I think it's fair to say that TrendTrader007 has seen the settlement news. I'm with you, TT007, good things are in store for TSLA longs in the coming week.
First though, I'd like to offer a short history lesson on what happens when there's a combination of rabid shorts on the attack and longs feeling a dread. The dread we have just shed was, of course the SEC suit over Elon Musk. That's all behind us now, but here's a reminder of what life can be like when there is a substantial dread harbored by longs.
The Q3 2016 deliveries report and ER took place shortly after brokerage houses started releasing shares to short back to the wild after a huge recall of shares for the SolarCity vote. The date of record had come and gone, but the vote itself wasn't going to happen until November, and so October was the chance for shorts to put max pressure on Tesla so that its shareholders would become worried and vote no on the SolarCity acquisition.
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With record deliveries on Oct 3, 2016, TSLA jumped up from about 204 and closed at 213.xx, not a very big jump when you consider that deliveries were at a record high and profits were expected. Notice the extreme capping here. A rise to 217 had significance to technical traders and so shorts made sure it didn't get close. They first held 214 and then whenever they could, they pushed down to 213. The result is a series of plateaus which is perhaps the most classic example of capping in the history of TSLA.
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The next day, October 4, we saw a massive MMD. Notice the severity of the icicles. This was the day after a GREAT delivery report.
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Come October 5, TSLA was ready to hold its own and it looked like we'd have whack-the-mole throughout the afternoon, but look how severely TSLA was pushed down in the late afternoon! To understand why such a severe dip occurred, you need to look at the next day's trading.
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October 6 was the day that Goldman offered a stinkpot of a note about TSLA. And that dip on October 5? It doesn't take much imagination to realize that Goldman leaked word of the coming note and the late afternoon buying, accompanied with quite a rise in volume, was caused by the recipients of that leak short-selling TSLA so as to be positioned for the note. If you entered your TSLA short at 210 on the 5th, you could cover on the 6th for 201. Sweet. Not legal, not ethical, but profitable. Notice, too, that Goldman just happened to release the note when the shorts were in greatest need of an additional bump to keep the stock heading down. Some things don't change. If the SEC wants to reduce securities fraud, a great place to start would be the "coincidental" timing of media and analyst FUD when major bear attacks are underway.
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Okay, let's look at Oct 26, 2016, ER day. Tesla had much to celebrate. See the details below from the ER report.
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Looks great, doesn't it. The first full day should be a good one, right?
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Well, here's October 27. Pre-market trading gives you a good idea of the enthusiasm for the report, but look what happens during the trading day. The shorts walked this very positive post-ER day's trading down to just about no gain. I still remember that day as everyone was wondering why TSLA was so weak.True, some traders believed that Q3 16 was a one-quarter oddity, but I think an even bigger factor was fear of the coming SolarCity vote and how that vote might impact the stock price. Thus, with dread felt by the longs, the shorts had maximum ability to manipulate, and boy did they take advantage of that situation.
My point here is that many on TMC were glad that Musk defended his honor when facing the SEC charges. If you wanted him to fight the charges for years to come, though, there would be a price paid by investors, and I give the example of Q3 2016 to refresh your memory of how much mayhem shorts can cause when longs are facing a significant dread. Still, Elon's one day between turning down the SEC offer and accepting a slightly different offer allowed him a brief opportunity to communicate his feelings. Remember this?
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He could not have published this message if he had accepted the first settlement. The second settlement (and almost certainly the first) prohibits him from speaking the words printed above. Fortunately, those words were shared with employees, investors, and the public. When he accepted the second settlement offer today, the words were already in the wild and couldn't be taken back. He had said his piece. After the second settlement was accepted, the cloud of the SEC suit was lifted from Tesla. For many reasons, Tesla's future looks bright, with Musk still in control of Tesla and an incredible quarter ahead, to be followed by an even better one. Thus, Musk managed to do both things he sought: protect Tesla and let the world know of his feelings about this SEC action. Bravo.
By settling with the SEC, the dread in the longs is quickly disappearing. We will not have to weather years of court action and uncertainty. We will not allow our dread to give the shorts the kind of leverage they had just two years ago. Onward and upward from here.
