Papafox's Daily TSLA Trading Charts

[Papafox]

Today was a strongly positive macro day as some solution to the China trade war looks possible. Not surprisingly, TSLA lagged behind the broader markets even though most tech stocks were up 4-5% today. A glance at the short percentage of trading gives you the answer: 67% of TSLA trading was done by shorts today. Interestingly, volume was up noticeably from last week at 8.4 million shares, but as more investors bought TSLA shares today, shorts chose to significantly ramp up their selling and other manipulations in order to minimize the damage. The NASDAQ did a bit of a dip at about 11:20am today, but shorts sold like crazy to bring about a dip on steroids. As TSLA approached the red/green line after 2 pm, shorts capped the stock and tried to walk it down slightly before losing control and TSLA ran up onto the green for its close.

With 67% of TSLA being traded by shorts today on a positive macro and positive Tesla news day, the manipulations reached levels that should qualify for some type of Olympic trophy.

Looking at the technical chart, you can see today's push well below the lower bb to 292ish, but without any real rationale for this drop, buyers stepped in and bid the stock back into the green. Looking at the previous excursions below the lower bb, you can see that in most cases TSLA then proceeded to rally and head towards the upper bb. The exception I see on the chart was in November when the recovery from 292.63 led to a mere 326.67 before revisiting the lower bb briefly at 300.00 (and then climbing above the upper bollinger band). If TSLA's behavior is typical, it will begin a climb after this bottoming out in the 290s. What is untypical about TSLA trading recently, though, is that shorts are continuing to throw all necessary resources at TSLA in order to trade two-thirds of the shares and influence TSLA's trajectory. As you can see, on days such as today the longs can overrule even this steep amount of manipulation by shorts, but the results are far less spectacular than what you'd see if manipulations by shorts weren't so intense. We also have another week to go before learning the Q1 delivery numbers (and, more importantly, the Model 3 production rate at month's end). As long as the production numbers aren't disappointing, I think TSLA will by then be heading back up to more reasonable valuations. I took the opportunity to acquire more TSLA today and hope you too had a chance to buy at this steep discount.Tesla might now rally or it may remain lethargic through the delivery report, at which time it will climb like a Falcon 9 rocket if the M3 production numbers are good. Better days lay ahead.

Conditions:
* Dow up 669 (2.84%)
* NASDAQ up 228 (3.26%)
* TSLA 304.18, up 2.64 (0.88%)
* TSLA volume 8.4M shares
* Oil 65.70, up 0.15 (0.23%)

 

[Off Shore]

the manipulations reached levels that should qualify for some type of Olympic trophy.

I say again, some entity is considering its loss a business expense.

 

[avoigt]

Yesterday was an important day for the stock. It has been the 4th time the bottom of the current band has been successfully tested in the last 12 months. Every test adds strength and helps to confirm confidence as well as disappoints bears. If today goes well I expect some upside momentum to gain pace.

 

[avoigt]

Given the huge drop Tesla experienced today together with others I though its good to see where we found support.

The weekly chard shows that we stopped exactly at the 100MA which could develop into a support. RSI in oversold territory.

 

[Papafox]

For those of you who are relatively new to TSLA investing, welcome to your first megadip. It happens. Fortunately, the SP can go up even faster than it comes down. Today the tech sector and NVIDIA in particular did a major swan dive and TSLA was caught up in this movement especially with news of an NTSB investigation into a Model X crash and relentless media hype on the "do or die" moment that's confronting Tesla. The bears carried the day with their theme that Tesla can't profitably produce Model 3 and they're going to run out of cash.

Since the dip fell well be.ow the traditional support area of the 290s, some technically-oriented traders got rattled and sold, but if you look at the shortvolume..com chart below, you will see that shorts still accounted for two thirds of today's trading. I'm told many brokerages are out of shares to short today, which suggests we saw LOTS of short-selling. The problem with selling close to a bottom, however, is that these new shorts are going to get pulverized pretty quickly on the rebound, which will only aid the upward velocity when it happens.

Your first step in a macrodip is to determine which side is right. Will Tesla really run out of cash and the SP go to zero? Personally, I give it less than a 1% chance of happening, but please do your own research. If you determine that TSLA should indeed survive this dip like it has all the others and recover lost ground once good news comes forward, then you should consider this dip a buying opportunity if you have some dry powder. We could turn around quickly tomorrow, or we might not, and I really don't know when the turnaround will happen, but I would watch like a hawk if you plan to do some buying anytime soon. A dip like this can induce fear in investors so please evaluate closely before you conclude we've bottomed out. Also, low stock prices can make raising capital more difficult for Tesla.

Shorts traded 66% of TSLA today and shares to short and unavailable at many brokerages, suggesting that the shorts did the vast majority of the selling today.

Looking at the technical chart, you can see TSLA well below the lower bb now. Typically, the stock price will correct to within the bb within 3 trading days Since there's no trading on Friday, we have about three days of trading before the Q1 delivery report comes out.

For Wednesday, expect the shorts to stay true to form with a mandatory morning dip to try and trigger some stop loss selling. It can be painful to watch, but once TSLA turns around, it can rise quickly.

 

[Papafox]

I made the comment about Tesla having a harder time raising money at a good value because I think part of what we're seeing here is an effort by a rather broad group of entities to adversely affect Tesla's chances of success by attacking the stock price.It's not all about making money by shorting. I say this because we've seen short activity in the mid-60s even on strongly up days, and this is contrary to historic patterns. The good news is that if Tesla reports good production rate for Model 3 early next week, the running out of cash angle used against Tesla falls apart and Tesla runs higher fast. Since we have what appears to my eye as a continuation of serious manipulations, more pain is possible before things get better, so please be careful. Once you dip below the expected floor of 292, the way the stock trades can be quite volatile. One positive note is that if shares to short are unavailable or hard to find tomorrow, the manipulators have less ammo to work with. Let's see how the percentage of trading by shorts works out tomorrow.

Also, a Moody's downgrade to Tesla's rating came after hours, which explains the secondary dip late in after-hours trading. Personally, I think the Moody's rating drop a few days before the Model 3 production rate is reported (and justified because of Model 3 production delays) smacks of timing meant to adversely affect the SP. Additionally, I believe the big dip today could have been in large part caused by a leak of the Moody's coming action, much like a Goldman-Sachs downgrade last year was preceded by much selling (also due, no doubt, to a leak). So... morning might be a bit rocky because of the Moody's downgrade.

Conditions:
* Dow down 345 (1.43%)
* NASDAQ down 212 (2.93%)
* TSLA 279.18, down 25 (8.22%)
* TSLA volume 13.9M shares
* Oil 64.47, down 0.78 (1.20%)

 

[berserk_sun]

I made the comment about Tesla having a harder time raising money at a good value because I think part of what we're seeing here is an effort by a rather broad group of entities to adversely affect Tesla's chances of success by attacking the stock price.It's not all about making money by shorting. I say this because we've seen short activity in the mid-60s even on strongly up days, and this is contrary to historic patterns. The good news is that if Tesla reports good production rate for Model 3 early next week, the running out of cash angle used against Tesla falls apart and Tesla runs higher fast. Since we have what appears to my eye as a continuation of serious manipulations, more pain is possible before things get better, so please be careful. Once you dip below the expected floor of 292, the way the stock trades can be quite volatile. One positive note is that if shares to short are unavailable or hard to find tomorrow, the manipulators have less ammo to work with. Let's see how the percentage of trading by shorts works out tomorrow.

Also, a Moody's downgrade to Tesla's rating came after hours, which explains the secondary dip late in after-hours trading. Personally, I think the Moody's rating drop a few days before the Model 3 production rate is reported (and justified because of Model 3 production delays) smacks of timing meant to adversely affect the SP. Additionally, I believe the big dip today could have been in large part caused by a leak of the Moody's coming action, much like a Goldman-Sachs downgrade last year was preceded by much selling (also due, no doubt, to a leak). So... morning might be a bit rocky because of the Moody's downgrade.

Conditions:
* Dow down 345 (1.43%)
* NASDAQ down 212 (2.93%)
* TSLA 279.18, down 25 (8.22%)
* TSLA volume 13.9M shares
* Oil 64.47, down 0.78 (1.20%)

Of cause, the force of anti-Tesla is not only for shorting. It includes:
Entire MSM backed by Democrats who is backed by Unions
Traditional energy group
Traditional auto manufacture group
Car dealer group
Etc.

 

[Papafox]

I just bought more shares at 258. Lower is possible, of course, but I like the idea of locking in this buy price.

 

[Papafox]

Today was pretty amazing in the quantity of short-selling taking place. More than two-thirds of all trading is still being done by shorts, even with volume at 21 million shares. This truly is the most intense short attack TSLA has ever endured. The good news is that there is a limit to how far shorts can push the SP down, even when trading such mind-numbing numbers of shares every day. Yesterday's chart showed a constant descent for TSLA. Look today, however, and just about any time during regular market hours when TSLA dipped below 255 it bounced right back up until shorts cut off the climb by selling spikes. Look at how the volume increases right when a climb is neutralized.

Volume at 21 million shares and shorts still trading 68% of shares today? Truly amazing.

Since TSLA opened around 279 today and 4% of that number is about $11, Dusaniwsky made his computations when the stock was priced at about $268. If you divide $8.5B by $268, you get in the vicinity of 31.7 million shares controlled by the shorts. That's a rather big increase from a few days ago, but with 14M trades done by shorts today, you're likely seeing LOTS of churning of short shares to stop any hints at rallies.

The bad news is that I've never seen any shorting of this intensity before and it's harder to predict TSLA's movements because we're really in uncharted territory with such massive manipulation by shorts. We have, however, seen nice climbs even with shorts trading 65+% of the stock. The good news is that when TSLA does break upward and start its run, there's a long way to go because the stock price is so artificially low compared to where it would be without the manipulations. The frustrating part is that we may have to wait for the Model 3 production numbers before this stock can escape the tractor beam.

Why did I buy today? Part of the reason is that this price is inappropriately low and the stock is a great value at these prices. Secondly, the dip and climb movement of TSLA today (even with the NASDAQ having a bad day) suggests that shorts are temporarily losing control of the stock price every time it dips below about 255. I see the many dips and climbs as a precursor to a recovery, but like I said, we're really in uncharted territory with such a massive attack by shorts going on.

Conditions:
* Dow down 9 (0.04%)
* NASDAQ down 60 (0.85%)
* TSLA 257.78, down 21.40 (7.67%)
* TSLA volume 21.0M shares
* Oil 64.57, up 0.19 (0.30%)

 

[justvisiting]

We have, however, seen nice climbs even with shorts trading 65+% of the stock. The good news is that when TSLA does break upward and start its run, there's a long way to go because the stock price is so artificially low compared to where it would be without the manipulations.

Again, your first sentence crushes the argument that you repeat day in and day out. Shorts shorts shorts, manipulation manipulation manipulation. I stand by the point I made earlier that your interpretations are nothing more than wishful thinking. Prove me wrong.

 

[Papafox]

Yesterday TSLA's rising and falling pattern showed that buyers were materializing whenever the SP dropped below 255 and thus TSLA looked like it was perhaps ready to have a green session soon. Fortunately, macros were quite positive today and longs buying TSLA managed to bring us into the green. Shorts did a mandatory morning dip to below 250, which backfired on them because the longs set to buying and creating an upturn. Twice TSLA failed to make the green as shorts played "whack-a-mole" but we broke through and enjoyed a positive day despite the fact that shorts accounted for 2/3rds of the trading today. Looking at the shortvolume.com graph below, shorts traded 67% of TSLA today.

The dip in TSLA during after-hours trading was caused by a voluntary recall on Model S steering wheel bolts on over 100,000 Teslas. Fortunately, labor should only be around an hour and the parts would be very cheap, so we should not expect a substantial hit to the bottom line. For this reason, TSLA recovered back into the green at the end of after-hours trading, but the usual pundits will no doubt try to get as much mileage out of this recall as possible come Monday.

Where does TSLA go from here? The answer is really dependent upon Model 3 production ramp. If we see 2,000 M3s/week rate in the delivery report next week, TSLA should climb. There's no guarantee, though, because according to Electrek.co, Tesla has been only able to get to 1500 M3s/week so far and will have to really increase the pace to make 2,000 in that timespan. The problem with a miss is that the shorts are definitely on the warpath and will try to define the results as a huge problem by pushing the stock down. Media bears will talk about Tesla running out of money, unable to ramp, using too much automation, etc. For this reason, I am planning on months of volatile trading until Tesla is finally able to crack the 2,500 M3s/week barrier (shouldn't take more than a few weeks), then work its way incrementally to 5,000 M3s/week. There's no guarantee the higher level will be reached by the end of June, so if you are adding shares now, be prepared for a potentially long assault on the SP by the shorts. Eventually a rational and attractive price will emerge once Tesla achieves profitability (should happen before 5,000 M3s/week is achieved), but the short term might not be pleasant. One step I took today was to roll some J19 leaps into J20 leaps. If you trade from an IRA, consider doing so on days when the stock price is running up or down, so that you can use your choice of buying or selling first as a tool for minimizing the cost of rolling the call options forward.

Shorts traded 67% of TSLA today as they continue to adjust their level of trading to achieve a two-thirds of trading in order to give their manipulations the best shot at success.

Looking at the technical chart, you can see that the lower bb has been dropping almost as quickly as the stock price and the two are separated by only a little more than $2, so don't expect much upward help from the lower bb next week. There's a good chance that TSLA will trade within the bollinger bands by the end of trading on Monday.

For the week, TSLA closed at 266.13, down $35.41 from last Friday's 301.54. It's been a brutal week that is final over. Enjoy your weekend.

Conditions:
* Dow up 255 (1.07%)
* NASDAQ up 115 (1.65%)
* TSLA 266.13, up 8.35 (3.24%)
* TSLA volume 14.9M shares
* Oil 64.94, up 0.56 (0.87%)

 

[Papafox]

Weekend Musings...

It looks like the recall for power-steering bolts will be paid for by the equipment provider and that no real inconvenience will be felt by affected Tesla owners. Tesla was smart to release this recall info after-hours and right before a three-day weekend. This news will be stale by Monday.

Up or down?
My position is that one needs to be positioned for either in the short run. I have a sizable holding of shares and leaps right now and if TSLA runs up swiftly this week, I'm in! On the other hand, if the delivery numbers and (more importantly) the M3 production numbers for the final week in March are disappointing, the shorts will push hard to push TSLA down further until Tesla can show they're producing enough Model 3s to self-fund the company without outside money (more outside money will be raised, but the point is that Tesla needs to get to a point where they don't need to raise cash to sustain current operations). Knowledgeable analysts are saying that Tesla can raise the capital it needs, even with an additional M3 production miss, so we're not looking at a real cash crunch anytime soon (sorry, shorts). Please realize that if there's a miss on delivery info in the next few days, TSLA could be rocky for a while but will recover when M3 production numbers are up. Prepare yourself mentally for the SP to go either way. You can make plenty of money by investing at the current SP, you likely would find a lower SP if numbers are disappointing, so please be willing to sit through some turbulent months ahead if you jump in soon. My technique has been to invest at each logical turnaround point ($297, 258, etc.) and spread out my buying, rather than trying to time the exact bottom. Each of these buy-in points will be very profitable once TSLA is above 400.

Option Sniper
A few days ago, Option Sniper suggested that even though he believes TSLA will be a $1600+ stock someday, in the short run it could head as low as $237 before turning around. More recently, he was impressed by Thursday's trading, is holding some calls, and put out the following tweet:

Now he's getting bullish again. Adam Jonas of Morgan Stanley is saying buy the dip. The sentiment seems to be turning bullsih in the short run, so realize that Monday might be a day when the shorts lose their grasp even further. Choose a strategy that works for you and your tolerance for risk.

 

[MacRocket]

Thank you once again for your insights Papafox.
I have a question for you or others with share trading knowledge.
Why do Longs lend their shares to shorts?
I am new to owning TSLA and have been slowly buying over the last 6 months. I recently became aware that my broker may be lending my shares to shorts so, on the advice of a forum member, I placed a sell order for my shares at $2500 to stop this happening.
This made me think though, why do longs lend their shares for a small return when the the shorts will then use those shares to try to force the price down 10% or even 20% causing a margin call or stop loss or at least a paper loss for the long?
If lots of us longs decided not to lend our shares to shorts would that not reduce the amount of short selling and make for a fairer market? It might even squeeze the shorts a bit?
Thank you in advance.

 

[ggr]

Thank you once again for your insights Papafox.
I have a question for you or others with share trading knowledge.
Why do Longs lend their shares to shorts?
I am new to owning TSLA and have been slowly buying over the last 6 months. I recently became aware that my broker may be lending my shares to shorts so, on the advice of a forum member, I placed a sell order for my shares at $2500 to stop this happening.
This made me think though, why do longs lend their shares for a small return when the the shorts will then use those shares to try to force the price down 10% or even 20% causing a margin call or stop loss or at least a paper loss for the long?
If lots of us longs decided not to lend our shares to shorts would that not reduce the amount of short selling and make for a fairer market? It might even squeeze the shorts a bit?
Thank you in advance.

There are two different scenarios.

1. If you have a margin account, part of your agreement with the broker is that they can lend out your shares. You don't have any say in it, or even know when they've done it. This is where the trick of putting in a limit sale order makes them ineligible to be lent out. If you don't have margin, you don't need to do anything like this.

2. If you don't have a margin account, you get some amount of interest for lending out your shares. This can actually be pretty high, if a stock is heavily shorted; a couple of years ago, around the time of the SCTY merger IIRC, the interest rate was well above 10%. Not that it matters for TSLA, but the borrower has to pay you any dividends too. All you lose is voting rights, and that doesn't matter for TSLA either, because for most matters Elon controls the vote.

 

[MacRocket]

There are two different scenarios.

1. If you have a margin account, part of your agreement with the broker is that they can lend out your shares. You don't have any say in it, or even know when they've done it. This is where the trick of putting in a limit sale order makes them ineligible to be lent out. If you don't have margin, you don't need to do anything like this.

2. If you don't have a margin account, you get some amount of interest for lending out your shares. This can actually be pretty high, if a stock is heavily shorted; a couple of years ago, around the time of the SCTY merger IIRC, the interest rate was well above 10%. Not that it matters for TSLA, but the borrower has to pay you any dividends too. All you lose is voting rights, and that doesn't matter for TSLA either, because for most matters Elon controls the vote.

Thank you for this ggr, makes it a lot clearer, I can safely remove my sell order it seems as I don’t have a margin loan. Wouldn’t want to accidentally sell my precious TSLA even at $2500.
I still don’t know why longs would lend their Shares? It seems to be totally against their best interests?

 

[Papafox]

Thank you once again for your insights Papafox.
I have a question for you or others with share trading knowledge.
Why do Longs lend their shares to shorts?
I am new to owning TSLA and have been slowly buying over the last 6 months. I recently became aware that my broker may be lending my shares to shorts so, on the advice of a forum member, I placed a sell order for my shares at $2500 to stop this happening.
This made me think though, why do longs lend their shares for a small return when the the shorts will then use those shares to try to force the price down 10% or even 20% causing a margin call or stop loss or at least a paper loss for the long?
If lots of us longs decided not to lend our shares to shorts would that not reduce the amount of short selling and make for a fairer market? It might even squeeze the shorts a bit?
Thank you in advance.

Let me add to ggr's response.

If you have a margin account as I do, the benefits of such an account are immense.I really don't want to be without the flexibility of a margin account and so I inadvertently make my shares available for shorting even though I am not interested in doing so. I trade into and out of shares frequently enough, however, that Fidelity has never apparently used my shares for shorting because I have never received any payment.

On the other hand, Curt Renz advises longs with shares to take steps such as a high value sell order to keep the brokerage from using your shares in shorting. I personally appreciate this viewpoint and feel that the carnage that the shorts create is not worth the income from lending shares. If you feel that you want to do the right thing and not lend out your shares, I am 100% behind you.

 

[MacRocket]

Thanks for the additional advice Papafox.
I will never lend my shares to short sellers and will encourage my friends who hold TSLA to do the same.
Perhaps members of this forum who have margin could be encouraged to use Curt’s trick of placing a high value sell order. It may make a small difference to the share price.

 

[avoigt]

It has been an interesting trading week and this is an interesting monthly chart.

This month brought us below the 200 MA line for a short period but it was going above finally nevertheless the support broke which is bad news and triggered another wave of selling be it technically or emotionally. SP was falling of the cliff and no ground visible. Good news that we are above the 200 MA again as its been a strong support in the past and even when we dived below we came back above soon. However the SP is in nowheres land and its right now very hard to predict near future movements.

The today situation has been here in the board repeatedly compared to the sell off in February 2016 and the chard looks indeed similar with the exception that at that time he did swing back quicker and much higher creating a long leg. I remember everybody whispering in the past before the correction that Feb 2016 was the ideal investment point that he/she missed. I ask myself now if this people did buy in this week as nothing really changed in terms of information we have available?!

What I have heard this week did sound partly like panic to me and that word is always an indication for me to consider buying. If panic is in the air its often a good time to invest for the long run as the short run is volatile. We may see a bounce back next week but a new attack after a recovery may happen as well. All of those does not bother me at all because that what I call "hidden value" in the SP is that high now that the downside risk is much lower than the upside opportunity. Be greedy when the market start to sell emotionally lacking facts and arguments.

A lot of weak hands did leave the ship lately and the shorts did take advantage of this repeating the old boring narrative without substance we all have heard 100 times. Now the stronger hands are left which should help through recovery unless bad not expected news appear. M3 production numbers do increase be it 1500 or 2500/w but the more important news are that they continuously increase. Knowing that Tesla will have no issues with cash or demand either way its hard for me to understand the excitement and negative sentiment.

Such a correction is a very healthy process and is almost a prerequisite for a new up move. As we all don't know when exactly that will happen the risk is with the short term traders. With stocks you can sleep well this days.

Thats why I added this week and feel very well about it.

 

[MacRocket]

Yes I also noticed a tone of panic in many posts last week.
This is often a sign that a bottom has been reached or is very close. I bought last week too and will buy again Monday.
TSLA is a disruptor of 4 major industries. Under $300 I think TSLA is the buy of the century.

 

[Papafox]

I've been buying J20 leaps today. Knowing that Tesla has reached a production rate of at least 2,000 M3s/week tells me that the Q1 delivery and M3 production numbers will not be bad. These prices are just too attractive for a company that expects to quadruple their production and deliveries, year over year.