Papafox's Daily TSLA Trading Charts

[Papafox]

If consolidation of the gains is taking place, it's a pretty benign consolidation. We're seeing some really heavy trading in morning hours and light trading in afternoons. Fortunately, buyers caught the 3pm swan dive fairly quickly and TSLA held green into the close. Because Friday is not a monthly option close, we may see the effects of Max Pain as being light. A run-up into close on Friday would be a positive indication for a good Monday morning open. With Q4 delivery number release not much more than a week away, the stock should receive some boost next week from traders hoping for good numbers and shorts covering to avoid a possible big run-up on good numbers.

Conditions:
* Dow down 23 (0.12%)
* NASDAQ down 24 (0.44%)
* TSLA up 0.76 (0.36%)
* TSLA volume 3.09 M shares
* Oil 52.61 up 0.12 (0.23%)
* Shorts morning drawdown (or covering) and lending rate: 66,000+ shares @ 2.50%

 

[Papafox]

After taking two days to consolidate gains (no surprise), the Tesla rally continued today on media speculations that Tesla is primed for a rally. Guy Adami spoke of Tesla being ready for a breakout on Thursday night, and today CNBC Estimize listed TSLA as one of 5 stocks to watch during 2017.

Take a look at the benign mandatory morning dip in the first 20 minutes of trading. I joined other traders in using this dip for some buying this morning, and as more traders use it, the dip will become less and less until it disappears entirely.No afternoon swan dive took place because 1) shorts did not draw down much ammo today, and 2) the rising price of TSLA kept volume up throughout the afternoon, which prevented any effort to engineer a swan dive.

Meanwhile, TSLA is approaching the 200 day moving average, which is a number that the shorts have been heavily defending in the past. Look on the graph for the orange line that hovers between 213 and 214. This is the number that both the 3Q delivery update and 3Q ER failed to cross. Expect resistance, but as I've said multiple times in the past month, the shorts have lost their ability to control the stock price of TSLA on strong up days. This could be a battle, though, because if we cross 214 (and some change) a lot of technical traders will be willing to buy in and if they do, we'll see some short covering and we're on our way.

Enjoy your three-day holiday (market is closed on Monday)! When we come back to trading, we're less than a week away from Q4 delivery numbers reveal. The combination of crossing the 200 dma and good Q4 delivery numbers could become a strong catalyst.

Conditions:
* Dow up 15 (0.07%)
* NASDAQ up 15 (0.28%)
* TSLA 213.34, up 4.89 (2.35%)
* TSLA volume 4.7M shares
* Oil 53.2, up 0.25 (0.47%)
* Shorts morning drawdown (or covering) and lending rate: (covering) -82,000 shares, 2.50%
* Yesterday's shortanalytics.com shorts percentage of trading (50%)
* News: Guy Adami on CNBC suggesting TSLA ready for a breakout (Thurs pm), and CNBC's Estimize naming TSLA as one of 5 stocks to watch (today)

 

[3Victoria]

What do you think of the (on average) linear rise over the last while. I looks like the MM are constraining the rise, possibly to prevent a short-squeeze?

 

[GoTslaGo]

Algobots?

Although I wouldn't be surprised if MMs and/or brokerages are preventing a short squeeze. IMHO, the market likes shorts because the make transaction money on the initial borrow, the interest to carry, and the return of the shares. They also add liquidity so there are more shares to buy/sell and make money on.

As for longs, they only get money for the buy and sell... if they sell. Maybe margins...

So the MM/brokers have no incentive to drive the shorts out of the market by letting a short squeeze happen. We've already seen with the merger how the MMs modulate prices, so I believe @3Victoria you have a point.

 

[3Victoria]

Yes, I see your point. We ol' stodgy longs will just buy and hold forever ... how can an honest broker make any money like that? More churn, more skim. Just as everyone keeping their money under theatres doesn't benefit the larger economy, much better to buy and spread the money around as fast as possible.

 

[Papafox]

What do you think of the (on average) linear rise over the last while. I looks like the MM are constraining the rise, possibly to prevent a short-squeeze?

To me, gradual, steady-as-she-goes climbs suggest that some big institution is buying. They have lots of shares to accumulate and don't want to bid the price up too quickly so they buy slowly. That's just the opposite of how shorts sell into a new position if they're big dog short. That said, I saw a prolonged period of time today when TSLA kept bouncing off 212. I wasn't sure whether we'd make it through, but gradually the uptrend prevailed.

The near-vertical jumps up that TSLA makes from time to time suggests either shorts covering or longs who were nervously waiting on the sidelines jumping in so as not to miss the run up. While all fine and good, I really prefer to see the steady slow climbs of institutions buying in. They're something the shorts can't really manipulate and they're the bulldozer that gets us through all the various DMAs when TSLA encounters them.

 

[Papafox]

All doubt about whether TSLA would break through the 200 day moving average, which stood between 214 and 215, was removed today as the stock shot above 220 in value then settled slightly by close. The shorts had drawn down over 240,000 shares at Fidelity early this morning and were no doubt ready to defend the 200 day today, but as both vgrinshpun and I stated, that strategy today with all the good TSLA news was mere"pissing against the wind." I'm particularly pleased to see the stock recover a bit in the final hour of trading and say no to an attempt to push it down in the lighter volume hours.

Now that the 200 day has been exceeded, we can expect additional interest in the stock from longs who seriously consider technicals. With the 53% share of trading by shorts on December 23 and with 80,000+ shares covered that morning, we undoubtedly saw net short covering on Friday and should expect to see light covering this week too. The Dec 15 short holdings of 35+ million will likely be the highest we see for some time as we see a transition to net short covering from short % growth. The good news is that the negative influences of the short sellers should remain in a diminished state while the longs are pushing the SP higher during 2017.

Conditions:
* Dow up 11 (1.06%)
* NASDAQ up 25 (0.45%)
* TSLA 219.53, up 6.19 (2.90%)
* TSLA volume 5.9M shares
* Oil 53.84, down 0.06 (0.11%)
* Fidelity morning short share drawdown and interest rate: 240,000 shares, 2.5%
* Dec 23 short % of trading: 53%
* Dec 15, 2016 short interest in TSLA: 35.39 M shares
* News: Prior to opening, Panasonic announced $250M investment in Buffalo plant for manufacturing Tesla's solar products. This news is likely the largest catalyst for the big SP jump we saw shortly after opening.

 

[ggr]

Dow up 11 (1.06%)

That's 0.06%... barely moved.

[Apologies if I come across as critical... don't mean to, I just tend to correct things when I notice them. In all things, accuracy, except moderation ]

 

[Papafox]

Today, www.shortanalytics.com says that shorts composed 56% of trading, the same percentage as on Dec 23. Typically, on a big up day we've been seeing shorts at about 40%, so besides the big short-selling drawdown at Fidelity this morning, I suspect we also saw some covering by shorts. This number is worth keeping an eye on.

PS: ggr, thanks for catching the typo.

 

[Papafox]

Today was a good day for TSLA. Call it a consolidation day, if you will, but today the broader markets were down considerably and TSLA managed to close slightly in the green. Moreover, the net change in shares to short at Fidelity was 340,000+ drawdown. If all these shares had been traded today and we still managed this kind of performance, then TSLA is ready to roar again in the near future. Only two trading days remain for investors to place their bets prior to the likely unveiling of Telsa 4Q delivery numbers over the holiday weekened (Monday, Jan 2 is a trading holiday).

There is no word yet on whether Tesla will host a Jan 4 event at the gigafactory. Without such an event, Jan20 options will depend primarily upon the 4Q delivery numbers for further growth, and personally I prefer to have multiple catalysts standing between me and the expiration date of an option I hold.

The remaining two days of this week should be positive for TSLA if today's demand for shares to buy on a down day for the broader markets is any indication. My guess is that we had a big buyer (institution?) loading up shares today but being cautious to spend most of the day slightly in the red so as to not spark a rally. The trading seems too even in a slight upward direction to be explained otherwise, particularly on a day with massive short share drawdowns.

Conditions:
* Dow down 111, (0.56%)
* NASDAQ down 49 (0.39%)
* TSLA 218.74, up 0.21 (0.10%)
* TSLA volume 3.8M shares
* Oil: 53.93, up 0.03 (0.06%)
* Fidelity short share drawdown and interest rate: 340,000+ shares, 2.5% interest, zero shares available
* News: Trump is supposed to make an announcement that is positive for American workers

 

[Papafox]

Today's drop of $5 was a surprise. TSLA did not follow the broader markets and data from Fidelity indicates net short covering instead of net shorting. One explanation is that the rise to 222 was so quick that some pullback was likely. Another explanation is that many investors made profits in the market recently and many of these same investors are sitting on TSLA losses this year (because 214 is relatively low compared to TSLA's highs for the year). What we are seeing may be investors selling before year-end to take their losses in order to help balance gains on other stocks sold this year.

Thus, we see two opposing forces working on TSLA tomorrow: a desire by some longs to get into the stock before the Q4 delivery numbers are released this weekend, and the chance that some year-end selling will take place. TSLA is also sitting right at the 200 day moving average. While this scenario suggests that a further decline is quite possible, the probability of decent Q4 delivery numbers suggests that fundamentals will trump technicals next week, particularly if the Jan 4 event at the gigafactory paints a rosy picture of future cell output and TE products output during 2017. Between the Q4 delivery numbers and the Jan 4 event, my money is riding on a good first week of the year for Tesla.

As always, never a dull moment with this stock.

Conditions:
* Dow down 14
* NASDAQ down 6
* TSLA 214.68, down 5.06
* TSLA volume 4.0 M shares
* Oil 53.95, up 0.18 (0.33%)
* Fidelity morning short activity and interest rate: Net covering of 225,000 shares
* Today's short percentage of trading: 57%
* Yesterday's short percentage of trading: 54%

 

[Papafox]

Friday, Dec. 30, was another day when TSLA mostly traded on end-of-year trader moves and positioning for Tuesday's trading with Q4 delivery numbers likely known by then. On the positive side, TSLA traded better than the NASDAQ. The year 2017 offers the promise of a new ATH, provided Tesla continues to execute by delivering Model 3 in second half, greatly expanding Tesla Energy, and finding ways to make Solar City cash positive for the year.

Conditions:
* Dow down 57 (0.29%)
* NASDAQ dow 49 (0.90%)
* TSLA 213.69, down 0.99 (0.46%)
* TSLA volume 4.6M shares
* Oil (on 1/1/17) 53.72, down 0.05 (0.09%)
* Fidelity short drawdown or (covering) and interest rate: 98,000 drawdown at 9:30am, 2.5%
* Shorts percentage of trading from shortanalytics.com: 53%

1kEE has suggested that these daily trading charts be posted on the Investor Roundtable: TSLA Market Action thread. What are your thoughts? As a positive, the charts get wider dissemination and help the Market Action thread have daily relevance. On the negative side, it'll take a bit longer to look back and research the chart for a specific day.

 

[EinSV]

1kEE has suggested that these daily trading charts be posted on the Investor Roundtable: TSLA Market Action thread. What are your thoughts? As a positive, the charts get wider dissemination and help the Market Action thread have daily relevance. On the negative side, it'll take a bit longer to look back and research the chart for a specific day.

Your call obviously but I find this thread to be very valuable and having the content in its own thread makes it easy to find on days when the main investor thread (now threads) have more chaff than wheat. Also nice to be able to easily look back at past postings to spot trends and patterns.

 

[jdw]

This is a great thread and thank you very much for doing all the work that goes into it!

I also kind of like that it is a separate thread for signal to noise ratio as well as that when you do post it pops up in What’s New. If you do move to the new thread it would be easy enough to just follow you though ...

 

[pz1975]

I vote to keep this as a separate thread.

 

[GoTslaGo]

At first I agreed it would be a good idea to merge since the premise is similar.

But the more I thought about it, it would probably be best to see how the dual thread thing works out before deciding. And even then it should be your decision, as this is your thread. May not want to have things too muddled by too many other posts.

Currently it's beautifully clean and simple. Thanks!

Edit--Probably best to keep as a separate thread...

 

[Papafox]

Enough feedback. We'll keep the daily charts on its own thread.Thanks for the input all!

 

[moe.salih]

One additional piece of feedback for the moderators: I think this should be a sticky thread. It's one of the most valuable threads in the investor section. Definitley more valuable than some of the other sticky threads.

 

[Papafox]

The broader markets went quite high today, helping TSLA bounce off 220 before settling in the afternoon. Let me remind you to take a look at that "Monday morning" burst of buying during the first hour of trading most Mondays. A Tuesday after a 3-day weekend that includes Monday experiences the "Monday Morning" buying surge pretty regularly during the first hour of trading. You may wish to use this period on Mondays as a selling opportunity on some future date.

Shortly after market close, Tesla announced Q4 deliveries at a rather disappointing 22,200 but production was at a respectable 24,882 production number. Here's the link, One member pointed out that Tesla averaged a production rate of better than 2,200 vehicles/week for active weeks in Q4, the first quarter with greater than 2,000 vehicles/week production rate. With some shrinkage of in transit numbers and with this current production rate, Q1 looks like it could rise to as high as 30,000 vehicles delivered. Additionally, Tesla did something it has never done before (in my memory), which was to give demand information. It stated that orders were 24% higher than in Q3 and 52% higher than in 4Q15. Between strong demand and very good production rate, the stock has weathered the low delivery numbers well in after-hours trading so far.

One reason for the miss that many did not take into account was the need to refill inventory after it was drawn down excessively in Q3. I figured that inventory increased by greater than 1700 vehicles by end of Q4, compared to the end of Q3.

An event at the gigafactory tomorrow gives Elon Musk a chance to share positive news with the media and hopefully announce that cell production is underway. Analyst Ben Kallo over the weekend gave us an indication of things to come, perhaps. He indicated that the Q4 delivery numbers would not be an overhang (a negative influence) for Tesla's 2017 year that he expects to be excellent, and he hinted that the gigafactory event would yield positive news. Looking forward to hearing.

Conditions:
Dow up 119 (0.60%)
NASDAQ up 46 (0.85%)
TSLA 216.99, up 3.30 (1.54%)
TSLA volume 5.9M shares
Oil 52.47, down 1.25 (2.33%)
Fidelity morning short shares drawdown (covering) and interest rate: 133,000 drawdown with rate dropping from 2.5% to 1%

 

[Papafox]

Short-to-mid-term prospects for TSLA

The more I think about analyst Ben Kallo's words, the more a picture emerges of the coming year and the short-to-mid-term. This is only a theory, so take it with a grain of salt. Kallo is bullish on Tesla and has a $338 price target for the stock. He believes that between Model 3 and Tesla Energy products, Tesla has a great year in store.

As the New Years weekend approached, however, his words indicated a hint of concern for the Q4 delivery numbers because he claimed these numbers would not bring an overhang (negative influence) into TSLA's 2017 trading. He specifically mentioned the Jan. 4 gigafactory event as something that would provide a positive influence. Let's combine these words with observations of other forum members and see what we come up with.

For Q4 delivery numbers to be a relatively-neutral force on 2017, the stock price cannot begin a sizable descent and derail the uptrend. One way to neutralize any negatives from the deliveries miss is to offset that information the next day at the gigafactory event. Elon Musk and company have an abundance of positive news to share if they want to. The question is when do you let each cat out of the bag? My guess is enough positive cats will be let out of the bag on Wednesday to encourage a resumption of the uptrend. If you look at Q4, it wasn't a bad quarter. It was a short quarter with a big holiday and with an unfortunate production interruption to get the Autopilot 2.0 hardware installation right, but in terms of demand and production per week, it was pretty good. So, Elon needs to balance the lowish delivery number of Q4 with good news at the gigafactory event.

Why didn't Tesla make more of an effort to increase deliveries in Q4, when it got off to a slow start because of the autopilot hardware? My theory is that Elon knew that Q4 would never be the knockout quarter: it was too short, had a big holiday, and it got off to a slow start with hardware changes. I think he and Jason looked to make Q4 adequate, but not a knockout quarter. TMC members report that no December orders for S or X by California buyers were moved up for end of month deliveries, as they were in Q3. Another member reports relatively high levels of deliveries in the first day(s) of 2017. Both these observations suggest that Tesla wasn't trying very hard to generate deliveries in December at the expense of January. Why? My theory is that by mid-October, when the January 4 gigafactory event was announced to certain members of the media, the timing of the event was two-fold: to announce the production of cells at the gigafactory and to provide encouragement about a great 2017 coming along so that the stock price will at least stabilize in the short term. Why specifically place an event the day after delivery numbers are released? At first I thought it was for the 1-2 punch, but now I suspect it is for the Jan 4 event to be a balancing for the Jan 3 numbers. The best news that can come out of the gigafactory event is that Tesla is on track with demand, production, Model 3 timetable, and Tesla Energy so that 2017 is going to be a great year and that Q1 is going to be the knockout quarter.

Look at Q1 this way: It is longer than Q4, has no big holiday, desn't start with a hardware delay, and almost all the production for the quarter is already sold out! Without interruptions, and with a production rate already better than 2200 vehicles per week, how is Q1 going to be anything less than stellar? There's no need to replenish the inventory in stores, as was necessary in Q4, and nearly 6,500 vehicles are being brought into the quarter from Q4. But why does Tesla need a stellar quarter, isn't the equity raise unnecessary? Yes, Tesla could manage to get to the Model 3 finish line without the raise, but it makes the whole enterprise less risky and the task easier and a bit quicker. Therefore, I suggest that Q1 will be stellar, and it will raise the SP high enough to allow Tesla to do an equity raise if it desires.

So, maybe the biggest message coming out of Q4 is that demand is strong, production is strong, and Q1 is going to be stellar. At some point, that realization has to positively influence investors. How well momentum of the uptrend is preserved depends upon the cats let out of the bag on Jan. 4. Hoping to see a tiger or two.