Papafox's Daily TSLA Trading Charts

[Papafox]

I don‘t believe the Gross Margin % is considered only “automotive” margin anymore, and is overall “gross margin” which includes energy storage as well. So it’s not the apples to apples “gross automotive margin” ppl were tracking in mid 2022. Tesla noted I believe in Q1 23, that they would no longer report actual “gross automotive margin”

update: yes, I just checked and Q1 2023 “update” which was the Q1 2023 report, was the first report which no longer reported “automotive gross margin”.

Thanks for the heads up. The progression of gross margin declines since Q1 of 23 still is showing a leveling off. Obviously, TE is helping the situation in Q3, and so are services in the recent quarter. Still, whether we're talking about automotive gross margins in isolation or a more general gross margin that includes energy and services, the slowing of the GM fall is notable and encouraging. Ultimately, what we're looking for is growing profits again, with Q3 as the bottom.

 

[Papafox]

TSLA chart above

QQQ chart above

Nobody was too surprised when the market decided to spank Tesla on Thursday, following its Q3 ER. It was all a question of where the stock would find its bottom. TSLA closed down 9.3% vs. the Nasdaq's drop of 0.96%. Around 11am TSLA approached 220 and the majority of the day after that it was a slow dance lower. Right before market close TSLA jumped up slightly above 220 for the close and then immediately fell below. Although market makers don't often show much tendency to buoy TSLA on a bad day, I think they made an exception on Thursday and pumped the stock higher to get a close above 220. Check out the max pain chart below and you'll see a put wall nearly 35K contracts high that expired on Friday. There's your incentive for a little help from the MMs.

If you look at the QQQ chart you'll see it was gyrating up and down wildly mid-day. That was when Darth Powell was talking in New York at the Economics Club (see CNBC account). The words he used early on were likely consistent with the Fed's general feelings, and listeners came away with the impression that we'll see no raises in November or December. Alas, Darth Powell just couldn't leave it like that and so the dark side came out with rants about inflation is too high and will be really hard and take really long to bring down and that the current rates are not too high. Mr. Market didn't like the tone and the market sank. Stocks also had a tough time on Thursday due to the strong rise in yields on 10 yr. treasury bonds plus rising oil prices. A recent bond offering by the Treasury ran into tough sledding and yields ended up rising as a result. For anyone who thinks that deficit spending is "free money", the bond market's response shows otherwise. The falling Nasdaq put additional pressure on TSLA Thursday afternoon.

What happens on Friday? Market makers would love to see a close above 220, but much depends upon macros. We shall see. TSLA's Thursday dip at its low (around 2:50pm) was greater than 10%, and so the alternative uptick rule will be in force.

Regarding the 3Q23 ER, Rob Maurer's Thursday video podcast did a nice job of summarizing material that was missed because of audio breaks. Recommended. Note, I did not sit through the second half Q&A.

Also, because of poor audio quality, accents, and audio breaks, the transcript of the conference call is very useful. Here is a link to a copy offered by Motley Fool

Let me spend just a minute putting Tesla's current situation into context. Those of us who go way back with the stock remember the extreme ups and down the earnings took as a new vehicle was introduced. At volume, TSLA would show profits. When development was underway, particularly close to vehicle release and shortly thereafter, TSLA would show losses. Elon said Model 3 was the last "bet the company" vehicle to introduce. And so here we are with $5 billion in annual R&D spending, cybertruck only a month away from release, years into 4680 cell development with good results this quarter, and Tesla spending money on FSD and its AI computer faster than a drunk sailor in port after a 3 month cruise. We're in the down part of the cadence now. With all of this going on, Tesla is still generating free cash flow. We see dips in the stock price, but no longer are these "bet the company" moments. It's so much better now than then.

News:
* According to Electrek, Toyota has signed an agreement to use Tesla superchargers and adopt the NACS standard
* Tesla made various price adjustments for U.S. and Canada, as reported on X.com by James Cat:

Yields on 10 yr. treasury bonds rose to 4.99% on Thursday. It's been 2007 since we've seen 5% yields for those bonds.

Max pain Thursday morning was 250, which is now irrelevant. What's important, though, is that there's a tall put wall at 220.

Thursday's options volumes

How low do we go? Hoping the 200 day moving average provides support if called upon on Friday.

Conditions:
* Dow down 251 (0.75%)
* NASDAQ down 128 (0.96%)
* SPY down 4 (0.88%)
* TSLA 220.11, down 22.57 (9.30%)
* TSLA volume 169.7M shares
* Oil 90.35
* IV 48.1, 23%
* Max Pain 250
* Percent of TSLA selling tagged to shorts: 51%
* Volume at 4pm closing cross: 5.9M shares

 

[Papafox]

TSLA chart above

QQQ chart above

It's never good to have the market upset with an earnings call, but it's noticeably worse when the ER is followed by two really down days for the Nasdaq. On Friday TSLA fell less than a third the amount of Thursday. Moreover, the Nasdaq's descent of 1.53% on Friday when multiplied by TSLA's usual beta of 2.1X comes to 3.21% vs. TSLA's dip of 3.69%. In theory, the vast majority of Friday's TSLA dip was a reaction to macros.

We did see what looked like some market maker positive intervention on Friday, which I cover in the maxpain chart writeup.

As disappointing as it is to have a tough week with TSLA, it comes with the territory of owning a volatile tech stock. Within the past year we've seen TSLA get very close to 100 and then briefly top 290. There will be more breathtaking climbs and over-reaction dips on the road ahead. That's just the way it is and it's through weathering this volatility that you "earn" those big runs higher when they come.

Truflation.com says the U.S. is at 2.36% inflation, which is pretty much holding. This is a big difference from the CPI inflation rate last month of 3.7% . The truflation data suggests to me that there's a real chance we can get into the low 2%s without a significant economic downturn.

Yields on 10 yr. treasury bonds closed the week at 4.91%

Max pain Friday morning was 232.50, which was irrelevant. Instead, it looks like the market makers set their sights on keeping TSLA above 215 until a bit before 2pm, they then reduced their sights to 212.50, which had some 8K put contracts and they certainly didn't want TSLA to pass below 210, which had nearly 25K put contracts. Notice how TSLA significantly outperformed QQQ during the final hour and a half of market trading. Coincidence? I think not.

Friday's options volumes

Yuck

For next Friday, max pain is 230. The super-high put wall is 200, which market makers hope to protect. If macros smile, they'd certainly like to see TSLA climb above the 10K contracts 220-strike put wall as well. That put wall at 90 is a technique used by traders to avoid margin calls. They don't expect the stock price to actually go there.

The downward momentum plus the poor Nasdaq performance teamed up to bring TSLA lower on Friday. One small improvement is the reduced volume on Friday, compared to Thursday's big move.

For the week, TSLA closed at 211.99, down 39.13 from the previous Friday's 251.12. Hoping your weekend brought joy and renewal.

Conditions:
* Dow down 287 (0.86%)
* NASDAQ down 202 (1.53%)
* SPY down 5 (1.23%)
* TSLA 211.99, down 8.12 (3.69%)
* TSLA volume 137M shares
* Oil 88.08
* IV 49.7, 29%
* Max Pain Oct 20: 232.50, Oct 27:230
* Percent of TSLA selling tagged to shorts: 47%
* Volume at 4pm closing cross: 5.1M shares

 

[Papafox]

Note TSLA's strength after hours

TSLA chart above

QQQ chart above

After feeling the headwinds of macro dips on Thursday and Friday of last week, TSLA finally caught a break on Monday and managed to close a few pennies in the green. We can thank a green Nasdaq for making this possible and calming some fear of falling out there. The Q3 10-Q was released and may have contributed to TSLA's resilience. Check out this post by TMC's @unk45 for reasons why investors might be happy with the 10-Q. TSLA's after-hours strength may have been related to investors liking the 10-Q and, if so, that bodes well for Tuesday's trading.

TSLA began the day with an ugly Mandatory Morning Dip that was nearly 4.5% deep before recovering and closing in the green. The strong recovery from this Monday morning dip may prevent a repeat from taking place on Tuesday.

Yields on 10 year treasury bonds closed down (thankfully) at 4.84% on Monday

Max pain Monday morning was 225. That number coincides with a 25K contract-high call wall, which the market makers hope to prevent from being crossed.

Monday's options volumes

On Monday the downward trajectory halted. Fingers crossed we climb on Tuesday. The 200 day moving average is at 215.18, which would be a good number to climb above so that it could become support. On August 20 TSLA flirted with 212.50 before closing just above 215. Rising above the Aug 20 closing price would be another created support level.

Conditions:
* Dow down 191 (0.58%)
* NASDAQ up 35 (0.27%)
* SPY down 1 (0.17%)
* TSLA 212.08, up 0.09 (0.04%)
* TSLA volume 148.5M shares
* Oil 86.12
* IV 48.1, 24%
* Max Pain 225
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 3.6M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Tuesday was day 2 of positive macros and day 2 of TSLA's eaking out a recovery from the post-Q3 ER dip. In the morning we saw TSLA climb to nearly 222, which didn't sit well with the market makers who did the el-kabong move on TSLA. Notice that TSLA began its decline from the daily high well before QQQ began fading. We're dealing with call options placed for Friday expiration that stirred up some share buying delta hedging by the market makers but also includes some what the mole tactics. Notice how much more poorly TSLA did in afternoon trading as QQQ marched upward. The explanation could be a lot of things but I gravitate towards capping by the MMs to keep TSLA below the 217.50 max pain.

TMC's @Gigapress did a nice job here in the main investors' forum laying out what was right with Tesla's Q3 accomplishments. Worth a look. He's echoing what I've been saying, which is that Tesla is incuring opex while spending large sums developing 4680 cells, dojo, FSD, Gen 3, Cybertruck, etc. The earnings improve noticeably when the company starts realizing the income from these investments, and it's only a matter of time.

News:
* Tweets such as this one by Sawyer Merritt say that GM's cruise has for the time being been banned by California DMV from operating without drivers in San Francisco after the company failed to turn over a video of an accident involving a pedestrian. Rob Maurer covers the issue in detail here in his video podcast.

Yields on 10 yr. treasury bonds closed around 4.82% on Tuesday

Max pain Tuesday morning was 217.50. We've seen a shift from put buying to call buying with the put to call ratio dropping from about .80 to about .66. Unfortunately, the call buying at strikes such as 217.50 and 220 gives the market makers incentive to play whack-a-mole with TSLA whenever it sticks its cute little head up where they don't want it.

TSLA options volumes on Tuesday

Despite TSLA losing its foothold above 220, the day's gains were important, bringing TSLA above the 200 day moving average. It also climbed above the August 20 closing price. Hoping this is our double-bottom.

Conditions:
* Dow up 205 (0.62%)
* NASDAQ up 122 (0.93%)
* SPY up 3 (0.75%)
* TSLA 216.52, up 4.44 (2.09%)
* TSLA volume 116.7M shares
* Oil 83.77
* IV 46.3, 17%
* Max Pain 217.50
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 3.3M shares

 

[Papafox]

TSLA chart above

QQQ chart above

What a crazy day on Wall Street. Nasdaq and QQQ were down because Google wasn't expanding its cloud business as strongly as Microsoft, and Google got spanked with about a 10% dip. Initially, the market made the right move regarding Tesla: Google cloud vs. Microsoft cloud is irrelevant to Tesla, and we saw Tesla flirting with 220 again while the Nasdaq was down, which must have really pissed off the market makers and hedge funds. By day's end, Nasdaq closed down 2.43% while TSLA was down "only" 1.89%. Keep in mind that we have traders who work TSLA stock and options. Some make money by selling the morning high and then rebuying the next low. Hedge funds likely play this game from time to time, too. That additional gaming of the system is part of the reason why TSLA can fall so far from its morning high to market close.

It's in after hours when things get interesting. You can see nothing happening after hours was enough to sink QQQ until about 6pm, when it took a step down. Compare this performance to TSLA, which began a steep descent not long after market close. In after hours, TSLA lost 2.21% and QQQ sunk 0.90%. Why was TSLA down so much more than QQQ, particularly when it hugely outperformed QQQ during the morning? I saw no negative news of consequence during this time period. The gullible investor might assume that "someone knows something negative about Tesla" and that's the reason for the fall. May I suggest that the big dog funds who likely have some Tesla employees on the payroll to "share" information would not be trading in after hours because the volume is just not big enough to justify losing their knowledge advantage while pushing the stock price lower on such meager volume. They would instead start selling the following morning after market open. A more likely scenario is that this is a bear attack and, as @Artful Dodger pointed out in the main investors' forum, such bear attacks can involve multiple stocks. The advantage of including TSLA in the mix is that with judicious shorting, TSLA can be reliably pulled down because of its high options exposure. That movement of TSLA, which is very volatile, then works to pull the various indexes down and put particular pressure on tech stocks and high flyers.

News:
* According to this Yahoo story, Ford and the UAW have reached an agreement in principle
* This Tweet says that Model 3 Highland deliveries are now beginning in China. This is important news because although Tesla initially sent highland cars to Europe as production cranked up, China deliveries are needed both as a shock absorber to keep inventory from piling up as well as making M3 vehicles once again available to Chinese buyers who need a car.

Wednesday saw yields on 10 year treasury bonds climb to 4.95%

Max pain Wednesday morning was 220. The big put wall is at 200 and the first tall call wall is at 220, thus incentivizing the market makers to keep TSLA within that range this week.

Wednesday's options volumes

TSLA has sunk below the 200 day moving average. With the lower bollinger band being so steep, it doesn't provide noticeable support.

Conditions:
* Dow down 105 (0.32%)
* NASDAQ down 319 (2.43%)
* SPY down 6 (1.44%)
* TSLA 212.42, down 4.10 (1.89%)
* TSLA volume 104.4M shares
* Oil 85.26
* IV 48.8, 28%
* Max Pain 220
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 4.1M shares

 

[Papafox]

TSLA chart above

QQQ chart above

QQQ had a bad day because U.S. GDP grew at an annual rate of 4.9% in Q3, the highest rate seen in a couple years (Reuters story here). TSLA tried once again to climb regardless of macros, stuck it's cute little head up into the green twice Thursday morning, only to get bopped back down. Despite TSLA's strength compared to QQQ in the morning, we saw the usual afternoon swapperoo and by market close it was Nasdaq down 1.76%, TSLA down 3.14%. Again, you can either assume that TSLA just isn't a good stock for trading in afternoons, or you join me in believing that this is the same manipulation pattern we're used to.

Nonetheless, TSLA had much good news that came out on Thursday:
* BP will be buying $100M worth of superchargers from Tesla. This is a big deal because Tesla benefits financially from this supercharger expansion and other energy companies will almost certainly follow BP's lead in the future.
* This X.com user says that Model Y long-range is increasing in price by $500 in the U.S.
* Sawyer Merritt Tweets that the Model Y performance has gone up in price about $1900 in China

https://twitter.com/x/status/1717577265582575981

Here's a report from a German driver who has significant Tesla experience and just took delivery on a Model 3 highland. He speaks very favorably about the lack of noise, the suspension quality, and the ventilated seats. His reaction is important because it shows just how significant the Model 3 redesign is. It's good enough IMO to get current Model 3 drivers excited about upgrading. Those older Model 3s will be sold to people who could never before afford a Tesla, and a big catalyst arrives for bumping up Model 3 deliveries.

Technical traders like to draw charts and this one shows a converging triangle with lower highs and higher lows. The trading range gets smaller until the stock departs through the top or the bottom of the triangle. What we have going on at present, IMHO, is a converging triangle where TSLA is close to the uptrend line and macros have been lame, so big money betting on Tesla going lower may in fact be doing a full-court press at present to see if TSLA can be knocked down below the trend line. We'll see. IMO at some point the good news about Tesla should override the mischief.

Yields on 10 yr. treasury bonds closed at 4.86% on Thursday

Max pain was 217.50 Thursday morning, which looks just about right. Puts slightly ruled at 212.50 while calls slightly dominated at 215 and above. The max pain is higher than the neutral zone because calls are outnumbering puts this week so far with a Put to Call ratio of about .69.

Thursday's options volumes

The last few days TSLA has been sliding down the lower bollinger band.

Conditions:
* Dow down 252 (0.76%)
* NASDAQ down 226 (1.76%)
* SPY down 5 (1.20%)
* TSLA 205.76 (3.14%)
* TSLA volume 113.7M shares
* Oil 83.71
* IV 51.5, 36%
* Max Pain 217.50
* Percent of TSLA selling tagged to shorts: 41%
* Volume at 4pm closing cross: 3.8M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Friday was options close day with macros positive, and the apparent priority for the market makers was to keep TSLA below 220. We saw TSLA climb above 210 at one point but when the macros faded a bit the end result was TSLA closing within 20 cents of the neutral strike price which marked the dividing line between put domination and call domination. In other words, the market makers got a very desirable close one again.

It's been a wild year for EVs. The IRA brough the potential for $7500 savings on EVs and brought U.S. battery makers an enormous bonus of more than 40% reduction in the cost of their batteries if they can follow rules about the sourcing of materials from friendly countries and building locations. Tesla Model Y was initially excluded from the IRA subsidy, but a deep cut in prices by Tesla made the vehicle eligible. I strongly believe that provisions were placed in the legislation to benefit Ford and GM the most and exclude Tesla whenever possible, but look what has happened. This week Ford said it was delaying a $12B investment in EVs for now because they are too expensive (meaning Ford's EVs can't compete with Tesla's), and GM announced it's going to move away from producing EVs and will concentrate on hydrogen fuel cells instead (meaning this is going to take time and likely result in a less economical solution). All these moves put together mean that the legislation initially designed to help Ford and GM is now going to primarily be used to save Tesla and Tesla buyers a ton of cash. The downside of such developments is that even though the IRA is serving its intended purpose of encouraging EV sales in the U.S. and bringing battery construction and materials sourcing to the U.S. and friendly countries, it has lost some of the political goal of helping Ford and GM. That makes the IRA more likely to be negatively affected in the political arena going forward. Overall, though, it's been a stunning reversal in expectations of Tesla's benefits from the IRA compared to the competition.

This weekend's most important video to watch is indeed the Brighter with Herbert video with guest Nick Colas, a veteran analyst who really knows the workings of Wall Street and has an amazing exposure to both the automotive business and the gurus of Wall Street. He gives his evaluation of Tesla and its valuation. In a nutshell, he says that part of the value is the company's business of building cars and he says that TSLA's valuable is so high because it is the one company everyone expects to survive the transition from ICE to EV. He says a major portion of TSLA's value is its FSD efforts which will either pay off hugely or maybe not at all. He likens the FSD component as being the equivalent of a call option, due to its huge payoff or maybe no payoff at all if it fails to deliver. He gives an informed view of interest rates and the economic tapestry ahead. Most of all he gives a glance at how a Wall Street big dog looks at a stock such as TSLA. Highly recommended.

Yields on 10 yr. treasury bonds closed about even on Friday at 4.84%

Truflation.com says that the U.S. inflation rate is 2.34%, compared to the official number 3.7%. I like the very slow downward trend since September.

Max pain Friday morning was 212.50. Strike 210 was slightly call-dominated, with puts dominating below and calls dominating above. Strike 207.50 was neutral. TSLA's close at 207.30 was very close to the sweet spot for market makers. Often we see the stock price finish very near the dividing line between put and call domination, rather than closing at the max pain number. Friday was such an example.

Friday's options volumes chart is missing.

After the previous week's big drop, this past week was a reduced dip which allowed price and max pain to come closer together again. Whereas the week ending October 20 would have been not so good for the market makers (too many puts paid out), this past week would have been an excellent profit for them. Chart courtesy of @JimS

For this coming Friday, max pain is 215 and the tall call wall is at 220. There's room for the TSLA price to change early this week and market makers to adjust their strategy going into the end of the week, but I think it's fair to say that they do not want to see TSLA running above 220 this week and would likely defend 220.

Friday's small climb allowed TSLA to remove itself from following the lower bollinger band lower.

For the week, TSLA closed at 207.30, down 4.69 from the previous Friday's 211.99. Hoping you've spent your weekend well with those who matter to you.

Conditions:
* Dow down 367 (1.12%)
* NASDAQ up 47 (0.38%)
* SPY down 2 (0.45%)
* TSLA 207.30, up 1.54 (0.75%)
* TSLA volume 93.9M shares
* Oil 85.54
* IV 50.4, 32%
* Max Pain 212.50 for 10/27, 215 for 11/3
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 3.8M shares

 

[khorton]

Typo alert: "Tesla Model Y was initially excluded from the IRA subsidy, but a deep cut in prices by Tesla made the vehicle eligible". This should be the Model X.

 

[Papafox]

Typo alert: "Tesla Model Y was initially excluded from the IRA subsidy, but a deep cut in prices by Tesla made the vehicle eligible". This should be the Model X.

Actually, it's not a typo. When the government list came out on whether a vehicle would be considered a truck/SUV or a car, Model Y was initially excluded from the truck/SUV list and therefore had to meet the $55K price threshold instead of the truck/suv $80K threshold (the government wanted some trims of the Ford and GM pickup trucks to fall into the coverage zone). Tesla qualified Model Y for the subsidy as a car (after the big price cut to below $55K) and the IRA tax credit level was reached. The government then redid the list of what vehicles qualify as trucks/SUV (see this CBS story) and Model Y (along with many competitor vehicles) got moved to SUV/truck status. Note that the government gave Model Y a move to the truck/SUV level only after some trims qualified anyway by being priced below $55K.

 

[khorton]

I forgot that the Model Y price didn't originally fit within the criteria. I thought you were referring to the reduction of the Model X base price to $79,990, which allowed it to get the tax credit as well. Perhaps the complete story would be "Tesla Models X and Y were initially excluded ... ".

 

[Papafox]

TSLA chart above

QQQ chart above

So, the big question is "What happened Monday?" Nasdaq closed up 1.16%, Dow up even more, and TSLA was down 4.79%.

First, consider the news items:
* CNBC blames the TSLA dip on Panasonic's warning about reduced Japan battery production because of slowing EV demand.
* The Wall Street Journal reported on a big drop in the stock price of ON Semiconductors after they guided for lower sales in Q4 due to easing demand from EV manufacturers
* Percent of selling tagged to shorts was only 46% on Monday, so the news was the reason, right?

I seldom see dips that are just news or just manipulations. Usually there's a combination effect as shorts and hedge funds take advantage of a reason for a potential fall and leverage that news for maximum carnage. Sometimes we see a mountain built out of a molehill.
Consider:
* Not only was Nasdaq quite elevated on Monday, but TSLA also was green in pre-market and through early trading. That's not your typical responding poorly to news situation.
* The news was secondary information that wasn't really as important as the straight talk by Elon at the Q3 Conference call just a couple weeks ago. Tesla is still shooting for 1.8 million deliveries in 2023, which works out to be about 476K vehicles in Q4. Trying to interpret Tesla deliveries from either of these news stories as useful for judging Tesla's Q4 performance is silly.
* The media is being used by Ford and GM, two companies that cannot make EVs that compete well against Tesla, and so the media is lapping up these stories that EV sales are in trouble. The reality is that worldwide EV sales are up over 30% this year over last and the reason most EV makers can't sell many of their vehicles in the U.S. and make a profit is because they cannot compete with Tesla. These stories tell you primarily about what's happening with Tesla's competitors, not Tesla.
* Take a look at the TSLA chart below that was captured before the big closing cross spike. Look at those volume spikes that temporarily sunk the stock price and then we saw an immediate recovery. Those high volume spikes and immediate recoveries have "manipulation" written all over them.

The bottom line is that Monday's news was relevant to other automakers but not to Tesla. I strongly suspect that with TSLA pushing the lower bounds of the uptrend vs. downtrend triangle, someone is working really hard to scare the technical traders and push TSLA as low as they can. When that happens, shorts do covering, big dog hedge funds who were shorting start to buy, and the dip became a very profitable enterprise. I refuse to donate my shares to these pirates.

Yields on 10 yr. treasury bonds closed at 4.87% on Monday

Max pain Monday morning was 215. The week's chart is dominated by the Mt. Everest tall call wall at 220, which is looking pretty irrelevant now. Between 202.50 and 210, the calls and puts were of similar numbers, making that no-man's land a comfortable place for the market makers. Notice that 200 was no longer a tall put wall, and so it was not a big deal for TSLA to dip below.

Monday's option volumes

Monday's dip hit the lower bollinger band and then bounced.

Conditions:
* Dow up 511 (1.58%)
* NASDAQ up 146 (1.16%)
* SPY up 5 (1.20%)
* TSLA 197.36, down 9.94 (4.79%)
* TSLA volume 135.7M shares
* Oil 82.70
* IV 52.1, 39%
* Max Pain 215
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: missing

 

[Papafox]

TSLA chart above

QQQ chart above

At last we have a good day for TSLA. Note how QQQ and TSLA were on opposites sides of the red/green divide in the pre-market and morning. TSLA was clearly stronger than QQQ and we saw that TSLA closed up 1.76% vs. Nasdaq's gain of 0.48% (TSLA was up more than 3X Nasdaq's gains). Looks like the market figured out that Monday's dip was an overreaction.

Good news: According to Reuters, Telsa won a $400M lawsuit against it related to an autopilot crash. The jury ruled that Tesla was not liable in the accident. Apparently the conditions an owner agrees to for who's in charge during the drive convinced the jury that the driver remains in charge throughout the drive. This is an important win because FSD profits are critical to Tesla's future. U.S. courts work on a system where previous legal decisions affect future cases.

Where to from here? We're looking for a big bounce to cement the low. Let's see if 200 can hold. As for the quarter, I expect some type of bounce in anticipation of the Cybertruck delivery event on Nov. 30. More importantly, we need to monitor progress with production and deliveries in Q4 to see if TSLA can do 476K without affecting margins too much. Hitting 1.8M deliveries for the year would go a long way to defeating the FUD that Americans aren't so keen on EVs any more. A strong Q4 would also be a reminder that Q3's dip was primarily related to factory upgrades. Inflation and the economy are the other major pieces of the puzzle this quarter.

Yields on 10 yr. treasury bonds fell in the morning then rose quickly at day's end on Tuesday and reached 4.92%

Max pain Tuesday morning was 207.50. Strike 205 is probably closer to the sweet spot for market makers. The call wall at 210 has grown quickly and is now a problem to the MMs, along with the super-high 220-strike call wall.

Tuesday's options volumes

The recent dip has caused the blue 50 day moving average to begin moving lower toward the red 200 DMA, which is still moving higher. The two are still about $30 apart and we don't wish to see them cross, which would be a bearish signal.

Conditions:
* Dow up 124 (0.38%)
* NASDAQ up 62 (0.48%)
* SPY up 3 (0.63%)
* TSLA 200.84, up 3.48 (1.76%)
* TSLA volume 116.2M shares
* Oil 81.31
* IV 49.7, 31%
* Max Pain 207.50
* Percent of TSLA selling tagged to shorts: 42%
* Volume at 4pm closing cross: 4.7M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday morning in pre-market trading we saw TSLA clearly outperforming QQQ, with TSLA climbing above 204 and QQQ spending much of pre-market trading in the red. Alas, no TSLA news of substance surfaced that could account for TSLA's late morning dip (as far as I can tell) and so it looks like the dip was a manipulation. Further evidence of manipulation was the striking game of whack-the-mole that kept sending TSLA into the red for a few minutes at a time well past 2pm. Just look at that repeating pattern of price appreciation and immediate pushdowns, it's classic! Meanwhile, QQQ was well into the green and mostly holding its gains.

Alas, Darth Powell spoke after 2pm and as expected the Fed held rates steady for the second FOMC meeting in a row, according to CNBC. This news propelled the broader markets higher, and the pirates lost control of the TSLA cap, which allowed TSLA to gain 2.4% for the day, vs. QQQ's gains of 1.74% (and Nasdaq's gains of 1.84%). TSLA's gains weren't 2X, but IMO any time you see a manipulation (whack-a-mole) defeated, that's a bullish sign. OTOH, in after hours trading, TSLA gained 1.14% vs. QQQ's gains of only 0.32%. That after-hours strength bodes well for Thursday's early trading.

Additional evidence of manipulation on Wednesday included percent of selling tagged to shorts rising to 51% and volume of trading during the 4pm closing cross was a hefty 5.3M shares, which gave plenty of opportunity for closing day-shorting positions used in the manipulations.

Why have the market makers, shorts, and hedge funds been so aggressive lately with their efforts to sink TSLA? May I suggest an alternative explanation why TSLA hitting the bottom of the uptrend vs. downtrend triangle was so meaningful? Besides the hedge funds and market makers profiting from TSLA's seesaw maneuvering up and down within the triangle, freelance traders have no doubt been taking advantage of the ups and downs with predictable top and bottoms. I suggest that the pirates didn't like the traders muscling into their game and the pushdown to below the triangle was (among other things) a nice way to get traders to sell their recently acquired shares at the bottom of the triangle, fearing that TSLA had at last departed the triangle's range. Oopsie for the traders, particularly if TSLA runs much higher on Thursday. We'll see.

News:
* Subaru has announced that they will be adopting Tesla's NACS for chargers in North America.
* Note that West Texas Crude (which was pushing $90/barrel recently) was down to $81/barrel during my evening data collection

The Fed's decision to hold it's interest rates steady resulted in a market sigh of relief and a drop in 10 yr. treasury bond yields to 4.71% on Wednesday

Max pain Wednesday morning was 205. That strike is slightly call dominated and 210 strike is heavily call dominated, so market makers will likely be trying to hold TSLA back as it climbs higher. They really don't want to see TSLA hit 220 this week.

TSLA options volumes on Wednesday

So far it's been a decent bounce off the 195ish low. A good climb on Thursday could tranform a lot of Fear of Falling into Fear of Missing Out.

Conditions:
* Dow up 222 (0.87%)
* NASDAQ up 210 (1.84%)
* SPY up 5 (1.07%)
* TSLA 205.66, up 4.82 (2.40%)
* TSLA volume 119.7M shares
* Oil 81.04
* IV 48.2, 26%
* Max Pain 205
* Percent of TSLA selling tagged to shorts: 51%
* Volume at 4pm closing cross: 5.3M shares

 

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TSLA chart above

QQQ chart above

Thursday was a day for the market to fully celebrate no rate increase during Wednesday's FOMC report. The combination of the broken cap Wednesday late afternoon plus strong after-hours trading did indeed lead to a strong TSLA opening on Thursday. Right from the start, TSLA was much stronger than QQQ. Check out that feeble Mandatory Morning Dip that got bought up quickly. Between 11:30am and 2pm TSLA settled around 217.50, which kept it a safe distance below 220, where a sugar-ton of calls reside that expire on Friday. After 2pm, TSLA resumed a shallow climb (qqq had been climbing since about noon) but TSLA topped out again around 3pm when TSLA topped out slightly above 219. Rest assurred the capping efforts were humming at that point. TSLA started down slowly after that but surged higher just before a close at 218.51. For the day, TSLA closed up 6.25% vs. Nasdaq's gain of 1.78%, a 3.5X multiplier.

The dip in after hours trading for QQQ and TSLA was due to Apple being negative about growth during the important December quarter and the market punished the stock (see this CNBC story).

In terms of evidence for the capping, we see only 45% of selling tagged to shorts, which strikes me as suggesting the market makers were using non-FINRA borrowing for their shorting. OTOH, trading during the 4pm minute was a robust 7.3M shares, suggesting lots of wheeling and dealing going on behind the scenes.

Thursday was the big jump higher that TSLA needed to define this as a price recovery stock instead of one that is falling. There's plenty of room for TSLA to rise before it intercepts the upper side of the triangle (see below).

Shanghai's 72K local plus export sales in October looks mediocre until you consider that the first week was a holiday and hardly any Model 3s were delivered throughout the month, then it looks pretty good! Graph by Roland Pircher

For Friday I'll be watching to see if the market makers can hold TSLA below 220. a big move above 220 would of course be bullish. A small move above would likely be followed by a serious effort to pull the price back below 220.

News:
* Electrek says that Tesla is about to launch what may be the world's largest virtual power plant (VPP) in Puerto Rico. This is a significant move because the company will generate revenue from operating the VPP and investors will see that projects that have been germinating in the past such as this can and will indeed become real. Tesla is far more than an auto manufacturer.

Yields on 10 year treasury bonds fell further on Thursday to close at 4.66%

Max pain Thursday morning was 205. Strikes 200 and 205 were both neutral in terms of put vs. call dominance. Strikes 210 and 215 were strongly call-dominated and strike 220 now rises above 50K contracts high and the early leveling of TSLA Thursday afternoon a couple dollars below 220 was almost certainly due to capping. MMs will try on Friday to keep TSLA below 220. If TSLA and the market are in beast mode again, the MMs could again see their cap fail.

Thursday's TSLA options volumes

Although it looks like the 200 day moving average at 218.50 was the reason for TSLA stopping its climb at that level, in reality I think capping to keep TSLA below 220 is a better explanation. Nonetheless, the big climb on Thursday likely will do the job of converting fear of falling to fear of missing out in the TSLA investor world.

Conditions:
* Dow up 565 (1.70%)
* NASDAQ up 233 (1.78%)
* SPY up 8 (1.92%)
* TSLA 218.51, up 12.85 (6.25%)
* TSLA volume 124.8M shares
* Oil 82.61
* IV 44.9, 13%
* Max Pain 205
* Percent of TSLA selling tagged to shorts: 45%
* Volume at 4pm closing cross: 7.3M shares

 

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TSLA chart above

QQQ chart above

Friday arrived with news that payrolls increased slower than expected (CNBC story here). In this bad news is good news world in which we live the market welcomed this news with glee because it means that the Fed has less reason now to do any more interest rate hikes. Thus, growth stocks were up, with the Nasdaq closing up 1.38%. Not too surprisingly, TSLA was one of those stock heading higher quickly after market open and it reached 225 before 10am.

As we discussed earlier in the week, market makers were focused upon strike price 220 because over 50K call contracts at that strike were expiring on Friday. It was really a question of whether TSLA could get high enough to break the MM tractor beam and be pulled down below 220. I actually woke at 4am in Hawaii to see what happened, but when I saw the stock begin that relentless linear march lower I went back to sleep. I knew how this story would likely end. And it did follow the script perfectly. By 11am TSLA was flirting with 220 again and as QQQ continued higher, TSLA bounced around 220 before closing 4 pennies below that strike price. Ho hum, another manipulation Friday.

Percent of selling tagged to shorts was not particularly high at 51%, but I've long decided that moderate FINRA shorting data sometimes doesn't give you much of an idea of how much shorting was actually happening in a clearly manipulative trading day. A robust 3.6 million shares traded during the 4pm closing cross does suggest there was lots of shenanigans afoot.

For Monday's trading, there's a news story that could help TSLA climb: Elon's X.ai has released a language model ai product called Grok, which is still in its infancy but is already turning heads due to its ability to answer questions and do so with a sense of humor. Grok could be quite a hit as it matures, and Elon has announced that Tesla will provide compute and individual Tesla vehicles might be able to do some of the computing for the computing for Grok when not in use (subject to the software being able to run on a Tesla's hardware. Here's a video by Dr. Know-it-all that shows how Tesla and individual Tesla owners could make money by utilizing vehicles to run Grok queries. We've seen a tug of war recently between traditional analysts who are gauging Tesla's success primarily as a carmaker, but there's a growing number of analysts and investors who are joining Adam Jonas in believing that Tesla is far more than an automaker and should be valued with an eye towards developing technologies. Add Grok, and the list just gets more and more impressive.

News:
* Elon announced at GigaBerlin (see this Tweet) that the location would be manufacturing the $25K Gen3 vehicle in the future.
* South Korea is banning short selling through at least June to level the playing field, according to this Tweet.

Truflation.com says U.S. inflation now is 2.28%. I like the slow downward trend after the late August bump.

Yields for 10 year treasury bonds fell crazy fast this past week, from over 4.9% to finish the week at 4.58%. Mr. Market is encouraged about inflation and fed rates.

Friday morning, max pain was 210. While puts and calls were about even at 215 strike, look at that true monster of a call wall at 220: more than 50K contracts high! No wonder the market makers pulled out the stops to keep TSLA below 220 on Friday.

Friday's max pain volumes are missing. Sorry.

At last TSLA found a bottom for the quick drop over the past couple weeks. Chart courtesy of @JimS

For this coming Friday, Nov. 10, max pain is 210 and 230 strike is the tallest call wall

TSLA still managed to close above the 200 day moving average on Friday, despite the obvious pushdown by the Market Makers

For the week, TSLA closed at 219.96, up 12.66 from the previous Friday's 207.30. It's been a good week, my friends. Hoping you enjoyed the weekend with those who matter to you.

Conditions:
* Dow up 222 (0.66%)
* NASDAQ up 184 (1.38%)
* SPY up 4 (0.91%)
* TSLA 219.96, up 1.45 (0.66%)
* TSLA volume 118M shares
* Oil 80.51
* IV 45.9, 16%
* Max Pain 210 for 11/3 and 11/10
* Percent of TSLA selling tagged to shorts: 51%
* Volume at 4pm closing cross: 3.6M shares

 

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TSLA chart above

QQQ chart above

As Monday's market open approached, macros were again green as they continued Friday's positive reaction to declining jobs added numbers. TSLA was strong in pre-market trading and when the market opened we saw the very common surge of exuberance from retail buyers following a weekend. Alas, as that exuberance buying declined, market makers apparently decided this was a great opportunity to build upon Friday's underperformance and we saw TSLA significantly underperform the Nasdaq and QQQ. I believe that sentiment could have allowed TSLA to have a strong day (Friday was artificially stifled and ai.x 's partnership with Tesla on the Grok ai language app. These days like Monday where TSLA could either run high or fade are an attractive use of the market makers' manipulation bucks. They get more for their money when there's both a reason to go and a reason to go down because their manipulations create fear and uncertainty, enough so to shift the momentum.

Percent of selling tagged to shorts was up to 52% on Monday and selling at 4pm was a robust 3.4M shares.

News:
* Reuters says that Tesla is giving workers in Germany a 4% raise, but they did so with the most negative of headlines.
* TMC's @The Accountant Tweets that certain statements from GigaShanghai show important progress in reducing the cost of producing vehicles. This video podcast from Brighter with Herbert covers the same topic well, as an additional source.

Yields on 10 yr. treasury bonds closed at 4.65% on Monday

Monday morning's max pain number was 215, which happened to also be the day's low. Just coincidence, right? Strike 215 is neutral for puts vs. calls, but if you move up to 220, calls dominate and of course there's that high call wall at 230. Market makers would prefer to see TSLA at 215 to 220, and I suggest that's the primary reason for TSLA's afternoon performance.

Monday's options volumes

TSLA ended the day just about at the red 200 day moving average. That line has played a role in each of the previous trading days as well.

Conditions:
* Dow up 35 (0.10%)
* NASDAQ up 41 (0.30%)
* SPY up 1 (0.23%)
* TSLA 219.27, down 0.69 (0.31%)
* TSLA volume 116M shares
* Oil 80.82
* IV 44.5, 9%
* Max Pain 215
* Percent of TSLA selling tagged to shorts: 52%
* Volume at 4pm closing cross: 3.4M shares

 

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TSLA chart above

QQQ chart above

For the past 4 trading sessions, TSLA has been gravitating toward 220. I suggest the market makers were defending 220-strike calls last week and 225-strike calls this week. There's upward pressure on the stock many of these days and TSLA gets held near 220. Can you say "capping"?

Upward pressure could be caused by these news items:
* Adam Jonas of Morgan Stanley once again explained his 380 base case target for TSLA. He used an Apple analogy, saying that Tesla has had its iphone moment already but not app store moment yet. He believes Tesla will be able to move into less capital intensive and higher-margin roles such as services, content and software.
* Rumors from multiple sources say that Tesla will raise Model 3, Model Y prices in China on Nov 9.
* The Economic Times says that India looks to fast-track approvals for Elon Musk's Tesla by January 2024
* Roland Pircher has presented graphs showing good delivery pacing in 4Q23 for Tesla

So... the MMs wanted investors to believe that the market was simply unwilling to price TSLA above 220 at the moment. Hold it there long enough and investors accept that false narrative. Tuesday morning saw an oversized dip of TSLA into the red for no apparent reason. Later, Tuesday looked like another day for whack-the-mole at TSLA's red/green line but after about 1pm QQQ started adding to its already attractive gains and the MM's apparently lost control of the cap and TSLA managed to climb above 222 before market close. A robust 3.7M shares traded hands at 4pm, suggesting plenty of opportunities for covering of day-shorting.

What we really want to see is for max pain to rise to 220 so that the MMs take the pressure off 220. OTOH, with 225 showing 50K contracts expiring on Friday, I expect the battle to stay below 225 to be raging for the remainder of the week. No guarantee who's going to win.

Yields on 10 year treasury bonds closed at 4.57% on Tuesday. Adding to the perception that inflation might be heading in the right direction is the day's West Texas Intermediate Oil price of $77.06.

Max pain was 215, a strike price that is put-dominated. Strike 220, OTOH, is still call-dominated and 225 is the tall call wall nearly 50K tall.

Tuesday's TSLA options volumes

Check out the focus on 220 and the red 200 day moving average for the past 4 trading days.

Conditions:
* Dow up 57 (0.17%)
* NASDAQ up 121 (0.90%)
* SPY up 1 (0.28%)
* TSLA 222.18, up 2.91 (1.33%)
* TSLA volume 116.5M shares
* Oil 77.06
* IV 44.3, 8%
* Max Pain 215
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 3.7M shares

 

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TSLA chart above

QQQ chart above

Wednesday was trading day 5 of the market makers' attempt to hold TSLA below the week's big call wall ($220 last week, 225 this week). Part of the strategy appears to be attempts to push TSLA below $220 for a close there. On every one of the past 5 trading days TSLA traded below 220 for at least part of the day. Percent of selling tagged to shorts was a somewhat elevated 51% on Wednesday. I think the reason the MMs can steer the price of TSLA somewhat with this mild a shorting effort is that we're in a unique time when the mainstream media is talking doom and gloom for EVs (including steadily decreasing margins for Tesla in order to move the vehicles) and meanwhile the company is marching forward with what is projected to be record deliveries (476K deliveries or more in Q4). The latest twist is that Tesla did in fact decide to raise Model Y LR and Model 3 LR prices by a few hundred dollars. Here's a Tweet from Gary Black attempting to quantify the revenue enhancements from the price raise. It's a minor exercise, however, because further declines in the cost of the vehicles (especially for Model 3) should be a bigger piece of the puzzle.

Q4 could be important if it marks a topping our of Fed rates and a bottoming out of TSLA margins. It's too early to tell about the margins in 2024, but for Q4 the quarter is percolating along well so far. Cybertruck will be a drag on margins until volumes increase substantially.

Let's hope that we see enough 220-strike put purchases on Wednesday to bring max pain up to 220. That would take some of the pressure off. OTOH, the call wall for 225-strike calls is about 45K contracts high still, and MMs want some breathing room under that strike prior to Friday's close.

Yields on 10 year treasury bonds fell to 4.51% on Wednesday

51% of TSLA selling was tagged to shorts on Wednesday. The number is higher than normal, but not super high (as in the 60s).

Max pain Wednesday morning was 217.50, which keeps the pressure on 220 for yet another day.

TSLA options volumes

TSLA remains just above the 200 day moving average as we await some development to take it higher or lower.

Conditions:
* Down 40 (0.12%)
* NASDAQ up 11 (0.08%)
* SPY up 0 (0.07%)
* TSLA 222.11, down 0.07 (0.03%)
* TSLA volume 104.9M shares
* Oil 75.63
* IV 43.7, 7%
* Max Pain 217.50
* Percent of TSLA selling tagged to shorts: 51%
* Volume at 4pm closing cross: 3.5M shares

 

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TSLA chart above

QQQ chart above

Yikes, a tough day but not because of any shortcoming in Tesla. Large European bank HSBC initiated coverage of TSLA with the equivalent of a sell rating and a $146 price target, according to CNBC. If you listened to details of the HSBC 100 page report, you'd realize that the analyst was clueless about Tesla's pace of innovation. A mere 14% of HSBC's TSLA valuation was for FSD, which they look at as an end of the decade product (really???). Definitely amateur hour, but the market lapped it up and the shorts added to the downdraft with 55% of TSLA selling being tagged to shorts on Thursday. Volume during the 4pm closing cross was no less than 5.2M shares, suggesting LOTS of day-shorting being covered at day's end.

In contrast to the inept HSBC analyst valuation of TSLA, we got to see Elon's views of what's going on with FSD and Optimus during his interview with Lex Friedman. The larger Lex Friedman interview is interesting, but for those of us who are Tesla-specific, I suggest viewing this excellent video podcast by Farzad Mesbahi. In it you'll quickly learn of the efficiency of using ai in Tesla vehicles, the fascinating convergence between the various ai projects that Elon Musk is involved in, and the crazy realization that Tesla ai may in fact be teaching itself to read (without having been taught). Ladies and gentlemen, Tesla is developing technology that is going to blow the doors off not only the auto industry but will also dazzle the other ai creators as well. Definitely worth a look. So, will Tesla FSD take til the end of this decade to work? Nope. In fact by then the ai capabilities of Teslas and Optimus will be batshit crazy. This is going to be fun, my friends.

Naturally, Darth Powell spread the usual doom and gloom when he spoke on Thursday and his comments spooked the market enough to send QQQ diving down and yields on 10 yr. treasuries shooting up in the afternoon. Not to be outdone, Biden of course said that the UAW should unionize Tesla and Toyota.

During this "wonderful" day for TSLA short-sellers, media latched onto a story of 159 S & X vehicles are having a recall for an airbag replacement related to steering wheel vs. yoke. It'd not even be worth a mention with any other automaker. OTOH, some real news about Tesla's performance came out and we learned that Model 3 production has been well above expectations (Rob Maurer covers this story here). Rob also pointed out that several other carmakers traded similarly to TSLA on Thursday. Rob talks about the excellent M3 production at Shanghai as does Troy in this Tweet.

Yields on 10 yr treasury bonds rebounded to 4.63% on Thursday after Darth Powell gave more of his "higher for longer" doom and gloom

Max pain Thursday morning was 217.50. The relatively tall put wall at 210 may have stalled TSLA's descent on Thursday. With 220 the lower call wall out there, TSLA could enjoy a nice climb on Friday and the MMs would still be happy. OTOH, each $5 dip would be painful. It'll be momentum vs. MM interests on Friday, which is the day of the week where you'd like to see such a contest.

Thursday's options volumes

Conditions:
* Dow down 220 ( 0.65%)
* NASDAQ down 129 (0.94%)
* SPY down 3 (0.78%)
* TSLA 209.98, down 12.13 (5.46%)
* TSLA volume 141.5M shares
* Oil 75.71
* IV 47.0, 21%
* Max Pain 217.50
* Percent of TSLA selling tagged to shorts: 55%
* Volume at 4pm closing cross: 5.2M shares