Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Friday was yet another high volume day with positive TSLA trading and suggestions that Elon is still selling. Although Friday's volume dipped below Wednesday's and Thursday's 125+M volumes, we still saw 114M shares trade hands. Noteworthy is the suggestion on both Thursday and Friday that the likely Elon selling came to a stop early on both days. On Thursday you can see a substantial increase in stock price after 3pm, and on Friday you can see that TSLA departed from the whack-the-mole at the red/green line scenario to one of strong climb after 12:40pm.

One theory could be that Elon selling stopping near mid-day on Friday would suggest he is done with the selling now. Another possibility is that since the Form 4s for four days of selling won't be due until Monday evening, some shares might have been left for Monday (Nov 11 was a holiday at the SEC, thus an unusual 4 day window before filings are needed). It's time to finish up the selling and give the all clear!

We're seeing heavy FUD at present. Why? TSLA is in a potential bottom for its stock price because we're possibly seeing two positive events happening close to each other: Elon finishing his Twitter-purchase TSLA selling and Thursday's CPI numbers gave the market hope that the rapid rise in interest rates by the Fed may be nearing an end. Something smaller than 0.75% would be welcomed by the market. FUD sometimes works and allows shorts who are covering or hedge funds that are buying to acquire shares at a reduced cost. We know from Ihor Dusaniwsky's info in our Thursday post that shorts were net covering last week. The mischief is most common near a critical point, such as a low after a long drop.

FUD #1: A few China Tesla observers last week pointed out that a very large Tesla price cut in China was incoming. A popular delivery and production observer commented on the rumors. They turned out to be false. Rumors such as this can cause Chinese buyers to hold off purchasing vehicles in the hopes that a price cut is coming before quarter's end.
FUD #2: Reuters ran a story saying that Tesla was contemplating shipping Shanghai-made Teslas to the U.S. in 2023. Elon personally killed this rumor with a single-word Tweet "False". The rumor could make it harder for a revision to the IRA that gives foreign EV makers some access to pass. The article also casts doubts upon China demand.
FUD #3: Electrek said that Tesla was canceling solar projects en mass. Tesla responded proactively by Tweeting an ad for solar and then Tweeted a post that says Tesla is recruiting solar installers.
Bottom Line: Stay on your toes looking for FUD during critical times such as this.

For Monday, the market will try to get an idea of whether Elon is doing any more selling. Volume and capping near a specific price may be the best giveaways. The market may remain skeptical until Form 4s are published Monday evening and Elon gives a "done selling" Tweet. Expect a positive response to that Tweet.

Percent of selling tagged to shorts rose to 47% on Friday, suggesting increased manipulations

No 10 yr. treasury bond trading chart was available for Friday, Veteran's Day

Max pain Friday was 197.50. That number makes sense with puts dominating at 190 and a tall call wall at 200. Closing price came in at 195.97.

Thursday's options volumes

This coming Friday's max pain is presently 215, giving the stock room to run higher if Monday is strong. Looks like that number was a remnant of a monthly expiration with lots of high put walls mixed with the call walls.

TSLA was way down in the cellar on Wednesday but good CPI numbers Thurs morning pulled the macros and TSLA higher on Thursday and Friday so that the stock price closed very close to max pain. Chart courtesy of @JimS

TSLA's close on Friday at nearly 196 undid the previous 2 days of deep dips. Notice the high volume seen throughout the week.

For the week, TSLA closed at 195.97, down 11.50 from the previous Friday's 207.47. Hoping you enjoyed your weekend and are ready for a lively week ahead.

Conditions:
* Dow up 32 (0.10%)
* NASDAQ up 209 (1.88%)
* SPY up 4 (0.97%)
* TSLA 195.97, up 5.25 (2.75%)
* TSLA volume 114.1M shares
* Oil 88.96
* IV 60.9, 43%
* Max Pain 197.50 for past Friday, 215 for coming Friday
* Percent of TSLA selling tagged to shorts: 47%

 

[Papafox]

TSLA chart above

QQQ chart above

The big news on Monday is that no Form 4 came out that evening. Elon didn't sell on Wednesday of last week, after all. Last Wednesday was the day after Form 4s came out for three selling days, TSLA dropped over 7%, which was a 2.9X multiple on the NASDAQ's dip that day. I suppose we can instead credit fear of Elon selling as the primary cause of last Wednesday's dip being at such a high multiple to the NASDAQ. Let's walk through the trading days as a review.

On Tuesday of last week, Elon did indeed sell, and while NASDAQ finished up about 0.5%, TSLA lost nearly 3%. Wednesday of last week started with TSLA actually in the green after open, but the NASDAQ fell throughout the day and TSLA followed it down, but with high multiple. On Thursday the CPI numbers came out an hour before market open and both the NASDAQ and TSLA closed up nearly 7.4%. Many strong growth stocks gained nearly 2X the NASDAQ's multiple, and we will learn this coming Tuesday evening if Elon selling was a factor in the lower multiple for TSLA. On Friday, the NASDAQ traded up about 1.9% on the momentum of Thursday's gains while TSLA managed 2.75%.

Which brings us to Monday of this week. QQQ began a sizeable dip in premarket trading and bottomed out at 9:48am, down about 1.2%. Meanwhile, TSLA followed this dip down but bottomed out at 9:50am, some 4.6% lower. That's nearly a 4X multiple, so either there was some Elon selling or shorts were making us believe that Elon was selling. In mid-afternoon QQQ ran into the green when TSLA was still bouncing around in the red. Again, this could be the signature of some selling by Elon or some other type of TSLA weakness relative to QQQ. For the day, NASDAQ closed down 1.12% while TSLA closed down 2.56%, a greater than 2X multiple. We saw a massive 2.8M TSLA shares trade during the closing cross at 4pm on Monday. There should have been plenty of buyers for the closing cross since shorts were closing positions last week and probably are this week too, and Elon could have been the big buyer. We'll see within a few days. Percent of selling by shorts continues to rise, now at 50%, suggesting a slow uptick in manipulations.

So, what to expect for Tuesday? Macros are trending green. OTOH, the lack of an "all clear" signal from Elon suggests some more reduced TSLA performance (relative to its 2.1X NASDAQ beta) both because of some actual selling on chosen days and because of fear of selling. Manipulations that leverage the fear of Elon selling are always a possibility. Shorts are covering and I for one won't donate my shares to their cause. The old adage "buy low and sell high" still rules. These are amazingly low TSLA prices for those with dry powder. For me it's still HODL time. My Jan23 call options are almost entirely rolled now and I am looking for opportunities to take the rest of my DITM Mar23s to Jun23s.

10 yr. treasury bond yields remained subdued below 3.9% on Monday

Percent of selling tagged to shorts continues to rise, now at 50%, suggesting increased manipulations

Max pain Monday morning was 210, reflecting the longer time that this particular expiration date has been available and the generally higher strike prices chosen in past weeks for puts and calls.

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

The most apparent feature of Monday's tech chart was the continued decrease in volume that began with Friday's trading and accelerated with Monday's. Still, 92M volume is way above normal for TSLA.

Conditions:
* Dow down 211 (0.63%)
* NASDAQ down 127 (1.12%)
* SPY down 3 (0.85%)
* TSLA 190.95, down 5.02 (2.56%)
* TSLA volume 91.8M shares
* Oil 85.44
* IV 61.7, 47%
* Max Pain 210
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday was a strong day for TSLA and the NASDAQ until an afternoon dip from a news story stole much of the gains. The important point was that TSLA was trading at an elevated beta to QQQ again. TSLA topped 200 a few times in the morning giving it a 5% gain compared to a 2.5% gain for QQQ, or about a 2X multiple. This was the first day since Elon's selling last week when we saw TSLA trading at normal multiples to the macros, which is a good sign that the market is relaxing after the Twitter selling and no longer holding its breath for an "all clear" Tweet. No such message came from Elon Tuesday evening regarding selling and no Form 4s appeared.

The day's strength came because of lower than expected Producer Price Index numbers for October. You can see the big surge in TSLA and QQQ prices at 8:30am when the numbers came out. TMC's @The Accountant in this post produced comparison charts of PPI and CPI, with the point that PPI can be a leading indicator for CPI.

PPI inflation rate declined more than expected for Oct 22, which led to a rally in the markets on Tuesday. Once again, I emphasize that inflation peaked in early summer of 2022 and has been steadily decreasing ever since.

Overall, we saw some hint of manipulations between about noon and 1:30pm as TSLA drew a nearly straight line near 198 after being spanked for daring to climb above 200 a few times. Percent of selling by shorts was 45%, and we saw 1M shares trade just after the closing cross at 4:02pm. I suspect the market makers didn't want 200 to fall this early in the week.

The news story which brought the market down, starting around 1:15pm, was a Russian cruise missile landing in Poland and killing two people. Poland and NATO are not overreacting, and so the market should be okay by Wednesday.

Because TSLA is close to its 52 week low still, FUD is plentiful. A worker at Giga Texas said, "I'm going to die in this factory" as part of a legal action against Tesla, and Consumer Reports is back to its tired old tricks of saying Tesla EVs are unreliable because of things like panel gaps and paint flaws. Sigh. Meanwhile, mainstream media is on a kick that since Elon is physically in the Twitter HQ in San Francisco, he can't be doing Tesla work and the automaker will suffer. Personally, I think his cell phone still works and he takes calls on important topics, but otherwise Tesla managers carry on.

Then there's the CYA reactions. Adam Jonas warned that TSLA could test $150 sometime before year end but he kept his price target above $300. Yes, this is the same Adam Jonas who typically gives 3 price targets, just to make sure no one says "Tesla caught you off guard". Additionally, @Troy publicized and supported the justification for two rumors (since proven untrue) of massive Tesla price cuts in China. Troy feels that there are going to be too many vehicles left unsold if Tesla doesn't make huge price cuts. The thing is, Tesla knows the rate of ordering and has a plan to deal with it. Working in Tesla's favor is a subsidy that will disappear at the end of 2022. When rumors are spread and then reinforced about price cuts in China, it causes some Chinese customers to hold off buying in the hopes of a big cut near year end. The rumors can become sell-fulfilling. Tesla didn't bite in Q3 and probably won't bite in Q4, so it's just unwise to create expectations of coming price cuts. Here's hoping that Troy cools it. In the meantime, we should keep an eye on how the China delivery situation unfolds.

News:
* Electrek reminds us that Dec 1 will be the delivery event for Tesla Semi.

Another dip on 10 yr. treasury bond yields brought them below 3.8% on Tuesday

Max pain Tuesday morning stood at 206.67. Notice the call wall more than 40K tall that helps explain the resistance we saw as TSLA tried to remain above 200 on Tuesday.

Monday's options volumes

As volumes have been coming down during the past 5 trading sessions, price continues to recover.

Conditions:
* Dow up 56 (0.17%)
* NASDAQ up 162 (1.45%)
* SPY up 3 (0.85%)
* TSLA 194.42, up 3.47 (1.82%)
* TSLA volume 88.7M shares
* Oil 86.83
* IV 62.1, 52%
* Max Pain 206.67
* Percent of TSLA selling tagged to shorts: 45%

 

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TSLA chart above

QQQ chart above

Of all the charts for Wednesday, the most important was the 10 yr. treasury bond chart below, because yields closed below 3.7%, nearly 0.5% lower than what we were seeing just two weeks ago. The market is signaling loudly that its rate expectations are falling. As rates fall, growth stocks such as TSLA gain in favor.

Despite this excellent news, Wednesday was a down day for the market, with NASDAQ closing down 1.54% and TSLA down 3.86% or 2.5X. Volume was a pretty typical 66M shares traded. I think the reason for TSLA's high beta compared to NASDAQ and QQQ has to do with manipulations returning now that volumes are lower. The QQQ chart shows a morning dip bottoming out at 10:55am and an afternoon dip bottoming out at 3:35pm. These dips were pretty even. OTOH, if you look at TSLA, the afternoon dip was quite a bit deeper than the morning dip. Moreover, QQQ ran higher quite quickly after the afternoon dip but TSLA rose much less. You can either deduce that 1) TSLA just is not a good stock at trading in the afternoon or 2) the lower-volume afternoon hours are the time when manipulations take place. I choose the latter. If the Wall Street pirates picked your pockets for an average of 50 cents a day over each of the approximately 250 trading days in a year, the stock would be $125 lower at year's end. This is why I believe we see such volatility in TSLA. During times when there is something to worry about in the air, Wall Street can keep TSLA subdued. When a good quarter shows that the stock is something you need to own, though, then the buyers pile on and up she goes to perhaps reach the price targets of the most optimistic analysts. Let's hope Q4 is the catalyst for the next "up she goes".

Likewise, if you look at Tuesday's chart, after the big dip from the missile landing in Poland, you can see that QQQ recovered quite a bit better than TSLA. Again you can believe that TSLA just has a trading problem in afternoons, but I see it as quite obvious manipulations. It's easier to hold a stock down than to push it down. The implication is that each time the pick pockets hit TSLA, the spring tightens just a little more. You truly want to be around when the spring lets loose.

Regarding Q4 production and demand, @Gigapress has posted an estimate of Q4 production and deliveries as a counterbalance to Troy's posts. Gigapress also posted here in a more detailed discussion of Troy's estimate. Gigapress believes Tesla will hit the greater than 50% production increase over 2021 and estimates that deliveries will be quite a bit above Troy's estimates.

News:
* Model S Receives 5-Star Euro NCAP Safety Rating

Yields on 10 yr. treasury bonds dipped below 3.7% on Wednesday. This is a huge development for growth stocks.

Percent of selling tagged to shorts climbed to 50% on Wednesday, suggesting increased manipulations.

Max pain Wednesday morning was 205. Why haven't the market makers allowed TSLA to climb above 200? Perhaps they strongly suspect that max pain will fall to 200 (or below) by Friday because of their efforts to hold and keeping TSLA below the 200-strike call wall is in their best benefit come Friday.

Tuesday's options volumes

With no one holding their breath about Elon selling any more, daily volumes have come down, enabling various forms of manipulations.

Conditions:
* Dow down 39 (0.12%)
* NASDAQ down 175 (1.54%)
* SPY down 3 (0.76%)
* TSLA 186.92, down 7.50 (3.86%)
* TSLA volume 66.0M shares
* Oil 84.45
* IV 63.4, 55%
* Max Pain 205
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

I want you to take a look at the two charts above. TSLA was outperforming QQQ at times shortly after morning open. Both QQQ and TSLA got hit with a late afternoon dip, but do you notice that almost all of the QQQ dip disappeared by market close but more than half of TSLA's dip remained at close.

Thursday got off to a rocky start when retail sales came in promising, which of course is bad news for the market because it means that Darth Powell will be just that much more focused on cranking up the interest rates. Sure enough, a couple of his Fed lieutenants spoke up on Thursday, with Bullard saying the interest rate hikes by the Fed have so far only had "a limited effect" upon inflation and Esther George telling the WSJ on Wednesday that with the labor market so tight, she doesn't know how inflation can decline sufficiently without "some real slowing in the economy." Thus the Powell hawks spoke, scared the market again, and the net result of talk about higher rates was that the 10 yr. treasury bond yields rose (as seen in the chart below). This small rise (compared to last week's massive dip) got the market worrying about growth stocks again. When TSLA took the late afternoon bobsled run down the hill, other growth stocks participated as well. By end of day, the Dow had recovered nearly all its losses for the day, the NASDAQ closed down 0.35% to TSLA's decline of 2.01%. Nvidia lost 1.46%, Amazon 2.34%, and ARKK 2.08%.

Personally, I see the Fed as a divided organization at present with Powell and the hawks doing everything they can to scare the market lower and thereby affect big purchase decisions while more moderate members are watching inflation fall without any help so far from the Fed's efforts so far and thinking that when the effects of the rising interest rates do kick in, it is going to be too much too late. In the next Fed statement, I'm hoping to hear the voice of the moderates taking on even greater importance. Of course the early December PCE report and the next CPI report on the first day of the mid-December Fed meeting will be critical to giving the moderates more power in the Fed decisions. Fingers crossed.

Despite yields on 10 yr. treasury bonds falling nearly 0.50% in the past two week, the creeping up of yields on Thursday by about 0.15% propelled the market to get its knickers all tied up in a knot.

As expected, the market makers needn't fear about getting TSLA to 205 this week because max pain fell to 200 on Thursday morning. Looking at the call and put walls, strike 195 is still call dominated but 190 is about to become neutral, so anything below 195 for Friday's close would probably suit the market makers.

Wednesday's options volumes

With TSLA volume at a modest 63.8M shares, and with the Darth Powell team stirring up fear in the market once again, TSLA's 2% drop on Thursday was easy-peesy for the hedge funds.

Conditions:
* Dow down 8 (0.02%)
* NASDAQ down 39 (0.35%)
* SPY down 1 (0.31%)
* TSLA 183.17, down 3.75 (2.01%)
* TSLA volume 63.8M shares
* Oil 82.12
* IV 63.8, 56%
* Max Pain 200
* Percent of TSLA selling tagged to shorts: 48%

 

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TSLA chart above

QQQ chart above

Friday saw a really fast pushdown for TSLA as market trading began, a far quicker push than what transpired at other similar growth companies. I credit a shove by the shorts for that rapid dip. Overall, even with the push off the market open cliff, TSLA fared similarly to most other high growth tech-like companies. While the NASDAQ actually closed up 0.01%, TSLA lost 1.63%, compared to Nvidia's dip of 1.71%, Amazon's dip of 0.75%, and ARKK's dip of 1.55%.

Call of the day goes to @Curt Renz who said "A survey of today’s open interest and trading volume in TSLA options, suggests that $180 would be the most profitable target for big option writers..." in this TMC post.

The bad news is that when there's uncertainty in the air, such as Elon selling or more recently, "What will the Fed say next?" manipulations are easier. Recent data shows that short interest jumped about 7 million shares between October 14 and October 31. No doubt with Elon's selling in early November it jumped more. TSLA is experiencing an old fashioned bear raid at the moment. Unfortunately, bear raids are often focused on short weeks, such as the Thanksgiving week with no trading on Thursday and only half a day of trading on Friday. Stay on your toes.

Over a longer time frame, things of course look much better for TSLA. Let's first start with the macros, and inflation (and Fed rates) in particular. CPI inflation peaked in June 2022 and has been descending ever since. Part of the reason has been the base months for comparison, starting in October, have been/will be rising quickly, which will help diminish the 12 month comparison numbers. Let's look specifically at oil prices now:
2022 West Texas Intermediate oil prices:

So, now we're in November and West Texas Intermediary Oil just dropped below $80/barrel. If that dip continues for the rest of November (a third of the month) then the energy cost component of the CPI will be coming down (in addition to the base month of the 12 month comparison coming up. Note, too, that max oil occurred in Jun, the pivotal month for inflation, and that relationship is not coincidence. Bottom line: I think the moderates on the Fed are going to become the majority soon and trim Powell's hawkish ways. That progress with interest rates will in turn get the macros heading higher and TSLA should be pulled along in its wake.

For a positive view on future TSLA valuations, check out this video by The Tesla Economist.

Those members of our retail community who have been tracking production are feeling good so far of TSLA exceeding 50% growth in production, 2021 to 2022. The big question now is whether a sufficient number of those vehicles will be delivered in Q4. On the positive side, please refer to @elasalle 's post regarding Franco now tracking 21 ships. Tesla is indeed unwinding the wave, and hopefully analysts will appreciate the need for this transition. We've just had a second wave of rumors about Tesla price cuts in China, likely once again aimed at creating expectations of cuts and diminishing Q4 deliveries. Fortunately, a subsidy disappears at the end of Q4 and buyers in China will not likely be able to game Tesla into a forced price cut to move vehicles at year's end. Tesla would rather put more vehicles on ships to Europe in order to avoid too large a surplus in China.

Of course the IRA effective Jan 1, 2023, is a threat to U.S. deliveries in Q4. I have little doubt that the writers of the bill took aim at Tesla specifically in making Q4 deliveries more difficult for the one EV-maker delivering very high quantities of U.S. vehicles in Q4. Deliveries to car rental companies in Q4 remains a mystery, but from visiting various Tesla showrooms around the country I am seeing sufficient inventory in place so that walk-up buyers can take quick delivery of a Model S, X, 3, or Y, often in the desired favorite color. We'd rather see 4 months of waiting customers, and we might well see that in the U.S. if the IRA spurs heavy demand in Q1, but having ready inventory in a Tesla showroom is actually a good thing in that it increases demand (when a buyer needs a vehicle right now, they can once again consider a Tesla). TMC's @StarFoxisDown! in this post makes note that the massive profits from Q4 will spur needed recovery of the Tesla stock price, but the real gem is 2023 as the IRA kicks in, Berlin and Austin continue ramping, and Cybertrucks begin rolling off the assembly line. I share many of these views and have been rolling leaps steadily forward toward at least June 23 so as to benefit from at least one quarter of 2023.

In the meantime, don't let the bears steal your shares in the short term turmoil.

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

Percent of selling tagged to shorts came in at 47% on Friday

Max pain on Friday was 195. This was a monthly expiration, which brought higher open interest and wider distribution of puts and calls than usual.

Thursday's options volume

Max pain for this coming Friday is 190.

The weekly chart helps us track the various causes of the dips. Friday 11/4, Mon. 11/7, and Tues. 11/8 were Elon's selling days to buy Twitter. The stock drifted lower on Wednesday 11/9 on fear he was was still selling (and likely some help from the short-sellers). Thurs 11/10 saw a rebound in TSLA as CPI numbers came in cool. Tuesday 11/15 was an up day with PPI numbers coming in cool but we lost half the day's gains when a missile killed a couple people in Poland. After the excellent news of the cool PPI following the cool CPI of the week before, the Fed Hawks started squawking and drove the market down.

Back on Wednesday Nov 9, the day after Elon stopped selling shares, TSLA closed at a new 52 week low of 177.59. The CPI lifted TSLA and the market the next day. Friday's closing price was only about $2.60 above the 52 week low. Expect some support at that 177.59 but expect the shorts to purposely work to push below as well, if possible.

For the week, TSLA closed at 180.19, down 15.78 from the previous Friday's 195.97. It'll be an interesting week ahead. Hoping you all enjoyed your weekends.

Conditions:
* Dow up 199 (0.59%)
* NASDAQ up 1 (0.01%)
* SPY up 2 (0.45%)
* TSLA 180.19, down 2.98 (1.63%)
* TSLA volume 74.5M shares
* Oil 80.08
* IV 63.4, 54%
* Max Pain 195 for previous Friday, 190 for coming Friday
* Percent of TSLA selling tagged to shorts: 47%

 

[Papafox]

TSLA chart above

QQQ chart above

Some big entities were shedding TSLA shares on Monday, as evidenced by high volume of 92.5M shares, closing cross volume of 5.2M in the 4:00pm minute, and a TSLA loss of 6.84% vs. the NASDAQ's 1.09% loss. No news of substance justifies such a bearish reaction (IMHO). The second round of "Tesla will be offering big discounts in China soon" rumors were disproven. Any excess inventory in the U.S. at year end will be sucked up in January, so there's little cause for enough concern to justify these low prices. Naturally, I'm expecting manipulations to be part of the day's poor performance, since this is the classic type of week (short week near apparent price bottom) where bear attacks occur.

To balance the sentiment, I offer you a Tweet from Mayur Thaker, someone on Twitter who has offered significant insight into TSLA in the past.

We could see more price erosion of TSLA as the week progresses, so keep the seatbelt snug. OTOH, when this stock bounces, it could surprise you. Anything's possible this week with the price so low and a bear raid underway.

Yields on 10 yr. treasury bonds were mostly flat by end of Monday and closed at about 3.83%

Max pain was 185 Monday morning. Although strike 185 is call dominated, the big call walls lie at 190 and 200 this week.

Friday's options volumes

The most noteworthy feature of Monday's tech chart is the increased volume, which suggests manipulations alone cannot explain the day's oversized dip.

Conditions:
* Dow down 45 (0.13%)
* NASDAQ down 122 (1.09%)
* SPY down 1 (0.36%)
* TSLA 167.87, down 12.32 (6.84%)
* TSLA volume 92.5M shares
* Oil 79.73
* IV 66.9, 68%
* Max Pain 185
* Percent of TSLA selling tagged to shorts: 45%

 

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TSLA chart above

NASDAQ market hours chart above

Tuesday was a day with good news for TSLA. Moneyball Tweeted that Tesla registrations in China for the week of Nov 14-20 came in at 14,366. If there's a lull in China Tesla purchases it certainly isn't showing up on the weekly registration numbers. Electrek says that Tesla is publicly denying that any price cuts are planned in China for the remainder of the year. Further, Tesla also denied that sales were less than hoped after the earlier price cuts in China. Bottom line: the unsavory interests who are trying to gork Tesla's sales in China for the remainder of Q4 just got called out.

To put China's local sales so far in Q4 into context, TMC's @The Accountant posted in TMC and Twitter a graph which compares the first two months of Q4 likely local deliveries to that of first two months of other recent quarters. As you can see, Q4 is stronger by a mile than any previous quarter, so far. When you consider alleged demand weakness in China is one of the big reasons Wall Street is supposedly shunning TSLA at the moment, the misinformation becomes startling clear.

Let's now return to the TSLA and Nasdaq charts above (using market-hours NASDAQ because QQQ chart got gorked by a spike today). TSLA traded strong in pre-market but as usual received a pushdown before market open. Nevertheless, TSLA spiked back above 170 right after open, as it would do two more times in the morning. Clearly, the Wall Street pirates had other things planned for TSLA on Tuesday and immediately performed a whack-the-mole maneuver any time TSLA dared to stick its head above 170. I think the fear is that if TSLA climbed above 170 that strength could cause a rally and the stock price could get away from them. Therefore, we saw above average volume of 77.6M shares and no less than 1.5M shares trade hands during the closing cross minute of 4pm. Percent of selling tagged to shorts in FINRA exchanges was only 42%, but I strongly suspect the day-shorters were borrowing their shares primarily from non-FINRA sources. TMC member @viridi noted in this post that 170 was being capped heavily with large (up to 12,000 shares) blocks positioned for sale should TSLA rise above 170.

Although TSLA never achieved the type of climb that it deserved after good news, TSLA investors scored a win nonetheless as a substantial effort was put forth by the pirates to contain TSLA's climb and what we learned is that despite the selling thrown at TSLA on Tuesday, there was a sufficient number of buyers jumping in and buying those shares. I see Tuesday as a failed manipulation and an indication that buyers just might be ready to thwart the Thanksgiving surprise that the hedgies were hoping to serve up for us longs. Wednesday and Friday will tell.

Going forward we're still going to be hearing distractions from Gary "Twitter Overhang" Black and all those who have removed their eyes from the big picture, which is that Tesla Q4 production is on track for exceeding 50% growth in 2022 and that all the noise about China demand may in fact just be off base.

Tuesday was the first day since the Fed Fearfest that yields on 10 yr treasury bonds showed a decent dip. We're once again below 3.8%

Max pain Tuesday morning was 175

Monday's options volumes

After 4 negative days in a row TSLA's close just under 170 was a welcome respite and perhaps an indication that the blatant manipulations have brought TSLA to a price point where buyers are returning in spite of the market commotion.

Conditions:
* Dow up 398 (1.18%)
* NASDAQ up 150 (1.36%)
* SPY up 5 (1.35%)
* TSLA 169.91, up 2.04 (1.22%)
* TSLA volume 77.6M shares
* Oil 80.95
* IV 63.6, 55%
* Max Pain 175
* Percent of TSLA selling tagged to shorts: 42%

 

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TSLA chart above

QQQ chart above

The November rout of TSLA from about 225 to below 170 has been swift and in many ways is similar to the strong rallies of the past that just kept on going beyond reasonable stopping points. In both cases, speculation in options (puts in the case of the November descent and calls in the case of many previous mega-rallies) were a major component in developing momentum that wouldn't easily quit. In the present atmosphere of fear begetting more fear, it's easy for a dip to get carried away and go far beyond a reasonable price adjustment for the stock. In fact, with a dip such as November's the intensity can be even worse than with a rally since the speculative buyers of puts (hedge funds, shorts, etc.) is compounded by legitimate investors buying puts as insurance. Don't blame the November dip just on Elon selling, Twitter overhang, or macros. Once the momentum gets going, the momentum drives the put buying, which drives the market maker naked shorting, which pulls the stock price further down. Rinse and repeat.

Such was the situation this past Monday when TSLA descended below 170 in the quarter which almost certainly is going to be 25% or more superior to anything we've seen at TSLA so far. A 1% dip in the NASDAQ led to a nearly 7% dip in TSLA. Fortunately, macros smiled upon TSLA on Tuesday, and a 1.36% gain for the NASDAQ allowed TSLA to close with a smaller gain than the NASDAQ, but a gain all the same after 4 consecutive down days. Note that the hedgies weren't about to allow TSLA to close above 170 and TSLA felt the whack-a-mole mallet any time it dared to stick its cute little head above 170.

Tuesday's small gains were the setup for Wednesday's big TSLA day. The NASDAQ's gains of slightly less than 1% on Wednesday was good enough for TSLA to rally 7.82%. TSLA had finally reached a point where buyers were willing to say, "this is too low to pass up, I'm in". Once the climb began, other buyers joined in, and I'm sure some of the shorts decided it was time to throw in the towel and take profits. Tuesday and Wednesday could indeed mark the turning point of TSLA for this bear market, but then again, if circumstances allow, the shorts and hedgies will seize any opportunity presented to them and try to extend the dip just a little more. Once again, stay on your toes.

The most helpful post in TMC over the past two days was this one by @Buckminster , which reproduced several Tweets by our friend Tesla Facts. The advantage Tesla Facts has is the ability to deduce the approximate short or long delta-hedging position of market makers on a day to day basis. From Tuesday to the end of trading on Wednesday, 500K puts fell out of the money and an enormous change happened in the MM's relative hedging position. We've seen it before where MMs will hold off delta-hedging if that hesitation causes the stock price to move in a favorable direction and take care of the delta hedging issue. It's a game of profit-maximizing while not taking too big of chances for the MMs.

Tesla Facts in the post pointed out that with any real weakness, shorts might attempt to put downward pressure again on the stock, but OTOH, if 1.5M puts are still in the money, the market makers may exert some upward pressure to take more of them out of the money. Should TSLA clearly demonstrate that it has turned the corner and climbing away from its low, then the "prisoner's dilemma" that Tesla Facts refers to is the fact that shorts want to buy and close their positions, but in so doing they speed the rise of TSLA, making an exit less profitable for the other shorts. So, let's see how news, momentum, and manipulations come together for the short Friday trading day.

BTW, here is a link to the most ridiculous news story of the week (and that's saying something). Lora Kolodny at CNBC says that the nearly 8% rise of TSLA on Wednesday was a reaction to Citigroup's upgrade of its stock from 141 to 176 and talk of a South Korea factory. Clueless.

News:
* Elon confirmed that wide release of FSD v. 11 is underway this Thanksgiving. In this Tweet, TMC's @The Accountant figured that Tesla should report about $922 million deferred revenue in Q4 because of the wide release.
* Beijing is in lockdown as Covid spreads in China (just what the shorts were hoping for)

Yields on 10 yr. treasury bonds fell to 3.7% on Wednesday.

Percent of selling tagged to shorts rose to 45% on Wednesday

Max pain Wednesday morning was 172.50 before the nearly 8% run higher. No doubt the effective max pain is higher. If you look at 170 and 172.50 strikes, they were both pretty neutral in terms of puts vs. calls, while above and below were clearly call dominated or put dominated. Friday is a short day of trading, expect the MMs to try for a close in the sweet spot between call and put domination in order to maximize their profits.

Tuesday's options volumes

Wednesday's nearly 8% rise brought TSLA out of auto-dip mode and into a more balanced trading position. Note the heavy (108.2M) volume. This week with its high volumes has been anything but the walk-in-the-park manipufest that shorts were looking forward to.

Conditions:
* Dow up 96 (0.28%)
* NASDAQ up 111 (0.99%)
* SPY up 3 (0.63%)
* TSLA 183.20, up 13.29 (7.82%)
* TSLA volume 108.2M shares
* Oil 77.78
* IV 60.1, 38%
* Max Pain 172.50
* Percent of TSLA selling tagged to shorts: 45%

 

[Papafox]

TSLA chart above

QQQ chart above

Lets get Friday's trading out of the way quickly so that we can concentrate on the big picture. QQQ opened in the red and stayed in the red all day (market closed early at 1pm). In contrast, TSLA traded up about 2% but then declined to a gain of about 1% approaching market open. Clearly sentiment was positive. Alas, as market trading began we saw an immediate pushdown as hedgies/shorts/and/or market makers attempted to grab the bull by the horns. A pushdown of 1% prevailed for less than an hour and then TSLA managed to go green, despite QQQ red. In time, I think the enthusiastic buyers tapered their enthusiasm because the low volume/short day/holiday trading effect led to a mere 50M shares traded for the day, something the manipulators could handle. TSLA's close at 182.86 was above max pain, but with 180 strike near even with puts vs calls and 185 strike solidly call-dominated, the closing price was a very profitable one for the market makers (funny how this often works out). Despite Friday being a low-volatility, low volume trading day, we saw close to 1.7 million shares trade in the 4:00pm closing cross. Something was afoot to make TSLA look that dull and dreary on a holiday Friday. Remember that Thanksgiving week is often a prime target for bear attacks. We got off easy.

For the larger picture, please consider the three charts immediately below. You can see that the Dow has actually been doing very well since the beginning of October as investors have been chasing value stocks and bidding up their prices to regretfully high numbers in some cases. Meanwhile, the NASDAQ has been in the doldrums for October and November but has shown some recovery in the second half of November. Interest rate fears stoked by Darth Powell are the boogymen here. Finally, there's Tesla which felt the interest rate hit of NASDAQ but then also got whacked by Elon's selling in early November, which led to typical shorts buying puts and causing some traditional long investors to buy puts as insurance, with both types of purchases spurring the MMs on to sell shares to maintain delta-hedging.

What we're looking for now is a sign that the Fed interest rate increases will be smaller going forward and that the peak interest can occur at a reasonable number. When interest rate fears recede (as they inevitably will) you're going to see money flowing out the Dow into the NASDAQ and stocks like TSLA because investors will at last realize it's safe to get back into growth stocks.

So, when do we get that sign? In the mid-December Fed statement, most observers are expecting the 0.75% raises to diminish to 0.50%. That would pave the way for more benign 0.25% raises shortly thereafter. The market should respond positively to lower rate increases. Moreover, the market was positive with the October CPI numbers released in November, and don't be surprised if we see a repeat in mid-December. For one thing, base months of the 12 month comparisons for inflation are in an upward trajectory until mid-2022, which should help month over month results. Further, oil prices in the Americas are falling big time. Check out the WTI Crude chart above. Although oil prices immediately help energy components of the indexes, the longer-term affect is felt in most other areas as well since oil (via transportation, etc) is a factor in the pricing of most items. Finally, keep in mind that Inflation peaked in June 2022 and has been falling ever since (don't expect Darth Powell to utter these words).

So, with the fleeing from growth stocks to value stocks already pretty much done (and we're waiting for the rebound), Elon's selling presumably completed, Twitter looking like it's going to be a going concern, and the big market maker delta-hedge selling of TSLA now looking to have bottomed out (because of Wednesday's big climb). there's hope that Tesla might have found its bottom. Once that bottom is definitely in (in the view of the market), call options proliferate and the market makers start buying TSLA for delta-hedging and momentum is reversed. Naturally the shorts and hedgies will leverage any bad news to find a reason why the bottom isn't in yet. Never turn your back on a desperado.

The most frequent target for generating Tesla fear is China. Demand fears are diminishing as weekly delivery rates continue as expected, but Covid lockdowns are now the new boogieman. This Tweet sets the record straight by pointing out how Tesla is testing employees twice a day, has a closed-loop plan ready to go, and has 71 days of inventory (no need sweat a supplier being closed). Bravo Tesla.

Where does TSLA go this coming week? Futures are weak for Monday open, but we've seen reversals on such days too. I suppose besides macros the next big issue will be how convincingly the FUDmasters can create fear about Tesla China. I'm ready for anything.

News:
* Elon Tweeted that Tesla employees just drove a Tesla Semi, loaded at gross weight, 500 miles. Some observers were wondering if such range was even possible with the battery pack size. Wonder no more. Looking forward to watching the Semi delivery event, Thursday, Dec. 1.
* The Nov. 15, 2022 short interest in TSLA is 78,270,643 shares, according to this NASDAQ official site.

Percent of selling tagged to shorts rose to 49% on Friday, suggesting an increase in manipulations

Yields on 10 yr. treasury bonds closed below 3.7% again on Friday. Bullish, of course.

Max pain this past Friday was 177.50, but given the upward pressure on the stock (on a down macro day), market makers were content with a close below 185. You can see Wednesday's options volumes in the lower chart.

For this coming Friday, Max Pain is showing 180. Strikes 185 and 190 are heavily call-dominated, and so this could be an interesting week, should market makers oppose a run higher.

After a steep three-week bobsled run down the steep mountainside, TSLA hit the jump on Wednesday and Friday.

Tuesday and Wednesday's gains from last week puts TSLA on a recovery footing. Can it be held? Expect a fight.

For the week, TSLA closed at 182.86, up 2.67 from the previous Friday's 180.19. It's a start. Hoping you enjoyed your weekend.

Conditions:
* Dow up 153 (0.45%)
* NASDAQ down 59 (0.52%)
* SPY down 0 (0.02%)
* TSLA 182.86, down 0.34 (0.19%)
* TSLA volume 50.3M shares
* Oil 76.28
* IV 59.8, 35%
* Max Pain 177.50 for past Friday, 180 for coming Friday
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

TSLA chart above

QQQ chart above

Monday saw TSLA rise 3% on heavy buying, only to see those gains eroded in the afternoon by a combination of macro weakness and likely downward pressure thrown in by the market makers. What made TSLA's morning rise so eye-catching was the strength of TSLA through about 12:45pm despite sour macros. Volume was high at nearly 93M shares traded. Quite simply, market makers were seeing their usual control over the stock price erode as heavy volume cause TSLA to exceed 188. Both the 185 and 190 strike prices are heavily dominated by calls, and TSLA climbing into this neighborhood was proof that the market makers had lost control of the price action. Alas, as afternoon arrived the volume decreased, which allowed some pricing control to return, but the big break for the market makers came after 12:45pm when QQQ's price entering a series of step downs. I regard the 45% selling tagged to shorts number as mostly irrelevant as market makers shifted to non-FINRA sources for any shorting shares. A big give-away that TSLA's afternoon dip was a manufactured affair (to some extent) was the 2.7 million shares traded during the closing cross. Yep, someone was busy covering their day-shorting.

I do not look at Monday's trading as a negative. Rather, I see it as a sign that the market values TSLA enough to give such a Monday morning buying frenzy that it threatened to bring 185 and 190 strike calls into the money, and the market makers couldn't stop it. It's quite possible we could see similar strength Tuesday morning but without the macros negatives in the afternoon that enabled TSLA's price to be pulled back to the starting point.

Monday was an unusually fortunate day for my call rolling, as I managed to roll on the way up in the morning and then placed a different bet to roll on the way down in the afternoon. The rate at which TSLA was dipping in the afternoon was a giveaway that the MMs were working to undo the morning's gains. I was curious if TSLA would pause its descent at the red/green line, it did, and I closed my roll at that point.

Why so much interest in buying TSLA Monday morning? Some of the strength is a hold-over from the strength of last week's Wednesday trading. Here are the most recent positive developments for TSLA:
* Tesla will be opening up deliveries to Thailand in December, according to this Tweet. Implications are that there's time to ship some vehicles from Shanghai to Thailand, as needed before year's end.
* Q4 will have a massive shipping increase over all previous quarters, according to this tweet with chart from James Cat. You can see no less than 11 ships taking Teslas from Shanghai to Australia and New Zealand.
* A third round of bogus Tesla is going to cut prices in China rumors were debunked. Nonetheless, the media is intent on trying to negatively affect China demand this quarter. This Reuter's piece talks about an update coming to Model 3 that will make it more cost effective. Of course that redesign is coming, but Reuters let the cat out of the bag in the hopes that some China buyers will hold off buying until the lower-cost Model 3 comes to market in Q3 of 2023. Lovely people.
All in all, China looks to be set for a decent quarter, and with the FUD falling away buyers are picking up shares at the current bargain prices. All the armchair quarterbacks who predicted Tesla would have to slash China prices in Q4 were wrong. Tesla had the data, knew what they were doing, and that strategy is now becoming apparent.

Looking forward to Tuesday's trading. I'll be watching for weekly registrations in China to make sure they're above 13K.

Yields on 10 yr. treasury bonds remained below 3.7%

Max pain Monday morning was 180. You can see that the 180 and 182.50 strikes are barely learning toward calls, but 185 and 190 are clearly call dominated and the market makers would, and did, intervene on Monday to roll back the TSLA price. Tuesday could be a lively trading days with more good TSLA news on the horizon and a possible repeat of Monday morning's strength, with high volume.

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

That's a tall wick on top of Monday's candle. Let's see if TSLA can hold Tuesday's gains with some backing from the macros.

Conditions:
* Dow down 498 (1.45%)
* NASDAQ down 177 (1.58%)
* SPY down 6 (1.60%)
* TSLA 182.92, down 0.06 (0.03%)
* TSLA volume 92.8M shares
* Oil 76.40
* IV 59.2, 34%
* Max Pain 180
* Percent of TSLA selling tagged to shorts: 45%

 

[Papafox]

TSLA chart above

QQQ chart above

So, it's not going to take a detective agency to figure out what's happening with TSLA these days. The big boogeyman this quarter has been China and yet we just keep getting strong data from that country. On Twitter, Mathias Fons posted this Tweet about Tesla's surprisingly high new registrations for the past week: 16,121. Our own @The Accountant then assembled the chart below to put the strength of Tesla's China deliveries in Q4 into perspective:

So much for demand issues that necessitate a huge price cut.

With such good news coming our way, what happened on Tuesday, then? I suggest that the strong morning trading, especially the climb over 186, was appropriate for TSLA on a day with good news. Alas, we're seeing the NASDAQ and QQQ slumping in the afternoons, which really opens the doors for market maker manipulations. In fact, I sometimes wonder if enough prime stocks in the NASDAQ are being manipulated to cause marketwide afternoon dips. No matter, TSLA fell from its heights after 11am when QQQ did a spectacular swan dive below 280. Initially TSLA resisted joining QQQ in the red and for the better part of two hours, until about 1pm, TSLA played a game of whack-the-mole with market makers. Eventually volume went light enough and the macros were red enough for the MMs to succeed in pushing TSLA down to its sweet spot. Although official max pain is 182.50, you can see that the range of 177.50 to 182.50 is really the sweet spot because calls and puts are nearly identical in number at all three strike prices. A close between 180 and 181 was perfect for the MMs.

Despite TSLA's strength so far this week, NASDAQ has been weak. Part of the problem is that Darth Powell has a speaking engagement on Wednesday and without being constrained by the rest of the Fed you can be sure that he'll be warning of the floods, pestilence, and plagues that will shortly befall growth stock investors. Lots of economic data comes out on Wednesday, too, so perhaps the market is down in preparations for our Wednesday thrashings.

A ray of hope arrives on Thursday, Dec. 1, as the next PCE inflation report comes out. Later that day, Tesla will host the Semitruck delivery event. This event won't likely move the stock price, but it'll be great fun to watch Tesla demonstrate their competence as competitors claim that the semi cannot travel 500 miles without breaking the laws of physics. Too fun to miss, in my opinion.

News:
* Teslarati says that Tesla has posted for Cybertruck leader position job openings. We also saw photos of the massive press being assembled at GigaTexas. This thing is going to become real. Tick, tick, tick.

Yields on 10 yr. treasury bonds climbed on Tuesday, for a close slightly above 3.75%.

Max pain Tuesday morning was 182.50. Looking at the chart above, you can see that 177.50, 180, and 182.50 are all nearly neutral in terms of puts vs. calls. When TSLA gets above 185 as it has on Monday and Tuesday, the MMs get nervous and pull the levers in the afternoon to get it back down.

Monday's options volumes

It's now been about a week since TSLA hit its new low.

Conditions:
* Dow up 3 (0.01%)
* NASDAQ down 66 (0.59%)
* SPY down 1 (0.17%)
* TSLA 180.83, down 2.09 (1.14%)
* TSLA volume 82.5M shares
* Oil 78.82
* IV 59.5, 35%
* Max Pain 182.50
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

Congrats TSLA longs, it was a really good day. The day was shaping up as a typical day for this week, which means that morning buyers were bidding the price of TSLA up and then as volume lessened in early afternoon, the MMs were pushing it back down to the red/green line. Ho hum. The market (including me) was expecting the usual hawkish Powell to speak, but instead we heard the voice of the new Powell, the one voicing the beliefs of the Fed as a whole, rather than his lone hawkish take on matters. Here is CNBC's take. Putting the issue of a reduced increase in rates for December on the table was music to the market's ears, because in many ways this was the first step in a Fed pivot. It's not real until the fat lady sings, but we see a willingness to start scaling back the size of rate increases, and that was good enough.

You can see that the first big jump up with the Powell news came above 1:30pm. In both the QQQ chart and the TSLA chart a few minutes later we saw a dip, by which the market makers said, "Nothing to see here folks, it's all over, move along, move along." The thing is that we saw a series of climbs and walkdowns, the most notable after 2pm when the MMs stopped TSLA's ascent below the critical 190 level, did the "nothing to see here folks," walkdown, and then the stock resumed its climb. Then about 3:20pm we saw TSLA level off while QQQ kept climbing. This was one of those "Can they hold it?" moments, and as QQQ marched steadily upward TSLA broke hugely upward with about 12 minutes of trading left and made up for lost time. For a dedicated TSLA chart watcher, it was a thing of beauty and yes I was rolling calls on that mega-rally. At market close, NASDAQ closed up 4.41% while TSLA was up 7.67%, or about a 1.74X multiplier. Not bad!

When you consider that Powell's remarks could well be the beginning of the Fed pivot, Wednesday rally was certainly not excessive, and the various pauses and walkdowns both in TSLA and QQQ are indicative of how the game is played. A massive 8 million shares traded hands during the 4pm closing cross. I'm thinking much of the run higher in the minutes just prior to the closing cross was price adjustment to bring buyers and sellers for the cross into alignment. You likely had a lot of day-shorting to try capping the post-Powell rally attempts, and the market makers doing the shorting would want to close those shorts as well as generally catch up with their delta-hedging.

Fast forward to Thursday, when the PCE inflation numbers will be released. I don't know the PCE well enough to be as optimistic as I was for the CPI numbers released in November, but I suspect that there should be some similarities such as rising base months in 2021 that will yield declining inflation rates in 2022 12-month comparisons. Also, we'll get a chance to see if November oil price falls will help cool the PCE inflation numbers.

To give you an idea of what might constitute a decent performance of the PCE on Thursday, consider that the inflation index has been stuck at 6.2% for the past couple months. A move downward would be most helpful.

The PCE will of course color trading on Thursday. Hot numbers will dissolve some of the gains from Powell's comments. Cool numbers, OTOH, could give the market a second day of strong rally, MMs might find it very tough to hold TSLA below 200 in such a case, and things get really interesting. Don't miss it!

News:
* Elon Tweeted that he and Tim Cook of Apple had a good meeting in person and no Twitter ban on Apple store is planned.
* Electrek says that Tesla is planning a massive ramp up on Model Y production at GigaTexas in 23Q1.

Yields on 10 yr. treasury bonds fell with the Powell revelation about possible decreasing of interest rate

Max pain Wednesday morning was 182.50. Looking at the open interest chart above, you can see the 182.50 strike Wednesday morning was right at the intersection of the descending put line and the rising call line. Notice that when you get to 190 and 195 you're getting into some seriously less-profitable areas for the market makers. Should TSLA exceed that enormous call wall at 200 strike, the market makers are really feeling the pain. For this reason I agree with @StarFoxisDown! that the MMs will be ferociously defending 200 on Thursday.

Tuesday's options volumes

Haha, with high volume of 103.8M shares, TSLA busted free of the capping and closed above the mid-bollinger band. The stock hasn't ventured above the mid-bb (except for about 7 trading sessions) since late September.

Conditions:
* Dow up 737 (2.18%)
* NASDAQ up 484 (4.41%)
* SPY up 12 (3.15%)
* TSLA 194.70, up 13.87 (7.67%)
* TSLA volume 103.8M shares
* Oil 80.48
* IV 56.7, 26%
* Max Pain 182.50
* Percent of TSLA selling tagged to shorts: 44%

 

[khorton]

Typo alert - It is Tim Cook, not Tim Cooke

 

[Papafox]

Typo alert - It is Tim Cook, not Tim Cooke

Thx, corrected.

 

[Papafox]

TSLA chart above

QQQ chart above

The October 2022 PCE indexes (released the morning of Dec. 1) show declines from the previous month and declines from a year earlier. All in all, they were benign numbers that should have sparked a rally. Apparently the Wall Street tycoons (and the willing media) thought it best to bury the results and not much was heard of the numbers. We did see nice surges in QQQ and TSLA when the numbers were released, though. Once the Wall Street big dogs decided it was best not to have a second day in a row of good news, we saw a game of whack-the-mole played out with both QQQ and TSLA. At day's end, after TSLA volume of 78.9M shares, TSLA closed unchanged from the day before. Hint: the market makers REALLY don't want those 200-strike calls to come into the money on Friday. This is how the game is played, and we saw it played on a macro level on Thursday.

Screen shot of message appearing on a Tesla inventory page I viewed Thursday evening

The biggest Tesla-specific news on Thursday was the story that Tesla is offering a $3750 credit (discount) to buyers who take delivery of a Model 3 or Model Y during December 2022. For buyers who cancel their order, lose deposit, have to reorder at a likely higher price, etc., the $3750 credit pretty much makes taking delivery in December a more economical choice than cancelling and then getting a $7500 IRA payment after Jan 1. In terms of impact on financials, A $3750 discount on a $65000 vehicle is about a 5.7% discount. Assuming that only a third of vehicles are delivered in Month 3, that works out to be about a 1.9% revenue dip for U.S. vehicles. When you consider that U.S. vehicles are only a portion of total Tesla sales during Q4, and that producing over 450K vehicles is going to have a very positive effect upon gross markets, the dip in U.S. vehicle revenues is not problematic. Further, it's not a situation like the Chinese market where the buyers will game a similar situation next time it pops up. There's going to be no new IRA anytime in the coming decade that can be gamed. Considering that the Biden administration knew full well that the inappropriate rules for implementing this IRA provision would negatively impact Tesla far more than any other U.S. EV maker, I think the move is a smart one. Now, let's follow up with research to make sure the new discount will indeed clear the inventory in an effective fashion.

The market instead of celebrating the good PCE report is bracing in case the Dec 2 monthly jobs report comes in strong. We'll find out Friday morning.

The benign PCE inflation numbers that came out Thursday morning appear to have produced a nice dip in yields for 10 yr. treasury bonds. Close was almost down to 3.5%

Max pain rose to 185 by Thursday morning. Strikes 185 and 187.50 are relatively neutral but market makers would prefer to get below 190 if the macros go south.

How do things change for next week? Max pain remains the same, 200 strike is the big call wall once again, but instead of 40K open interest at 200 strike there's currently less than 12K. TSLA could theoretically ascend through 200 more easily next week, with less consequences for the MMs.

Wednesday's options volumes

Another close above the mid-bollinger band is a good thing.

Conditions:
* Dow down 195 (0.56%)
* NASDAQ up 14 (0.13%)
* SPY down 0 (0.07%)
* TSLA 194.70, up 0.00 (0.00%)
* TSLA volume 78.9M shares
* Oil 81.48
* IV 56.3, 24%
* Max Pain 185
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

TSLA chart above

QQQ chart above

Let's take a Big Picture look before diving into Friday's TSLA trading. After TSLA bottomed out on Monday, Nov. 21, TSLA has spent the better part of the last two weeks recovering losses. Much of the China fears about demand have vanished since that low, but macro fears about interest rates continue. The recent PCE inflation numbers were benign, the recent jobs report a bit hot (here's CNBC's take), and so the market and willing media have emphasized the negatives and kept the specter of fear hanging in the air. Fear, particularly on a macro level, is a great tool for market makers and other manipulators because it enables control that would not otherwise be available.

And so the jobs report came out Friday morning, and both QQQ and TSLA spiked downward. Countering this down macro trend has been the relative strength of TSLA these past two weeks, and so we ended up with QQQ recovering most of its jobs report-pre-market losses and TSLA recovering to its starting point of the day. Looking back at the week, the big move up for TSLA came on Wednesday when it gained 8% in market and after-hours trading when Powell showed a hint of dovishness.

Here are closing TSLA prices for Wednesday, Thursday, and Friday:
194.70, 194.70, and 194.86. This amazingly level closing in three days is a testament to the capping abilities of the market makers. They CERTAINLY didn't want a close above 200, they wanted a close below 195, and if a close below 190 could be engineered on a bad day, they would gladly take it.

So, where does this leave us going into the coming week? Typically, we see the best opportunity for TSLA to climb appear in the first half of the week, before large call walls have built, especially at 200. If TSLA can gain and hold 200 this week, it'll have room to run without apparent resistance points. If TSLA has not cleared and held 200 by Thursday or Friday, we'll likely see a defended call wall to deal with. Fingers crossed.

Personally, I think some of the "Twitter Overhang" is lifting as Elon has in recent days taken on both powerful Democrats and Republicans. He does appear to be even-handed in how he wishes to administer Twitter. Despite his focus on Twitter these days, SpaceX has done amazing things this past week, we've seen an eye-opening Neuralink presentation, and Tesla's Semi-truck reveal showed an astonishingly efficient truck that will keep TSLA ahead of the competition for some time to come. By all appearances, the Musk empire has not been floundering while Elon gets Twitter back on track.

News:
* Bloomberg says that in Shanghai and elsewhere in China, Covid rules are being relaxed. This development could allow a greater chance of Tesla continuing its production unstopped this winter if Tesla remains smart and implements serious testing and measures to prevent spread.
* In this post, @Curt Renz says CFRA reiterated its strong buy for TSLA

Yields on 10 yr. treasury bonds declined on Friday to close the week below 3.5%. Does the bond market think inflation is out of control? Nope!

Percent of selling tagged to TSLA shorts came in at 50% on Friday

Max pain Friday morning was 187.50, but 190 and 192.50 looked pretty neutral, as well. TSLA finishing the week just a dime and some pennies below 195 was fine turning of the manipulation machine. Although the 200 strike puts began the week at only about 12,000 contracts, you can see by week's end the contracts exceeded 50,000. There's no way the market makers were going to let TSLA rise above 200 at week's end.

Thursday's options volumes

Next Friday's max pain is 190, and the number of call contract at 200 are presently in excess of 15K. It would be less expensive for the MMs to allow TSLA to break 200 early in the coming week than later, since the number of contracts will be growing each day.

The max pain chart does a great job of showing that the past two weeks have been recovery weeks for TSLA. The stock bottomed out on Monday of the previous week, rose quickly, then spent that Thursday and Friday trading level, at the command of the MMs. This past week, TSLA made its big up move on Wednesday and then was capped for the remainder of the week by the MMs. The red dot goes on 190 because that would have been the likely target for the market makers to shoot for on Friday. They didn't make it, which speaks well of TSLA's continued strength. Chart courtesy of @JimS .

We'll call TSLA closing above the mid-bollinger band for the week to be a positive development as the stock claws its way out of the basement for its second week in a row.

For the week, TSLA closed at 194.86, up $12 from the previous Friday's 182.86. It's been a good two weeks so far. Hoping you enjoyed your weekend.

Conditions:
* Dow up 35 (0.10%)
* NASDAQ down 21 (0.18%)
* SPY down 0 (0.12%)
* TSLA 194.86, up 0.16 (0.08%)
* TSLA volume 72.9M shares
* Oil 79.98
* IV 54.1, 13%
* Max Pain 187.50 for previous Friday, 190 for coming Friday
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

If you were like me, you anticipated a chance Monday morning to finally climb above 200. Alas, climbing was not in the cards for TSLA as macros were weak and Reuters took the prime position in a very spirited bear attack upon TSLA. The need for a bear attack included TSLA rising high enough to climb out of the long downtrend and then very substantially good delivery news in Europe and China needed to be neutralized.

TMC's @The Accountant provided the chart above in this post on Monday, which compares the first two months of registrations in Europe with each other. Q4 2022 is kicking asphalt and taking names.

Then there was November 2022 deliveries (China plus export) of Shanghai-made Teslas, which reached 100,291, says InsideEVs. Again, this was a record number by a huge margin, nearly 90% higher than November 2021's deliveries. Clearly, TSLA had reason to run higher on Monday.

And so Reuters published this stinker of a news story, saying that Tesla planned to cut Model Y production by 20% at Shanghai sometime in December. The story spoke of high inventory and suggested Tesla was having difficulties with China vehicle sales, thus implying the production cut was demand-related. That's all it took, and the market rekindled its China demand fears, prompting a long sell-off of TSLA during the day. Reuters has been one of the most willing news organizations to publish FUD that brings TSLA lower. Even after Tesla China came out and said the report was false information, the stock continued to lose value.

This Tweet made it clear that something was wrong with the Reuters story. It would have been helpful for Tesla China to say more than just "false information".

For an alternative viewpoint, consider listening to Rob Maurer's take on this podcast. Rob seems to believe his source would not make up such a story, so let's see how things shake out over the next couple weeks. It could be that there was an element of truth in the original Reuters story but Reuters did what Reuters usually does, which is to place its special brand of twist on the story to make investors fearful.

To pour a little kerosene on the fire, the market did its usual overreaction to good economic data (factory orders, etc.) and the NASDAQ ended the day down nearly 2%. TSLA's dip of more than 6% was more than a 3X multiple of the NASDAQ and indicative of TSLA-specific fears.

Let's hope that on the morning of December 13, just 8 days away, when November CPI report comes out, a further decline in inflation rates elevates the market and TSLA in particular. Then, the next afternoon, December 14, Powell will speak in the afternoon, likely name half a percent as the raise in rates, and then not get too Darth Powell with explaining the path forward. The market could in theory get two days in a row of stimulants. Then in early January, when the Q4 Production and Deliveries Report arrives, we'll hopefully see the kind of strength that will get TSLA rising into the January Q4 ER, which should provide profit numbers that Wall Street simply won't be able to ignore. Better days are coming.

Yields on 10 yr. treasury bonds rose to 3.6% on Monday

Max pain Monday morning was 190, but that number became a mute point as a massive bear attack brought TSLA lower throughout the day.

Friday's options volumes

Volume was high at 91.9M shares as TSLA lost ground during a powerful bear attack on Monday

Conditions:
* Dow down 483 (1.40%)
* NASDAQ down 222 (1.93%)
* SPY down 7 (1.80%)
* TSLA 182.45, down 12.41 (6.37%)
* TSLA volume 91.9M shares
* Oil 77.45
* IV 59.5, 36%
* Max Pain 190
* Percent of TSLA selling tagged to shorts: 51%

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday was day two of the macro weakness. Over the past two days, NASDAQ is down nearly 4% and TSLA is down a bit less than 8%. That works out to be about a 2X beta for TSLA over the past couple of days. The sky is not falling, my friends. The big dogs used Monday's positive economic data to generate fear in market. TSLA was manipulated and so fell more than you would expect on Monday but made up for the overly strong dip on Tuesday by actually outperforming the NASDAQ. I'm unaware of any good news that would explain TSLA's relative strength on Tuesday. I think it was just the market compensating for Monday's trading.

Comparing the two charts above, TSLA is noticeably more lumpy, as if we saw selling spikes designed to drive TSLA lower, but they kept being bought up. Trading during the 4pm closing cross came in at 1.3M shares. Generally, I'd say failed attempts at pushing TSLA lower is an indication that a more positive day could follow on Wednesday.

Insurance data for new insured vehicles for the past week came in weak for Tesla, compared to the previous three weeks. I suggest not reading anything into a single week's performance. It very well could be lockdowns-related, a week with a particularly high number of vehicles in transit to more distant China destinations, or a combination. Chart above is from Tuesday's informative video by Rob Maurer. Rob also did a nice job of debunking parts of that stinker of a Wired article that claimed the Berlin factory was just a mess.

News:
* Electrek says that Tesla has plans to incorporate a higher-resolution radar in future vehicles. I had to laugh at Electrek's tone because it was so inappropriate. Electrek is criticizing Tesla for needing to upgrade the autopilot computer and the radar. My take is that nobody has ever created reliable self-driving cars for widespread use yet, and it is just silly to criticize Tesla for not envisioning the exact hardware it would need when it first began the program. It is kind of like criticizing the Wright Brothers for building a biplane when an F-35 jet fighter is clearly a superior aircraft.

Yields on 10 yr. treasury bonds fell to just a bit above 3.5% on Tuesday

Max pain Tuesday morning was 187.50. From the chart above, you can see that strikes 185 and 187.50 are fairly neutral in terms of calls vs. puts, but 190 and above gets into the realm of call domination and the 200 call wall already stretches above 30K in number of contracts. Translation? The market makers will likely start manipulations should TSLA threaten to reach 190 as the week progresses and they would fight 200 tooth and nail.

Monday's options volumes

Notice the volume of 91M shares. A lot of shares traded hands on Tuesday as efforts to push TSLA lowered fizzled because plenty of buyers showed up to take advantage of the sale.

Conditions:
* Dow down 351 (1.03%)
* NASDAQ down 225 (2.00%)
* SPY down 6 (1.44%)
* TSLA 179.82, down 2.63 (1.44%)
* TSLA volume 91.2M shares
* Oil 74.58
* IV 61.4, 47%
* Max Pain 187.50
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

While I was hoping for a recovery day, instead the bear attack rekindled and TSLA closed down more than 3%, compared to the NASDAQ down about half a percent. You can see the hallmarks of manipulations, such as TSLA falling at a multiple of QQQ but hardly moving up when QQQ was rising quickly. I agree with @Artful Dodger that what we're seeing are the hedge funds pushing TSLA down to retest the recent lows. The push needs to come now because after just three more trading days (Thurs, Fri. and then Mon of next week) the CPI numbers are released before Tuesday morning's market open. Tick, tick, tick. I believe two factors are helping the CPI numbers for November, another step higher in the Nov 21 data raises the 12-month comparison number, and for the final third of November 22 we saw noticeably lower oil prices. I'm thrilled when I see oil under $80, and our friends at oilprice.com tell us that today's close for West Texas Intermediary was less than $73/barrel. Look at how the bond market is pricing 10 yr. treasury yields and you see anything but runaway inflation. Bottom line: the pirates have to move fast to pry your TSLA shares from you before the possibility of a macro rally surfaces next week.

Let's talk Tesla demand.

Ray4Tesla's Tweet suggests the recent insurance discount has pretty much cleared out inventory in China. This view is in stark contrasts to stories about thousands of unsold Teslas piling up in the country. As always, it's best to look for confirmation from another source.

Related to China demand is Tesla's newly announced entry into the Thailand market, since those vehicles will be coming from GigaShanghai. This youtube video by Bjorn Nyland gives a good overview of the excitement. Basically, Thailand is a market where vehicle manufacturers have been adding a substantial premium to the price. Tesla coming in at competitive prices is upsetting that market and gathering cheers from car buyers. A Twitter poster says that Tesla already has 4,000 orders. According to this article from The Nation Thailand, deliveries will begin in February. Although Thailand doesn't factor into Q4 numbers, it'll be a positive for Q1 numbers, especially when the ship trip to Thailand is just about 6.5 days, instead of the much longer journey to Europe.

We all know that Europe has been red hot this quarter. 'Nough said.

As for the U.S., concerns have been swirling about the effect of the I.R.A. on Q4 demand and the need for a $3750 discount for December buyers. I've been hearing that at least one outlet for national inventory is reporting less than 1100 Teslas at the moment. I'm always careful about accepting such numbers, so let's keep an eye on things. I've also been monitoring two service centers in two very distant locations, and in the past three weeks I've seen substantial reductions in inventory at both, suggesting to me that the national number might be possible. Again, we need to keep an eye on things, but three weeks before the end of the quarter things look good to these eyes.

In the meantime, keep that seatbelt snug. Tesla investing remains a character-building experience.

News:
* Tesla wins lawsuit against Chinese news outlet PingWest for publishing fake news

Yields on 10 yr treasury bonds fell again, to less than 3.45% now. The Fed really ought to take a hint from the bond market

Max pain fell to 185.00 Wednesday morning. The sweet spot for market makers right now is 180 or 182.50, where puts and calls are fairly similar in number

Tuesday's options volumes

For the third day in a row we saw higher than normal volume and a push lower

Conditions:
* Dow up 2 (0.00%)
* NASDAQ down 56 (0.51%)
* SPY down 1 (0.17%)
* TSLA 174.04, down 5.78 (3.21%)
* TSLA volume 83.6M shares
* Oil 72.58
* IV 63.3, 57%
* Max Pain 185
* Percent of TSLA selling tagged to shorts: 49%