, as the Q3 P&D report looms just beyond 2 weeks from now, we also have a golden cross of the blue 50 day moving average rising up to cross the red 200 day moving average. This could get fun.

For the week, TSLA closed at 303.35, up 3.67 (about 1.2%) from the previous Friday's 299.68. Considering that the NASDAQ was down about 6% for the week, TSLA looked quite strong. Now let's see if the NASDAQ will give TSLA some help in the coming week. Hoping you enjoy your weekend.

Conditions:
* Dow down 139 (0.45%)
* NASDAQ down 104 (0.90%)
* SPY down 3 (0.76%)
* TSLA 303.35, down 0.40 (0.13%)
* TSLA volume 81.3M shares
* Oil 85.34
* IV 52.0, 18%
* Max Pain 280 for past Friday, 295 for coming Friday
* Percent of TSLA selling tagged to shorts: 44%

 

[Papafox]

TSLA chart above

QQQ chart above

TSLA on Monday once again outperformed the NASDAQ, rising 1.89% to the NASDAQ's 0.76% gain. The continued relative strength of TSLA this week following the S&P500 balancing lends credibility to the theory that the market makers naked shorted to add liquidity for all the closing cross buying by S&P500 funds in need of satisfying the rebalancing numbers. Buying by the market makers would not only explain the relative strength of TSLA over QQQ on Monday, it would also help explain the strong final minutes of TSLA trading as it headed into Monday's closing cross, which involved the trading of some 2.7 million shares in the 4pm minute.

Looking at the TSLA chart, you can see the exaggerated Mandatory Morning Dip of TSLA relative to QQQ, followed by an immediate buying of that MMD dip at TSLA, which returned TSLA to the green. After such a quick dispatch of the MMD you often see TSLA gain a good amount of ground pricewise, which is what happened.

Meanwhile, QQQ was running up and down in small gyrations through the red/green line for most the day's trading. The exception was the final hour when QQQ finally took off into the green, helping TSLA to elevate its gains as well.

I rolled at no cost my last Sept or Nov. 22 call on Monday and am now solely working at moving my Jan23s to Mar23.

News:
* Elon Tweeted that FSD version 10.69.2 (he first said 10.69.1) is rolling out to 160K FSD vehicle owners now. I've received mine and this is the first version of the FSD software that can drive from my house to my girlfriend's house 30 miles away without need for interventions. Why is this so noteworthy? Getting out of my neighborhood requires following narrow, heavily winding roads as well as heading up narrow two-lane roads which are not wide enough to have a centerline. Although I have overridden the autopilot to avoid disturbing other drivers through slow movement or another issue, my Model 3 is ready to finally complete this difficult route. In particular, I was impressed today when a high speed bicycle rider coming from a cross street but mostly hidden by obstructions zoomed into the crosswalk and FSD stopped to let him go by. Most human drivers would not have stopped. For this reason, I keep a sharp eye on the rearview mirror just in case I need to move forward a bit to avoid a rapidly converging vehicle from the rear.
* Teslarati posts that the Shanghai government says that Giga Shanghai's production capability expansion is now completed.

The slow, upward move of 10 yr. treasury bond yields continues. On Monday yields reached just shy of 3.5%

Meanwhile, percent of selling tagged to shorts fell to 42%, suggesting reduced manipulation pressures. We have seen weeks where the pressure is reduced earlier in the week, the stock price rises, traders buy out of the money call options, and then more downward pressure is applied by the market makers. Maybe that's not the case this week if market makers are busy buying shares to close their naked calls from last week's S&P500 rebalancing.

Max pain Monday morning was 295, which makes sense since 300 and above is solidly dominated by calls and everything below 300 is put dominated. We see a put to call ratio of 1.21, very close to the typical 1.2 ratio

Last Friday's options volumes for this Friday's expiration date

The stock price volatility has been stale enough recently so that the upper and lower bollinger bands are relatively close to each other. In fact, the upper bb is only about $4 above the current price, which could add some dampening to Tuesday's climb, should TSLA trade up again. The blue 50 day moving average continues to ascend toward a golden cross with the red 200 day moving average.

Conditions:
* Dow up 197 (0.64%)
* NASDAQ up 87 (0.76%)
* SPY up 3 (0.78%)
* TSLA 309.07, up 5.72 (1.89%)
* TSLA volume 60.0M shares
* Oil 85.73
* IV 50.6, 12%
* Max Pain 295
* Percent of TSLA selling tagged to shorts: 42%

 

[Papafox]

TSLA chart above

NASDAQ market hours chart above

Weakness in the NASDAQ resulted in a lackluster day for TSLA. NASDAQ closed down 0.95% while TSLA closed down a mere 0.11%. TSLA's relative strength is still there. To put that strength in perspective, take a look at this chart in this post by TMC's @jkirkwood001 . Of the 12 highest cap stocks, TSLA was the only one to trade positively over the past 30 days. The good news is that when the market shakes off its Powell doom and gloom mood, TSLA will likely add its relative strength to macro strength. Stick around, you don't want to miss it.

Various rumors are floating around the internet regarding Tesla's Q3 deliveries, especially regarding China. They may or may not be correct. My reaction is that I don't want to be scared out of this stock by rumors, nor do I want to bet the farm by carrying too much enthusiasm and betting the farm on a particular event. Thus, I keep my TSLA investing horizon long and ride out the bumps, both up and down. It's a strategy that has worked very well for me so far.

Wednesday at 2:00pm we get to see Powell's 0.75% interest rate raise announced, then at 2:30pm comes the press conference which will likely affect the market. Powell most likely won't give up his hawkish slant, but OTOH the presentation in October should see significantly less of a raise and the market may react positively to that probability when shared by Powell. This third big rate raise is something we just need to get out of the way so that things can start getting better going forward.

News:
* Electrek reports that a Tesla megapack caught fire at PG&E's Elkhorn battery project near Monterey, but the safety systems worked and isolated the blaze to a single megapack.

Yields on 10 yr. treasury bonds saw a big jump at open on Tuesday and closed at about 3.55%. Much of the recent raises in yields are likely anticipation of the Fed's hawkish interest rate posture.

The macros did the work of holding TSLA back on Tuesday, thus the low percent of selling by shorts number.

Tuesday morning's max pain was 300 as puts now outnumber calls at that strike price. To the left we see solid put domination and to the right solid call domination.

Monday's options volumes

The Golden Cross of the 50 day moving average (blue) and the 200 day moving average (red) appear on track to become a near term phenomenon.

Conditions:
* Dow down 313 (1.01%)
* NASDAQ down 110 (0.95%)
* SPY down 4 (1.15%)
* TSLA 308.73, down 0.34 (0.11%)
* TSLA volume 61.6M shares
* Oil 84.45
* IV 53.7, 23%
* Max Pain 300
* Percent of TSLA selling tagged to shorts: 42%

 

[Papafox]

TSLA chart above

QQQ chart above

For the first trading day in some time, TSLA (down 2.57%) showed somewhat less strength than the NASDAQ (down 1.79%). At 2pm the Fed announced the highly expected 0.75% rate increase and you can see a strong reaction in QQQ and TSLA. Sigh. When the press conference began you can see TSLA and QQQ bounce way up and of course that was followed by a plunge. Is this a good environment for manipulating stocks? You betcha.

Consider two possibilities why TSLA was trading weaker than QQQ in the morning. One possibility would be that speculation about sales of Tesla in China (the theory that buyers are gaming their delivery dates to receive better prices after Oct 1) may have had some effect. Another possibility, however, is that the market makers may have quite a few million shares of TSLA yet to buy to account for the liquidity they provided S&P500 rebalance buyers last week. If the MMs are still buying to cover that closing cross selling via naked shorting, then buying those TSLA shares at a discount would be desirable and helping TSLA trade lower (but still bouncing back to $300 at week's end) would be a reasonable tactic.

I had expected Powell to be his usual hawkish self, but he went above and beyond by suggesting higher rates were needed and for longer, which the market was not thrilled about. Remember, the more fear he can induce in the short run, the quicker buying of products sees reductions, and therefore the pressure on inflation lowers. Fear is part of his arsenal of tools. My biggest concern is that there's a lag of up to a year and a half between the imposition of a rate hike and its full effect on the economy, and with this far faster than ever before hiking of rates, he could indeed overshoot his goal.

Are the market makers still buying TSLA shares? A closing cross volume on Wednesday of 3.5 million shares suggests "yes".

I know this is shocking, absolutely shocking to many of you /s but the way the market is trading this second half of the week may work out to be a very sweet deal for the market makers. These coincidences just seem to happen again and again.

If for some reason a large number of China deliveries takes place in early 4th quarter instead of the final week or two of 3rd quarter, then 4th quarter P&D plus earnings would be all the more impressive. Profits in 3rd quarter should still be strong. By keeping your investing horizon suitably long, you benefit one way or the other. In the short term, surprises are the norm, not the exception, but as long as Tesla continues to execute well and create lots of demand, then the long run works out regardless.

Yields on 10 yr. treasury bonds initially rose above 3.8% with the Fed announcement on Wednesday and then dipped to end the day lower than at day's beginning. The late afternoon dip could be potentially explained two ways: increased demand for bonds induced buying that pushed the price of the bonds up, which lowered the yield, or the second possibility: bond investors believe the aggressive actions by the Fed will succeed in lowering inflation and then interest rates over time.

Selling tagged to shorts rose to 51% on Wednesday, suggesting an uptick in manipulations.

Wednesday morning saw max pain at 300. Looking at the open interest chart above, the 300-strike is now heavily dominated by puts, which would give market makers an incentive to see TSLA close above 300 on Friday.

Tuesday's options volumes

Powell's hawkish oration on Wednesday caused the biggest dip we've seen at TSLA since early September.

Conditions:
* Dow down 522 (1.70%)
* NASDAQ down 205 (1.79%)
* SPY down 7 (1.74%)
* TSLA 300.80, down 7.93 (2.57%)
* TSLA volume 61.0M shares
* Oil 83.03
* IV 54.9, 28%
* Max Pain 300
* Percent of TSLA selling tagged to shorts: 51%

 

[Papafox]

TSLA chart above

QQQ chart above

Thursday turned ugly as the 10 yr. treasury yields leapt up to 3.7% and growth stocks including TSLA got punished. Obviously, Powell's pessimistic predictions did the job of scaring Wall Street. Those of us who now live primarily from our stock earnings tend to delay large purchases during a dip like this, which is a side benefit to inflation combatting of Mr. Powell's overly (imo) pessimistic pronouncements. The NASDAQ closed down 1.37% to TSLA's dip of 4.06% (a 3X multiplier). By comparison, NVDA closed down 5.28%, and ARKK down 4.29%.

The dynamic by which such nasty cuts are done on growth stocks rests with the reduction in present value of money earned in future years. Fortunately for TSLA, we don't need to look too many years into the future to find earnings that will justify considerably higher stock prices because TSLA has a truly massive growth rate at present. A few percent lower current value can be greatly offset when a company is growing its profits at 50% per year. To illustrate this process, consider the following Tweet from Gary Black, below:

Unfortunately for TSLA, most fund managers don't do the careful computations of a Gary Black but instead look at TSLA as a growth stock that gets whacked similarly to other hot growth stocks. When TSLA demonstrates its financial strength during the Q3 and Q4 earnings reports, those same fund managers are forced to reconsider their TSLA strategies.

No real news came out regarding China deliveries today. Rob Maurer is back and commented on the situation, pointing out that Tesla can deliver over 25% of its Shanghai output in the final two weeks due to deliveries all over China and that some reduction in backlog is a natural result of the delivery wave. Tesla's production is still going gangbusters, and any vehicles that aren't sold in Q3 will find homes in Q4.

What I did see is that attempts to push TSLA lower by sketchy means are way up over the last couple days. We have a very active individual trying to scare TMC members in the main investors' thread, and the media ran headlines about a Tesla recall that in actuality is an over-the-air update to ensure nobody gets a finger pinched in the window as it goes up. Technically, it is a recall, but Elon agrees that the term is inappropriate in OTA fixes of small issues by Tesla. Usually such over the top efforts at FUD come toward the end of a pushdown, so maybe there's something positive in it happening on Thursday.

Yields on 10 yr. treasury bonds shot up to 3.7% on Thursday, placing lots of pressure on high-growth stocks. On Wednesday I wondered if the dip late Wednesday afternoon was the result of buying pressure sending 10 yr. treasury prices up (and yields down) or whether the market actually believed inflation would be more tame because of the Fed's actions. Unfortunately, Friday's yields suggest the reason to have been the former.

Keep that seatbelt snug in the meantime.

Percent of selling by shorts dipped to 46%, suggesting little need for manipulating (macros and treasury yields are doing the downward pushing at present)

Thursday morning we saw max pain at 301.67 as increased put buying raised max pain nearly $2. The strike 300 is solidly red now and 305 has moved to the neutral position with equal numbers of puts and calls. Market makers could in theory push TSLA above 300 for Friday's close if the macros calm down, but an even more profitable option if the MMs are light on TSLA after the S&P rebalancing might be to ride the market down if it looks like there's a few more days of dip in it and then buy to cover at a bargain price.

Wednesday's options volumes

Behold the Powell downhill bobsled run. TSLA bounced near the 50 day moving average. We've been through these ups and downs before. At some point in the bobsled run investors believe they're close enough to the bottom to pick up bargain shares and traders start buying options. That buying leads to share buying which then helps the market begin its recovery. Typically it takes at least a few days going downhill before we see a turn.

Conditions:
* Dow down 107 (0.35%)
* NASDAQ down 153 (1.37%)
* SPY down 3 (0.84%)
* TSLA 288.59, down 12.21 (4.06%)
* TSLA volume 70.1M shares
* Oil 83.18
* IV 56.4, 33%
* Max Pain 301.67
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

Oil prices in the U.S. dropped below $80/barrel last week. That's a huge decline from $120/barrel and oil prices affect virtually all other prices due to manufacturing costs, transportation, etc. Meanwhile, the inflation curve on the right shows that inflation peaked in June and has been heading downward. If you look back 12 months, you will see the plateau in CPI inflation between June of 21 and September of 21. Unfortunately, the October CPI report is still working off the final month of that plateau, September 2021. When the October 21 data gets used as the base (reported in Nov 22), and in subsequent months, then we are going to likely see really big CPI drops, especially with the new, much lower oil prices. For this reason, I disagree when someone says that we're going to be wrestling with inflation for years, trying to bring it down a few percentage points.

On Friday, both the Dow and S&P500 dropped below their June 22 lows. The NASDAQ is not far behind. Fortunately, what we saw just before 3pm on Friday was the appearance of a bounce for the day. What I'm looking for in the coming week is whether that bounce gets built upon on Monday or if the bears force the market into new lows. Fortunately for TSLA investors, the lows in early June explored below the 220 mark intra-day. We're considerably above that mark while the broader markets have lost all their gains since June.

With that macro picture in mind, let's look at TSLA's trading on Friday. TSLA shed it's usual relative strength on Friday, as it did to a certain extent on Thursday. TSLA closed down 4.59% to the NASDAQ's 1.8% loss (a 2.55X multiplier). What's most eye-catching about TSLA's Friday trading is what (failed to) happen after the 3pm bottom. In the final hour of trading, QQQ recovered 44% of the day's losses, NVDA recovered 75% of the day's losses, while TSLA recovered only 15% of the day's losses. Some entity was clearly capping TSLA during that final hour.

Let's take a closer look at that final hour capping of TSLA on Friday. I doubt that market makers would be doing the capping since a rising stock price would bring TSLA closer to max pain. Instead, I think the culprit would most likely have been a hedge fund that realized the market makers weren't going to defend TSLA's price on Friday (because the MMs are still likely quite short on TSLA shares since providing liquidity to all the S&P500 companies that were buying TSLA for the rebalancing). The hedge fund(s) likely bought lots of TSLA puts for Friday expiration (300s?) and then did whatever they could do to minimize Friday's closing price (perhaps even by calling in favors on all that FUD you saw at week's end regarding Tesla's "recall". The hedge funds simply capped into close. They could have covered some of that shorting during the 4pm closing cross (1.4M shares traded) and could make up remaining covering early next week, if needed. Business as usual, my friends.

The good news is that I think Adam Jonas is right in the notes he published this past week regarding IRA giving Tesla much benefit in the coming years, far more than Wall Street comprehends at the moment. Jonas suggested that Tesla would become a staple in the portfolios of fund managers much the way that Apple has been in the past. We certainly will see significant gains in deliveries and profits during 2023. Then there are the very significant gains that come to Tesla as a battery manufacturer with its own lithium refining operation. In a few years Tesla batteries could be ridiculously cheap and will give the company a solid advantage over the Ice and hybrid vehicles. of other manufacturers. Don't miss it.

Watch carefully as we move into the week and whether the market defines a new bottom or not. Rest assured, there will be big dogs who are betting on the market falling further who will do everything they can to sow fear. Don't be surprised by a Mandatory Morning Dip, but watch to see if there's a quick and convincing recovery. An example of big dog investors betting on a further dip, Carl Icahn, just gave an interview to Fortune in which he says the worst is yet to come for the economy and compares our inflation to the fall of the Roman empire. How's that for going overboard to generate fear?

For those of you gaining access to FSD 10.69.2.2 for the first time, enjoy the very real improvements to the software that shows the pace of Tesla software innovation is moving quickly. OTOH, keep awake and keep those hands on the wheel because even in this excellent release a few potentially serious gotchas remain on poorly-marked streets. Those too will be ironed out in time.

Fortunately, yields on 10 yr. treasury bonds retreated slightly on Friday, closing below 3.7%

Percent of selling tagged to short-selling dipped to a low 41% on Friday. Don't let that number fool you- some manipulators simply shop at non-FINRA exchanges.

On Friday morning max pain was 296.67, but with the macro dip underway, market makers had other priorities and nobody was pushing to bring the stock price close to max pain.

Thursday's options volumes

For this coming Friday, max pain is 295 and we have a long climb to get there. At 295 and above, calls dominate.

Here's a weekly chart that is definitely ugly and shows the effect of the macro drop plus some help from the pirates (courtesy of @JimS ).

In three days TSLA went from tickling the bottom of the upper bollinger band to closing more than halfway down between the mid bb and the lower bb. The most positive aspect of this chart is that although most of the macros were testing their June lows on Friday, TSLA's 275.33 is way, way above it's early June dip below 220.

For the week, TSLA closed at 275.33, down 28.02 (9.2%) from the previous Friday's 303.35. Once this fearful market finds its bottom, better days lay ahead, my friends. Enjoy your weekend.

Conditions:
* Dow down 486 (1.62%)
* NASDAQ down 199 (1.80%)
* SPY down 6 (1.68%)
* TSLA 275.33, down 13.26 (4.59%)
* TSLA volume 63.8M shares
* Oil 78.74
* IV 61.7, 53%
* Max Pain 296.67 for past Friday, 295 for coming Friday
* Percent of TSLA selling tagged to shorts: 41%

 

[Papafox]

TSLA chart above

QQQ chart above

After three nasty days of falling prices, both TSLA and the NASDAQ showed signs of a possible bottom as both charts rallied Monday morning. TSLA closed up 0.25% and NASDAQ down 0.60%. Notice the exaggerated Mandatory Morning Dip for TSLA (compared to that of QQQ). You have entities trying to promote fear of falling in the markets and with TSLA specifically at the same time you have investors trying to scoop up shares at a potential bottom. When both MMDs were quickly bought up you saw the usual result: a rally. By noon QQQ's rally had been sold off but TSLA managed to stay in green territory throughout the day. Unfortunately for QQQ and TSLA, we saw a severe dip in the final minutes of market trading, which pulled QQQ well into the red and stole most of TSLA's gains for the day.

While it's possible that investor sentiment turned bearish at day's end, I think a more likely scenario is that big dogs who are betting on a deeper dip for the macros may have engineered the day end dip (and TSLA just followed along).

All in all, I was happy with the day. This is how the market finds a bottom. It's a rocky process. We saw TSLA up 3% in the morning after the MMD was dispatched, and so we know there are buyers out there ready to pick up shares again when the macros signal positively. Futures are up Monday night.

News:
* China has extended EV tax breaks until the end of 2023.
* Shanghai should deliver between 80K and 90K vehicles in September, according to this Teslarati article. Could the doom and gloom of Shanghai have been overplayed?
* More than $5 trillion sitting on the sidelines waiting for the economic uncertainty to subside, according to this Bloomberg article

Monday saw a big jump in 10 yr. treasury bond yields, almost up to 3.9% now.

Percent of selling tagged to shorts fell to a ridiculously low 36% on Monday even though manipulations appeared ongoing. What about the big TSLA MMD and other apparent manipulations? Non-FINRA exchanges are getting this business.

Max pain Monday morning for this coming Friday was 290, which makes sense since 290 was the lowest strike that was call-dominated. Both 285 and 280 are close to neutral, so MMs might be happy with anything 280-290 early in the week.

Lasts Friday's options volumes for this coming Friday's expiration date

A light at the end of the tunnel? After 3 brutal down days TSLA regained some mojo and outperformed the NASDAQ. You can see by the tall wick atop Monday's candle that TSLA managed to undo Friday's dip but unfortunately got caught up in the macro volatility. Notice how close the closing prices were to those of the late August/early September dip. A climb from here would establish a double-bottom of sorts.

Conditions:
* Dow down 330 (1.11%)
* NASDAQ down 65 (0.60%)
* SPY down 4 (0.99%)
* TSLA 276.01, up 0.68 (0.25%)
* TSLA volume 58.1M shares
* Oil 77.08
* IV 62.3, 57%
* Max Pain 290
* Percent of TSLA selling tagged to shorts: 36%

 

[Papafox]

TSLA chart above

TSLA after-hours price until 8pm courtesy of Yahoo

QQQ chart above

Morning smackdown deja vu all over again? Actually, Monday's pushdown off the high was a true market smackdown, but Tuesday's was a horse of a different color as TSLA remained strong until about 11am when St. Louis Fed President Bullard made several strongly negative comments regarding the Fed's best action going forward, and the whole market tumbled. Just like Monday's action, QQQ settled into the red for most the afternoon and TSLA stayed in the green, showing relative strength. Likely causes of the strength? China delivery numbers looking better this week and Fremont is crazy busy delivering vehicles as fleet sales pick up the slack.

Please excuse my putting on my pointy tinfoil conspiracy theorist's hat for a second, but I have an idea why the Fed is so frantic to demonstrate that it is scaring the stock market. Falling stock prices not only affect consumption by the well-to-do, it's also a signal of economic distress which curbs spending on large items by wage-earners, as well. With the very substantial drop in oil prices lately (under $78/barrel Tues evening) and with the 12 month targets for CPI inflation to start rising in October (as reported in November), the Fed wants to be able to say "look at this nice decrease in inflation that WE created." OTOH, if the economy remains strong, the stock market doesn't flinch, and then inflation falls anyway, the brutally hawking Fed would look pretty ridiculous. We now return you to our regular programming.

What's noteworthy about TSLA's trading on Tuesday was the strength of the final two hours of market trading when TSLA rose significantly even though QQQ mostly languished. Additionally, we saw a surge in TSLA's late evening after-hours trading, with TSLA up 1.43% since close. Thus the market hours and after-hours trading allowed TSLA to rise nearly 4% for the day, not bad.

News:
* Electrek says "Tesla expects 'very high volume' deliveries at end of quarter, asks workers to help" and Tesla is making large fleet deliveries at end of quarter. The fleet deliveries story is particularly important because we may face a thorny end of Q4 as well with buyers holding off for the 2023 IRA incentive, but substituting fleet deliveries for weakness in retail selling may be the key to keeping the vehicles moving.

Yields on 10 yr. treasury bonds rose to just a smidgen below 4% on Tuesday. When they cross 4%, which could come on Wednesday, expect the market to notice

Percent of selling by shorts remained very low at 39% on Tuesday. Looks like comments from the Fed's Bullard around 11am provided all the negative pressure needed for keeping TSLA in check.

Max pain Tuesday morning was 285, $5 lower than Monday morning's number. The strike 280 was the focus of pressure on Tuesday as lower strikes were put dominated and higher strikes were dominated by calls.

Monday's options volumes

The net result of this week's activity so far has been to mostly neutralize last Friday's dip. Overall, you can see that even though macros are weak to sick, TSLA has been climbing this week because of the combination of approaching Q3 Production and Delivery report plus a shift in news suggesting stronger deliveries (Shanghai numbers look up and Fremont moving vehicles quickly with fleet sales). Take a look at the blue 50 day moving average approaching the red 200 day moving average for the golden cross. That golden cross would occur with increased optimism regarding Q3 deliveries, AI Day 2 on Friday (usually a non-event but you never know) and then the Production and Delivery Report at the beginning of next week. The stars may at last be aligning in a good way for TSLA longs.

Conditions:
* Dow down 126 (0.43%)
* NASDAQ up 27 (0.25%)
* SPY down 1 (0.26%)
* TSLA 282.94, up 6.93 (2.51%)
* TSLA volume 61.0M shares
* Oil 78.42
* IV 62.8, 58%
* Max Pain 285
* Percent of TSLA selling tagged to shorts: 39%

 

[Papafox]

TSLA chart above

QQQ chart above

When I woke this morning I could see something was really screwy with TSLA's trading. It was jumping above and below the red/green line frequently and was red while most every other stock was green. No Tesla-specific news justified TSLA's weakness. Fortunately, the main investor's thread at TMC revealed a Bloomberg report citing an unnamed source saying that Apple has decided not to go ahead with an earlier also-unnamed source report of a production increase for the latest iphone, due to demand. The reports together may or may not be correct, but they succeeded in pulling Apple stock down on Wednesday. Since Apple and Tesla are considered the two apparently invincible stocks in this bear rout, Tesla should be punished too by this sketchy reasoning. Thus TSLA remained weaker than QQQ on Wednesday.

Consider how TSLA gets punished on such a day. The mere association with a falling stock will by itself generate some legitimate selling. The Apple news was the catalyst. Such a catalyst can be pretty weak, and so the parties who benefit from a weak TSLA on Wednesday would be inclined to add steroids to the TSLA weakness by short-selling, spoofing, and the usual bag of pirate tricks. As an indication that something was amiss, we had percent of selling by shorts jump from 39% on Tuesday to 51% on Wednesday. Fortunately for us longs, the plan to sabotage TSLA trading started falling apart after 2:30pm when QQQ started rising into the close and TSLA took off. It never caught QQQ, but it played a good game of catch up.

Lots of pirates and traders wished to zero out their activity at day's end, both with TSLA and with QQQ. This is why you see a big drop going into the 4pm minute of market trading with both. We saw a massive 5.3 million TSLA shares trade hands at 4pm. Buyers would include those entities doing day shorting in order to hold TSLA back. They wished to cover their shorts and leave the day neutral. Buyers could also include market makers if they still hadn't restored the TSLA shares they sold to provide liquidity during the S&P500 rebalancing. Sellers would likely be hedge funds and other traders who would have been day trading TSLA but don't want to go overnight in this volatile environment. You could also have some institutional sellers who were reacting to the nonsense of tying TSLA to Apple with the day's pseudo-news about Apple iphone demand issues. With sellers outnumbering buyers as the TSLA closing cross approached, the stock price had to dip at the last minute to bring the two sides into equilibrium.

Looking forward, we have AI Day 2 Friday evening and then likely Production and Delivery Report for Q3 on Sunday. Rob Maurer in his recent podcast raised his Q3 delivery target to 361,401 vehicles with an additional increase in inventory of 6,000 vehicles. We're now looking more likely to pull off another quarterly beat for deliveries. Troy will deliver his best deliveries guess on Friday, Sept. 30.

News:
* Joe Gebbea is TSLA's newest board member. He was a co-founder of Airbnb.
* Share this Tweet of FSD saving a Tesla driver from a head-on collision next time someone drones on about Tesla autopilot safety. It's great to see a video of the system saving someone's life.

Percent of selling tagged to shorts made a big jump up Wednesday because the potential catalyst for a red day (associating Tesla with Apple's weakness) needed to be reinforced with short-selling. The trick worked for much of the day but TSLA broke free and started climbing by 2:30pm

Here's good news: yields on 10 yr. treasury bonds fell significantly to just a bit above 3.7%. The market's reaction to yields touching 4% on Tuesday was nasty, so it's good to have a little wiggle room at the moment.

Max pain Wednesday morning was 285 again. Since Tuesday, the 280 strike fell into the clutches of put domination, making 285 a clean choice of max pain at the moment.

Tuesday's options volumes

Check out the blue 50 day moving average approaching the 200 day moving average for the soon-to-be Golden Cross. They're about $1.70 apart at the moment and a strong day on Thursday could give us the cross that will make technical traders cheer. TSLA would also climb above the mid-bollinger band at that time, setting the stock back into a position of strength for the end of the week.

Conditions:
* Dow up 549 (1.88%)
* NASDAQ up 222 (2.05%)
* SPY up 7 (1.97%)
* TSLA 287.81, up 4.87 (1.72%)
* TSLA volume 54.7M shares
* Oil 81.79
* IV 61.8, 53%
* Max Pain 285
* Percent of TSLA selling tagged to shorts: 51%

 

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TSLA chart above

QQQ chart above

Thursday was a surprisingly deep dip for the macros and for TSLA in particular. The NASDAQ dropped 2.84%, and TSLA fell 6.81% (a 2.4X multiplier) on heightened volume of 76M shares.

How to understand the macro drop? CNBC focused on Apple again, with a Bank of America analyst downgrading from buy to hold. That's probably the wrong reason. Unemployment claim numbers that came out at 8:30am showed less new unemployment than anticipated, and so that market is thinking the Fed is going to punish the economy with yet another big interest rate increase next month (the floggings will continue until the morale improves!).

The S&P500 has now slid slightly below it's June low

As for TSLA's Thursday weakness, I see a couple possibilities. Since the media has enjoyed talking about Apple and Tesla as the last bastions for retail investors and Apple has been battered this week, TSLA is likely getting some association with Apple and going lower with it. Maybe the story is darker, however, and those entities who benefit from a further slide in the macros (certain hedge funds with negative bets, short sellers, etc.) may have purposely gone after TSLA to make sure BOTH bastions for retail investors got whacked on Thursday in their effort to get the September dip below the June dip and avoid a double-bottom.

Supporting the theory that TSLA was specifically targeted on Thursday, take a look at the chart below that shows percent of selling by shorts jumping WAY up to 64%. The closing cross at 4pm had volume of 1.9M shares, which also could mean lots of covering of daily short-selling used in manipulations. Additionally, you can see a really classic manipulation technique used on Thursday, which is capping in late afternoon to prevent TSLA from recovering into close at the same rate as QQQ. The difference between TSLA and QQQ in the final two hours was dramatic, and we saw this same technique used on Friday of last week.

Friday's trading should be most heavily affected by the Personal Consumption Expenditures (PCE) price index, released at 8:30am. We saw numbers of 6.8% in June, followed by 6.3% in subsequent months. A noticeable dip below 6.3% could more than counteract the jobless information from Thursday morning and allow the market to regain some lost terrain. Fingers crossed. This is an inflation indicator that the Fed watches closely.

Friday evening will be the AI Event #2, which should be interesting watching and then we likely get the Q3 Production and Deliveries report on Sunday. At present,
* Bloomberg's analyst survey is expecting 358K deliveries
* Tesla's survey of analysts came averaged 364K deliveries
* Most retail expectations of deliveries are coming in around the low 360s with Troy to give his final report on Friday. My guess will be to take Troy's number and add 1000 to it.
Let's hope for at least a small beat because this market environment could be brutal to a miss. If there is a dip caused by a miss of a few thousand vehicles, I will likely be a buyer because Q3 earnings should be an attractive ATH, regardless. Watch the production number, which could signal that lots of cars could be en route to making Q4 deliveries that much stronger.

Percent of selling tagged to shorts soared to 64% on Thursday, strongly suggesting that mischief was afoot

Yields on 10 yr. treasury bonds crept up a little to 3.76% but remained well clear of the 4% "market has a conniption" zone

Max pain on Thursday was 285 again. That strike is neutral at present, with put domination below and call domination above

Wednesday's options volumes

Thursday's drop didn't quite reach the lower bollinger band.

Conditions:
* Dow down 458 (1.54%)
* NASDAQ down 314 (2.84%)
* SPY down 8 (2.09%)
* TSLA 268.21, down 19.60 (6.81%)
* TSLA volume 76.5M shares
* Oil 81.57
* IV 69.4, 82%
* Max Pain 285
* Percent of TSLA selling tagged to shorts: 64%

 

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TSLA chart above

QQQ chart above

Let's get Friday's trading out of the way early and then talk about Q3 Production and Deliveries report. Before market open, the core components of the Personal Consumption Expenditiures (PCE) index showed a modest rise over July's data, and so the market was somewhat unhappy, fearing the wrath of Jerome Powell gaining a bit more ammunition for his next rate increase. We saw both QQQ and TSLA navigate quick Mandatory Morning Dips, but both recovered well into the green before seeing the usual pushdowns to close. TSLA fared better than QQQ, perhaps because of the upcoming P&D Report, perhaps because of this article from Reuters stating that Tesla planned to produce close to 495,000 3s and Ys in Q4. For the day, TSLA closed down 1.1% while the NASDAQ closed down 1.51%.

As a recruiting event, Friday's AI Day 2 will almost certainly be a big success. Introduction of recent iterations of Tesla Bot, updates on Dojo, and updates on Full Self Driving will surely attract talent. Unfortunately, any positive sentiment that could come out of the event will be overshadowed on Monday by Q3 Production and Deliveries Report.

Sunday morning Tesla produced the Q3 P&D report (above) and linked here. Although there was strong commonality between analysts, Troy, and other retail Tesla watcher for a low 360s delivery number, the actual number of 343,830 fell well below expectations. Thus, Monday will be a buying opportunity. Most media outlets are spinning Tesla's results as being both short of expectations but also a new record, so market reaction may not be as bad as some theorize. I will likely participate by moving some DITM Jan23 $13.33 call options to a greater number of DITM Jun23 100-strike call options as a tax-free trade within my IRA.

One potentially positive outcome of this miss by Tesla in Q3 is that analysts were for the first time anticipating numbers that were closer to Troy's estimates than ever before. Troy was really being close lately, but always a touch on the low side. Following Troy was always a safe move for an analyst. Now that Troy (and everyone else) overstated delivery numbers, analysts are less likely to overdo Q4 estimates because of this overshoot. We may well see analysts in Q4 guessing well below Troy, as it used to be, making a beat more likely.

How much reaction we see from the market depends upon macros, how badly the hedge funds/shorts want TSLA lower, and how well investors anticipate the coming Q3 Earnings Report day on Oct. 19. I encourage you to take a look at @The Accountant 's latest estimates here in the Near-Future Quarterly Financial Projections thread. The Accountant shows what should be a comfortable beat on earnings in Q3 and then offers a chart that shows both GAAP and non-GAAP earnings of 2022 should be at least 100% higher than similar number in 2021 if Tesla remains on plan.

Keep in mind that the cost of producing 363K vehicles in Q3 gets divided between those vehicles and therefore the decent production numbers work toward good profit numbers for vehicles delivered that quarter. Vehicles in transit for Q4 deliveries will have their costs impact the income statement of Q4, where it belongs.

Percent of selling tagged to shorts was still a high 56%, suggesting manipulations.

Yields on 10 yr. treasury bonds snuck above 3.8% on Friday

Friday morning we saw max pain of 278.33 for that week's options expirations

Thursday's options volumes were closely centered around 270

Friday's max pain for Oct 7th's was 282.50. You can see that the big call walls at 300 and 330 are likely to finish way out of the money, so the week will likely be a very profitable one for market makers.

TSLA has essentially descended back to where it was 4 weeks ago. Chart courtesy of @JimS .

For the week, TSLA closed at 265.25, down 10.08 from the previous Friday's 275.33. Hoping your weekend has been a good one.

Conditions:
* Dow down 500 (1.71%)
* NASDAQ down 162 (1.51%)
* SPY down 6 (1.55%)
* TSLA 265.25, down 2.96 (1.10%)
* TSLA volume 67.7M shares
* Oil 79.49
* IV 70.5, 84%
* Max Pain 278.33 for past Friday, 282.50 for coming Friday
* Percent of TSLA selling tagged to shorts: 56%

 

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TSLA chart above

QQQ chart above

There's two ways of looking at Monday's trading. The first is that about 20K vehicles couldn't be delivered in Q3 and will be delivered in Q4 instead. Production, deliveries, and earnings will all be records with that extra 20K vehicles adding to Q4's expected massive deliveries.

The other viewpoint is that since TSLA missed its analyst forecast, the stock needs to be run through the spanking machine as uninformed investors fret about long-term demand (they've been doing so almost constantly since 2013).

The NASDAQ was up 2.27% while TSLA was down 8.61%, a difference of nearly 11%. Volume was high at 98.4M shares traded, which suggests market sentiment largely at play for the dip. Elon's controversial Tweets didn't help matters any. Was the dip appropriate? Nope, but it is unsurprising since we've seen that when TSLA might be near the bottom of a long dip the shorts, hedge funds, and others will pull out the stops to help the stock go lower. Those who wish to exit a short position at the most profitable location will work to continue the dip and some hedge funds will be hoping to switch to long positions after the stock bottoms and ride it up through the inevitable recovery. That's how these dips work. You will see efforts to push lower in order to set off margin calls and stop-loss triggers. This is the same rodeo many of us have been riding in for nearly a decade. Bottom line: hang on, don't sell to the pirates, and look forward to better days ahead.

In particular, look at that hard pushdown shortly after market open, even though the macros were climbing. This is a tempting hedge fund tactic if they feel confident that the dip will stick. Selling by the hedge fund gets the bots and fearful investors involved in selling too. The hedge fund(s) then covers at the bottom after shorting right after market open and makes a nice pile of cash on the manipulation. You can see a small overshoot of the initial dip. The other apparent manipulation took place in the afternoon. QQQ started accelerating its climb around 12:30pm but TSLA couldn't break the cap and start rising until more like 2pm. When QQQ showed a little dip with half an hour to go in market trading TSLA took a big dip. Again, these are classic manipulations. With 4.2M shares trading during the 4pm minute, there was plenty of opportunity to cover the afternoon day-shorting.

@Artful Dodger has an interesting post in the main investors' thread regarding hedge funds protecting the 10% alternate uptick rule trigger point. He concludes if this was indeed a purposeful act the hedgies have more mischief in mind for TSLA on Tuesday.

What about demand, though? Part of the difficulties in China could have been accelerated by gamesmanship of Chinese buyers as they canceled orders in hopes of an end of quarter price cut. I think it was more short-term than long-term and Zach knows how to move the vehicles and will stimulate demand with a price cut if necessary. Tesla has always been good at finding the sweet spot between price and high margins, and I strongly suspect they haven't lost their touch. Remember that adding new markets (Indonesia?) remains an option as production volumes continue to increase. If Tesla feared long-term demand issues would they be shooting for nearly half a million vehicles to be produced in Q4? I think not. That said, I think Tesla did get caught in a short-term demand situation because of Chinese buyers wanting a price cut before quarter's end, and the "getting rid of the wave" explanation likely will turn into a long-term transition away from the wave (which might be good in Q4 as well).

Keep in mind that Berlin and Austin have just been coming up to speed in 2022. It took Berlin about 3 months to hit a 1,000 vehicles/mo. rate and about 3 1/3 months to double that number to 2,000/mo. on Oct. 1. Once Berlin and Austin hit 5K/mo. (hopefully near year end) the two will be producing at a rate of half a million vehicles/yr and climbing. Stick around and don't miss it.

For my own Monday trading, I swapped leaps for a gain of one leap and a move of expiration dates further out. If TSLA falls more, I'll do it again. Normally I sell my DITM leaps with plenty of time value left, but this has been a long streak of bad price action for TSLA and so I'm working to move at little or no cost my IRA's DITM Jan23 leaps to Jun23. I have a bunch so it takes a while. My thought process is that even with the likely huge production and deliveries of Q4, there's always something that can happen (such as U.S. buyers holding off purchases of EVs until the IRA goes into effect on Jan 1) and I give myself an extra quarter for good measure.

Bottom line: Monday's dip is pretty common behavior for this stock when looked at through the perspective of many years. As long as Tesla keeps executing well the dip will get sorted out in good time. Really looking forward to the Q3 Earnings report and conference call.

News:
* Electrek says new construction is coming to Giga Nevada. Note: I'm very familiar with Northern Nevada and believe that Tesla will be able to hire the needed extra employees. The problem in the past has generally been Panasonic's inability to recruit sufficient numbers of workers for the battery cell business from Northern Nevada.

Percent of selling tagged to shorts came in pretty high again at 51%, suggesting plenty of manipulations

Thankfully, yields on 10 yr. treasury bonds dipped below 3.7% on Monday

Max pain for this Friday is 277.50.

Last Friday's options volumes for expiration this coming Friday

Trading on Monday begat at the lower bollinger band and fell from there. Volume of a high 98M shares suggests most of the dip was from market sentiment.

Conditions:
* Dow up 765 (2.66%)
* NASDAQ up 240 (2.27%)
* SPY up 9 (2.64%)
* TSLA 242.40, down 22.85 (8.61%)
* TSLA volume 98.4M shares
* Oil 83.74
* IV 67.3, 76%
* Max Pain 277.50
* Percent of TSLA selling tagged to shorts: 51%

 

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TSLA chart above

QQQ chart above

For the second day in a row, the macros rallied, causing some to believe that this long macro dip may be getting close to an end. The NASDAQ added 3.34% to Monday's 2.27% gain, for a 5.61% two-day gain. Not bad. Optimism in the macros led to a positive day for TSLA, too. Hedge funds would have loved to hit TSLA with a big MMD if the macros swooned on market open, I suspect, but two huge macro gain days in a row made a TSLA pushdown a bad bet and so the pirates took a one-day vacation or at least a morning's vacation.

Right around noon TSLA fell like a lead balloon when word came out (I believe from Bloomberg) that Elon was planning to go through with his purchase of Twitter at the original price. The New York Times and other media outlets jumped in. About an hour after the plunge, TSLA did an oversized dip at the same time as the gentle QQQ dip, and I wouldn't be surprised if hedge funds were playing that dip as a day-shorting opportunity. QQQ recovered and so did TSLA. All in all, I think Elon's acquisition of Twitter will not be a problem for Tesla. He has already stated that no more selling will be needed and unless there's a surprise with his partners, I believe him. As soon as we hear confirmation of no more TSLA selling needed, you will see clouds part and the Twitter overhang above TSLA dissolve. Wall Street likes certainty.

Getting rid of the Twitter overhang from TSLA and getting investment grade bond ratings for Tesla are two factors that will encourage institutional investors to start picking up shares. Both likely will happen soon enough. Building substantially upon Q3's excellent production numbers in Q4 and subsequent quarters (and enjoying the resulting profits) will make a huge difference as well.

Might Elon potentially selling on Monday have been the reason for that day's dip? No, for two reasons. First, We already knew that Monday was going to be a bad trading day for TSLA after the weekend's P&D Report came up 20K short on expected deliveries. Elon would not want to amplify the dip with his own selling. Secondly, If you look at the first Max Pain chart below, you'll see a drop of over $22 in max pain between Monday and Tuesday mornings that was caused by the purchase of a "sugar"load of put options expiring Friday. It was the purchase of those puts, the delta-hedge selling of TSLA shares that the MMs needed to do, and the negative sentiment that led to the purchase of those puts that created such a negative day for TSLA (along with a little kerosene thrown on the fire by our old friends the hedge funds).

Regarding the controversial comments about Ukraine and Russia made by Elon on Monday, let me just say that, purely from the standpoint of a TSLA investor, I suspect that the Ukrainians must have felt somewhat better after Elon pointed out that costs of providing the Starlink service to Ukraine by SpaceX was $80 million (as opposed to WaPo stories of the government picking up the tab) and he Tweeted he's obviously for Ukraine because he spent all that money for Ukraine but $0 for Russia. As for Russia, the Kremlin acknowledged Elon's effort to find a peaceful solution. This is important because Elon so infuriated Russia earlier in the conflict that I feared a small but still worrisome chance of a Russian assassination attempt. Remember that Elon single-handedly put Russia's space program out of the commercial satellite business as well as space transport for Western astronauts. Now any assassination makes no sense. From a purely selfish standpoint of a TSLA investor, I see derisking after the dust settles.

A big takeaway from the Q3 P&D results is that Wall Street analysts have been revising their 2022 and 2023 Earnings Per Share (EPS) estimates strongly upward. Above are two charts by Gary Black from this Tweet that tell the story. The red line is expected EPS for 2022 (left chart) and 2023 (right chart). The 2022 estimate just jumped 5.2% and the 2023 average estimates just jumped 7.4% (just wait until they see Q3 earnings report). You can see on the left side of each chart how EPS estimates and stock price rose in synch for a while but since mid 2021 the EPS expectations and stock price have been grossly out of alignment. No wonder analysts think TSLA is undervalued at the moment. Tick, tick, tick.

Yields on 10 yr. treasury bonds stayed put below 3.7% on Tuesday

Percent of selling tagged to shorts dipped to 45%, a rather normal level suggesting low manipulations

Max pain Tuesday morning was 255, a fall of more than $22 from Monday. That plunge was caused by the purchase of many puts during Monday's trading, (chart below for comparison) which required delta-hedge selling of TSLA shares by market makers, which in turn pulled the stock price even further down. With TSLA closing within $6 of the most recent max pain, that number and the involvement of the market makers becomes relevant again. With the HUGE number of outstanding calls above 250, I suspect the market makers will go to work this week trying to tame the climb if TSLA gets frisky. There's lots of money to lose if TSLA makes a big run upwards.

Monday morning's max pain chart. Notice the HUGE growth of puts in the 200-250 range from Monday morning to Tuesday morning

Monday's options volumes

What's interesting about the past four days of trading is how involved the lower bollinger band was. Thursday ended right above the lower bb, Friday bounced off the lower bb but closed close to it, Monday's dip began at the lower bb and went downhill from there, and despite huge swings up and down, Tuesday's trading both began and ended reasonably close to the lower bb. If you look at the 50 day and 200 day moving averages (blue and red lines) they are paralleling each other just a little over a dollar apart. We'll save the golden cross for another day.

Conditions:
* Dow up 825 (2.80%)
* NASDAQ up 361 (3.34%)
* SPY up 11 (3.10%)
* TSLA 249.44, up 7.04 (2.90%)
* TSLA volume 109.2M shares
* Oil 86.37
* IV 63.9, 60%
* Max Pain 255
* Percent of TSLA selling tagged to shorts: 45%

 

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TSLA chart above

QQQ chart above

Wednesday was similar to Monday in character but with some important differences. Percent of selling by shorts was low on Wednesday, as was the quantity of trading in the 4pm closing cross: 1.6M shares on Wednesday v. 4.2M on Monday. TSLA's reaction to the rise of QQQ in the afternoon might have suggested manipulations underway if volume was low and manipulation indicators were high, but such was not the case. I'm therefore inclined to believe that some entity was selling heavily on Wednesday, and I open my mind to the possibility that it could be Elon. I say a big dog because retail investors will typically reduce selling and allow the stock to rise with the macros when macros are rising. We'll find out soon enough. We haven't heard any "funding secured, no need to sell TSLA" Tweets from Elon yet, and so his selling or at least the threat of him selling is affecting the stock price. Likewise, Gary Black has an interesting Tweet-series that says once the Twitter deal closes, "arbs" will close their short position in TSLA and transfer Twitter shares to Elon (which will lift TSLA). We'll learn soon enough. When the Twitter deal closes and when Elon says funding secured, expect a nice pop in the stock price. Both could happen at the same time because with court proceedings still hanging over Elon's head, the exact price for Twitter is not certain until a settlement is announced (most likely at exactly the original price) or a court proceeding finally ends (not very likely).

It's time for Elon to stop Tweeting about Ukraine and Russia, no matter who pokes him.

This Teslarati post says that retail investors have bought $500 million of TSLA in the last 5 days. Glad to hear that retail is loading on this weakness instead of selling. Sometime next year many big dog fund managers will realize they want to get into TSLA.

Keep those seatbelts snug. I picked up another DITM leap on Wednesday and will do so again if there's another big dip. There will indeed be an end to this storm. Thankfully, Q3 Earnings Report is only two weeks away now.

Percent of selling tagged to shorts remained low, suggesting little in the way of manipulations.

Yields on 10 yr. treasury bonds popped back up to about 3.75%

Max pain Wednesday morning was 255, same as the day before. Strike 250 is nearly neutral though and 255 is the first call-dominated strike

Tuesday's options volumes

TSLA closed about a dollar below the lower bollinger band on Wednesday. The 50 day moving average is staying close to the 200 day moving average but moving slightly away. We really don't want to see a Golden Cross followed by Death Cross. Instead, we want the Golden Cross to occur when we are definitely on the way up again.

Conditions:
* Dow down 42 (0.14%)
* NASDAQ down 28 (0.25%)
* SPY down 1 (0.23%)
* TSLA 240.81, down 8.63 (3.46%)
* TSLA volume 86.2M shares
* Oil 88.15
* IV 65.8, 65%
* Max Pain 255
* Percent of TSLA selling tagged to shorts: 46%

 

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TSLA chart above

QQQ chart above

Whatever strong selling pressure we saw on Wednesday disappeared on Thursday and TSLA finished about half a percent below the NASDAQ. QQQ was bouncing up and down through the red/green zone through about 2pm and so was TSLA.

The biggest distraction during the day was news about Elon's court battle with Twitter. Despite both sides agreeing to close the deal with the original terms, Twitter wished to keep the trial on track, nonetheless, but the judge ultimately decided to support the contention of Elon's team that they needed to conclude the financing ASAP and not delay the deal any further. The best source for the activity on Thursday was this article by AP. Developments include:
* 'They (Elon's attorneys) said Musk’s financial backers “have indicated that they are prepared to honor their commitments” and are working to close the deal by Oct. 28.'
* 'Musk attorney Alex Spiro said in a statement Thursday that “Twitter offered Mr. Musk billions off the transaction price” but Musk “refused because Twitter attempted to put certain self-serving conditions on the deal.”
So... don't hold your breath for the Twitter overhang to disappear this or next week.

Substantial good news was released on Thursday as well:
* Reuters says that the EPA will propose that EVs become available for renewable fuel credits. Rob Maurer in his youtube video says this could be a big deal for EV manufacturers.
* Teslarati says that Standard & Poors upgraded Tesla two positions on their bond rating so that bonds are now considered investment grade. A tip of the hat to TeslaBoomerMama for being such a positive advocate for Tesla and its investors on this issue.
* Elon Tweeted that Tesla semi-truck deliveries begin December 1 with deliveries to Pepsi

Why then didn't TSLA climb on Thursday with this large quantity of good news being released? Well, if you look at the chart below you'll see that percent of selling by shorts jumped up to 59%. Volume dropped from 86M shares to 68M shares from Wednesday to Thursday, making manipulations easier. Someone really didn't want TSLA rising on Thursday. The good news is that all this good news is going to help Tesla going forward.

Percent of selling tagged to shorts jumped way up to 59%, suggesting lots of manipulations

Yields on 10 yr, treasury bills rose above 3.8% on Thursday

Max pain dropped $7.25 to $247.50 by Thursday morning.

Wednesday's options volumes

The stock price bounced off the lower bollinger band during its gyrations on Thursday.

Conditions:
* Dow down 347 (1.15%)
* NASDAQ down 75 (0.68%)
* SPY down 4 (1.03%)
* TSLA 238.13, down 2.68 (1.11%)
* TSLA volume 68.2M shares
* Oil 88.99
* IV 66.9, 72%
* Max Pain 247.50
* Percent of TSLA selling tagged to shorts: 59%

 

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TSLA chart above

QQQ chart above

Man, what a painful week this has been. I've seen worse with this stock, though, and at times Tesla really did have a problem that needed solving quickly, as opposed to now. We've recovered to new all time highs from all of them, and this one will be no different.

On Friday the macros threw another tantrum because as CNBC pointed out here the employment numbers came in better than expected. Thus, Mr. Market assumed the Fed is going to be all that much more inclined to continue the inevitable interest rate hikes, at least in October. Meanwhile, inflation peaked in June and the numbers have been mostly level since. Thus, the economy is showing great resilience to the Fed's punishment, inflation is mostly flat since June, and the Fed is determined to continue the floggings until morale improves. I continue to believe that the CPI numbers we see in November (October's) will show a decent decline because starting in October or 2021 the base from which CPI numbers are computer began a significant rise.

As far as Q4 is concerned, Tesla's current production suggests another record quarter. China deliveries are the current focus. With Shanghai production ramped up, I seriously doubt that Tesla just plans to end the quarter with too many excess vehicles. In particular, did you notice that in the first week of October holiday in China, Tesla did not close for the entire week but managed to minimize the closures with extra pay? This holiday would have been a perfect opportunity for Tesla to reduce production by a week if they foresaw demand issues for the quarter's production, but they didn't do it. Perhaps Europe demand is high enough to pick up the slack, perhaps a price cut is planned for China deliveries. We can pretty much expect a China demand question at the Q3 ER conference call, so we only have a week and a half to wait.

An exception to the too many excess vehicles statement could be U.S. production during Q4. With IRA likely giving attractive discounts on most Teslas purchased after Jan 1, 2023, Tesla is going to sell every vehicle they can manufacture or carry into 2023, and if too many U.S. buyers delay delivery until 2023, a big January delivery is possible. If Hertz and other rental companies are aggressive enough with Q4 deliveries, we may not see that carryover beyond Jan. 1. Keep an eye on inventory to see what develops as the quarter progresses.

Until macros or the approach of Q3 ER brings TSLA share prices to more reasonable levels, hang in there. You really don't want to be the last investor to sell before a big turnaround. For those of you with ITM call options in your IRA, consider rolling. I've been doing free or nearly free rolls during descents and climbs of the stock price. Use the volatility to your advantage.
As far as the cause of the three week dip, it's a combination of macros and some specific TSLA fears generated by TSLA ending up too many China vehicles undelivered in Q3 as well as Twitter fears. Those fears are then magnified by hedge funds shorting the dips and by investors buying puts, which cause the MMs to delta-hedge by selling shares. The share price falls when too many investors are sitting on the sidelines, waiting for a solid turnaround. The whole process reverses once TSLA and the market are through the dip and heading upwards. Tesla may very well lead the macros in its recovery.

News:
* Teslarati reports that the 9000 ton IDRA Giga Press that will stamp out cybertruck panels will soon be at the Austin Gigafactory. The article quoted Alex as stating that the press had already been at the Houston port for 8 days. Looking forward to sightings of cybertrucks roaming the streets near Austin in 2023.
* This Tweet shows that Tesla is producing some Model 3 LR vehicles that are being sold as inventory cars

Percent of selling tagged to shorts remained high on Friday at 58%, indicating lots of manipulations. Shorts and hedge funds who are looking for a profitable exit from this stock will do their best to maximize the dip before they cover. As they say, it's always darkest before the dawn.

The good employment numbers suggest more interest rate pressure ahead, and so yields on 10 yr. treasury rates rose to nearly 3.9%. Be prepared for the market to give a shudder if yields rise to 4%.

Max pain on Friday was 245.

Max pain for this coming Friday is 250.

Here was Thursday's options volumes as reported Friday morning

Ouch!

TSLA spent the week following the lower bollinger band down, with the stock price closing about $2.50 below the lower bb on Friday.

For the week, TSLA closed at 223.07, down 42.17 from 265.24 the previous Friday. Please get out for exercise this weekend and spend time with people you love. Shed that stress of the past week's market trading, Better days lay ahead.

Conditions:
* Dow down 630 (2.11%)
* NASDAQ down 421 (3.80%)
* SPY down 10 (2.79%)
* TSLA 223.07, down 15.06 (6.32%)
* TSLA volume 83.1M shares
* Oil 92.64
* IV 69.0, 80%
* Max Pain 245 for past Friday, 250 for coming Friday
* Percent of TSLA selling tagged to shorts: 58%

 

[Papafox]

TSLA chart above

QQQ chart above

I consider Monday's trading as a positive for TSLA because we stood out from the market in a positive way. Apple did too. Could this be the strongest two tech stocks leading a recovery from the Powell dip? Perhaps, we'll just have to watch and see. When QQQ was down nearly 2% in early afternoon, TSLA was still flirting with green, so this is real relative strength. TSLA closed down 0.05% on volume of 67M shares vs. NASDAQ down 1.04%. GM and Ford were both down substantially on analyst downgrades.

This week we see the PPI released Wednesday morning before market open and then Thursday the CPI comes out at a similar time. This is a flip-flop of the order from recent months. I'm not holding my breath on this month's combination but next month's CPI inflation indications should show the effect of the rising base numbers from 12 months ago. The release number could then improve monthly through June of 2023.

Mayur Thaker Tweeted this chart showing Tesla's cash conversion cycle going negative. The CCC is a comparison of how many days it takes from paying for the parts until getting paid for the vehicle. You can see back in 2015 TSLA could go over 60 days from the time the parts were paid for until cash was received for a vehicle. That number dropped to 20 days for much of 2017-2020 and then went negative in 2021. Going negative means that Tesla collects payment for the car BEFORE payment for the parts is due. This shows great efficiency in turning parts into vehicles, transporting those vehicles to the buyers, and then closing the deal. Having the industry clout to negotiate a sweet deal with suppliers is a big part of the equation as well. As Berlin and Austin increase their output, CCC should fall further, owing to proximity for transportation. Increases in output increase cash, rather than decrease it in the short run when there's negative CCC. Bullish.

End of Quarter Issues
Gary Black has recently been ranting about how Tesla needs to fix its end of quarter situation in China by cutting prices. My belief is that Tesla was caught off guard in Q3 by a sudden dip in fulfilled orders as Chinese buyers held off purchasing while anticipating an early October price cuts. Some even theorize that many Chinese buyers were actually gaming Tesla and trying to force Tesla to cut prices in the end of Q3 in order to realize good delivery numbers. Who knows? In any event, if there was some anticipation of lower prices or some gaming the system, Tesla did the right thing by not responding to it. Otherwise, Chinese buyers would use the strategy again and again. My feeling is that Tesla has a better handle on the China demand situation for Q4 and will either cut prices when the time is right or continue unraveling the wave by shipping more vehicles near quarter's end. Some observers believe that there simply aren't enough available Roro ships to get all the needed vehicles to Europe in 1st half of a quarter and some unraveling of the wave is needed.

As far as the U.S. facing a similar situation, Tesla just took a step toward reducing the declined deliveries in Q4. TMC member @LYTRIDR said in this post that Tesla sent a message informing that if this buyer didn't remove his delivery hold before Oct 15 that the price lock-in would disappear along with the deposit and a new order would need to be placed (which puts one at the end of the line for deliveries). While the technique sounds a bit draconian, it will be effective at reducing the incentive to avoid Q4 deliveries. Again, watch inventory car availabilities and delivery time estimate changes as the quarter unfolds.

Notes:
* RBC dropped their TSLA price target from 367 to 340. Lets see... a rise from 223 to 340 would be 53% upside. Still good by Wall Street standards if they're right.
* TMC's @The Accountant reports in this post that Shanghai wholesale sales are up 60% over September of 2021

Percent of selling tagged to shorts plunged to 34%, suggesting extremely little or no manipulations in a downward direction

Yields on 10 yr. treasury bonds stayed relatively level just below 3.9%, but there was a quick afternoon spike which was of such short duration it could have been a manipulation to trigger the 4% alarms (yes, 10 yr. treasury bonds can be sold short).

Max Pain on Monday morning was 240. We see put spikes at 210 and 220 while 230 is slightly call-dominated and strikes above that number have call spikes.

Last Friday's options volumes for this coming Friday's expiration

Notice the low of the day touched the lower bollinger band but the strongest message of the candle is that TSLA just didn't go very far between opening and closing and would have closed green if not for the last-minute trading going into the closing cross.

Conditions:
* Dow down 94 (0.32%)
* NASDAQ down 110 (1.04%)
* SPY down 3 (0.76%)
* TSLA 222.96, down 0.11 (0.05%)
* TSLA volume 66.9M shares
* Oil 91.13
* IV 67.9, 78%
* Max Pain 240
* Percent of TSLA selling tagged to shorts: 34%

 

[Papafox]

TSLA chart above

QQQ chart above

I agree with @StarFoxisDown! from the main investor's thread that TSLA's strength relative to QQQ and the NASDAQ through most the day was perhaps caused by market makers supporting the stock level so that it was in a good position relative to expiring options for either good news or bad news come Wednesday's PPI report and Thursday's CPI report. TSLA resisted a sizeable dip in the morning by QQQ, but the afternoon dip of QQQ led to one of those overdone dips for TSLA that we're all too familiar with. You see the very steep part of the QQQ dip? That began about 2:44pm. The steep second half of TSLA's dip also began at that time. I suspect hedge funds and algos jumped into the selling as well to give TSLA an oversized dip.

What about the first half of TSLA's dip, which was not accompanied by a similar dip on QQQ? One theory (see in the current Rob Maurer videocast) is that a Tweet by Ian Bremmer accusing Elon of substantial discussions with Putin regarding Ukraine was at fault when it was published by Vice. Elon later totally refuted the claim, but the damage was done. What we see when the MMs are keeping TSLA trading level is that they're willing to do so as long as the pressure to hold the price is not too great. Beyond a certain point, the MMs give up trying.

Rob also pointed out how Models S & X received a tax break of 10%, which should make the vehicles desirable as refreshed S and X are introduced to the China market. Further, he got into the China delivery situation where an increase in production from Shanghai led to undelivered vehicles at quarter's end, even though the China retail sales were barely off expectations (see Rob's shareloft article here). More and more pundits are now recognizing that China likely doesn't have a demand problem. As usual, the spin is used to sink the stock price and when we learn the reality Wall Street is no longer interested.

Some China perspective from Dave Lee. I'll take a 63% year over year increase in sales any day.

Overall, I say that we continue to see evidence that TSLA is executing and the future looks bright, but factors such as the analysts guessing too high on certain numbers can sink the stock nonetheless. Once TSLA turns the corner, hang on.

Regarding turning the corner for the market, we could see the beginning this week if PPI and CPI inflation number come in tamer than expectations. It's anybody's guess this month, but next month I feel comfortable the CPI numbers will start their inevitable drop as the base numbers from 2021 rise. Best wishes to everyone.

10 yr. treasury bonds crept up to 3.95ish on Tuesday

Percent of selling by shorts remained very low at 37%

Max pain Tuesday morning was 235, which explains why the market makers would have worked to keep TSLA above 220 for most of the day.

Monday's options volumes

The slide down the lower bollinger band continues, but at least we didn't touch the lower bb on Tuesday. Meanwhile, the blue 50 day moving average continues to creep away from the red 200 day moving average. Multiple sources suggest 207 is an important support level. With TSLA and the broader markets revisiting June lows, the chances of a turnaround are increased.

Conditions:
* Dow up 36 (0.12%)
* NASDAQ down 116 (1.10%)
* SPY down 2 (0.63%)
* TSLA 216.50, down 6.46 (2.90%)
* TSLA volume 76.4M shares
* Oil 88.59
* IV 69.9, 83%
* Max Pain 235
* Percent of TSLA selling tagged to shorts: 37%

 

[Papafox]

TSLA chart above

QQQ chart above
Wednesday was a rare green day for TSLA, closing up 0.34% on volume of 66.5M shares, compared to NASDAQ's rise of 0.09%. The NASDAQ was pretty tame throughout the day.

When the PPI inflation numbers were released at 8:30am, QQQ lost about half of its pre-market gains while TSLA touched the red then descended into the red for market open. Although the percent of selling by shorts number was a super-low 35%, don't put it past the hedge funds to borrow from non-FINRA exchanges and try to create some fear on market open.

The PPI numbers showed 0.4% increase from the previous month, which works out to be a little less than 5% annual inflation for producer prices. Both goods and services showed the same 0.4% increase, which is a bit higher than the market wanted to see, thus the pre-market dip. Most news outlets pretty much ignored the PPI action. However, the CPI that will be released Thursday at 8:30am will receive more coverage and should have more effect on the market. I'm not holding my breath for good CPI numbers until the report in November.

Yields on 10 yr. treasury bonds dipped slightly on Wednesday

Percent of selling tagged to shorts was way down at 35%

Max pain Wednesday morning was 230. Strikes at 220 and 225 were slightly put negative

Tuesday's options volumes

Out of the past 10 trading days, Wednesday gave us our second green. Fortunately, the trend is at last pulling away from the lower bollinger band.

Conditions:
* Dow down 28 (0.10%)
* NASDAQ down 9 (0.09%)
* SPY down 1 (0.33%)
* TSLA 217.24, up 0.74 (0.34%)
* TSLA volume 66.5M shares
* Oil 87.27
* IV 69.0, 80%
* Max Pain 230
* Percent of TSLA selling tagged to shorts: 35%

 

[Papafox]

TSLA chart above

QQQ chart above

Thursday was the release of CPI numbers day. Just as on Wednesday's PPI day, the market was optimistic leading into the 8:30am release but the numbers disappointed and the CPI carries more weight than the PPI. Alas, the numbers came in hotter than the preceding months of level trading and the market called "Hot CPI!" In reality, recent CPI releases may be telling a story of lagging data that skews the inflation picture and could lead the Fed to overdo its interest rate increases when inflation has already peaked. Cudos to @juanmedina in this TMC post which shows a Wharton finance professor pulling back the veil and showing why inflation in housing was greatly underreported in the second half of 2021 and is now being grossly overreported. Let's hope a movement to pressure the Fed on the housing data it uses materializes.

Both TSLA and QQQ dropped in pre-market trading when the numbers came out, but shortly after market open QQQ started recovering but TSLA didn't. TSLA dipped about 5% to QQQ's 3% dip. A funny thing happened, though, QQQ started rising quickly and TSLA didn't. By 11:00am TSLA wasn't far from it's daily lows while QQQ had recovered more than half its morning losses. So, in a period of about 15 minutes, while QQQ was heading to the green, TSLA started rising like a Falcon 9 heavy and both charts show a crossing into the green between about 11:15am and 11:20am.

Why did Tesla hesitate so long near 207? As you may remember, I have mentioned that 207 has been considered a support level for TSLA recently. TSLA went down to that support level, couldn't bust through, but didn't bounce significantly either. Why no bounce? I'll bet you a nickel it was because the hedge funds and shorts trying to keep the TSLA dip going were shorting and spoofing the sugar out of TSLA to try and get it to punch through 207, generate fear, and go lower. It didn't succeed. Part of the characteristic of many support levels is that they can deflect the price approaching that level for a given amount of time because you have buyers who have resolved to buy at that level and who see that the support level is holding. The pirates were trying to bust support at 207 and because the macros were climbing it did not succeed. As QQQ began an accelerated climb around 11am, buyers started grabbing TSLA in anticipation of what comes next, and the stock shot all the way to the green line in about 15 minutes. It was a great setup for a day trader because so often when the macros pressure a capping exercise and the macros keep rising significantly, that cap is going to fall apart at some point and it did. The 207 support level remains intact but it can eventually be broken by a concerted enough effort. That didn't happen on Thursday, though.

Indications for why the cap fell apart included:
* Yields on 10 year treasury bonds subsided from their market open peak, which caused the macros to run higher
* Volume for TSLA was 91M shares, nearly double what we see on calm days, which makes capping and other manipulations more expensive and more difficult
* Percent of selling by shorts rose to 44% from about 35% and I trust the hedge funds were heavily dipping into non-FINRA exchanges to find sorting shares.
* 2.3 million shares traded during the 4pm minute, suggesting elevated day-short covering

The big takeaway from Thursday's trading is that the market is getting tired of stock prices going down. There are great prices out there and whenever a good uptrend develops, FOMO sets in. The reverse can be true too: if a big downtrend develops the fear factor can reignite. We have a dynamically unstable situation where the market can head either way. The fascinating thing is the market did its usual swoon after somewhat bad news came in, then it completely erased that dip and QQQ ended the day up over 2%. That tells you some serious FOMO was developing once the recovery began.

Reminder: Q3 Earnings report is Wednesday of next week. Only 4 trading days left. Maybe we will see buying pick up in the day or two ahead of the ER. Tick, tick, tick.

Why did the market drop in the morning and then rise in the afternoon? Check out Thursday's 10 yr. treasury yields chart. When the CPI ran hot, bond yields quickly spiked, which scared the market. Cooler heads prevailed, the bond yields came down, and the stock markets went up. Yields closed the day a bit above 3.95%. The market could react with emotion again if/when we cross 4%.

Percent of selling by shorts came in at 44%, suggesting increased manipulations from recent trading days.

Max pain was 225 on Thursday morning, down $5 from the day before. On Wednesday we saw 220 and 225 strikes dominated slightly by puts, but on Thursday the calls took the lead at both strikes. This change give the market makers a very small amount of incentive to allow the stock to creep below 220, but check out those towering 200 and 210 puts. They grew hugely since Thursday morning, which put the market makers in a position where they had to delta-hedge those newly-sold puts by selling TSLA stock. That selling of course put downward pressure on our stock. The hedge funds who bought 200 and 210 leaps since Thursday morning are the same pirates who would be working to push TSLA below its support level of 207.

Wednesday's options volumes

TSLA continued to remain above the lower bollinger band (way above at close). In this expanded timeframe view of the tech chart, you can see the triple bottom that was established on Thursday. That could potentially be the start to a recovery, depending on what Darth Powell has to say.

Conditions:
* Dow up 828 (2.83%)
* NASDAQ up 232 (2.23%)
* SPY up 9 (2.64%)
* TSLA 221.72, up 4.48 (2.06%)
* TSLA volume 91.1M shares
* Oil 89.19
* IV 68.0, 77%
* Max Pain 225
* Percent of TSLA selling tagged to shorts: 44%