Papafox's Daily TSLA Trading Charts

[Papafox]

Today was another strong day for TSLA while the rest of the market was deep in the dumpster. The Dow lost more than 1%, the NASDAQ more than 2% and TSLA gained more than 5%. The TSLA gains would have been significantly more but around 2pm the Wall Street Journal published an article suggesting that there was a major development in the DOJ's inquiry about Tesla's Model 3 production numbers. The WSJ published on online story entitled "Tesla Faces Deepening Criminal Probe Over Whether It Misstated Production Figures". The first reaction of an il-informed investor to that title is the theory of the shorts that Q3 production and delivery numbers were fraudulent and this is a probe of that issue. Not so. Next, you think, good grief, Elon is subject to jail. Then you read the article and realize there's little new to this old news about 2017 production estimates except that the FBI interviewed a couple of former employees of Tesla within the past few weeks. Tesla then put out a statement that there have been no subpoenas of Tesla regarding this probe and no requests for new material in the last few months. In other words, this story was recycled old news meant to do damage at a critical time. I encourage all of you to consider making tips to the SEC when manipulative stories that cross the line come along, and I reported the WSJ to the SEC for this. Let's keep the pressure on the media. If the SEC doesn't act, we have good reason to go to Congress and seek regulatory change to make the markets fair for trading again.

Anyway, investors started figuring out that the WSJ story was a nothingburger and the stock price started rising again. The momentum was broken, though, and we never saw just how high above 340 TSLA may have gone today.

Today was the first day we should have seen some short covering from margin calls, and it looks like that occurred. Looks like at least 300,000 short shares covered today. The majority of the buying, then, could still be attributed to longs, since volume today was quite high.

I'm now rethinking whether we might see some type of short-covering slow-squeeze in the near future. The enemies of Tesla will try to stop the SP appreciation with tactics such as today's WSJ article, but if the SP keeps rising (and it seems impervious to macro pressures at the moment) then more margin calls will come and a rather brisk exit of shorts might set in. Thus, I now leave open that possibility.

Shorts did 52.94% of TSLA selling today, a high number when you consider both the climbing SP and the net short covering taking place.

Looking at Dusaniwsky's latest chart, it looks like that big spike upward was on Tuesday, Oct 24 when TSLA climbed $33 a day before the earnings report. Net covering appears to be the new trend, but look at the high number of shorts still aboard.

Looking at the technical chart, you can see the turn the upper-bb has taken after about 312 to a near-vertical climb as it chases the TSLA stock price upward. Such a situation provides no clear lid on where the climb should end. With trading as high as 387 just 3 months ago, and with better news than Tesla has ever seen, there's room to run if the short-seller covering heats up and generates more covering. Don't underestimate the potential of a setup such as this. I did yesterday, but I'm adjusting my perspective tonight.

For the week, TSLA closed at 330.90, up 70.90 from last Friday's 260.00. Not too shabby. Those of us who hung in there through the nonsense dip to 250 and back have earned a good week. Enjoy your weekend.

Conditions:
* Dow down 296 (1.19%)
* NASDAQ down 151 (2.06%)
* TSLA 330.9, up 16.04 (5.09%)
* TSLA volume 27.0M shares
* Oil 67.59, up 0.26 (0.39%)
* Percent of selling by TSLA shorts: 52.94%

 

[TrendTrader007]

View attachment 347399
Today was another strong day for TSLA while the rest of the market was deep in the dumpster. The Dow lost more than 1%, the NASDAQ more than 2% and TSLA gained more than 5%. The TSLA gains would have been significantly more but around 2pm the Wall Street Journal published an article suggesting that there was a major development in the DOJ's inquiry about Tesla's Model 3 production numbers. The WSJ published on online story entitled "Tesla Faces Deepening Criminal Probe Over Whether It Misstated Production Figures". The first reaction of an il-informed investor to that title is the theory of the shorts that Q3 production and delivery numbers were fraudulent and this is a probe of that issue. Not so. Next, you think, good grief, Elon is subject to jail. Then you read the article and realize there's little new to this old news about 2017 production estimates except that the FBI interviewed a couple of former employees of Tesla within the past few weeks. Tesla then put out a statement that there have been no subpoenas of Tesla regarding this probe and no requests for new material in the last few months. In other words, this story was recycled old news meant to do damage at a critical time. I encourage all of you to consider making tips to the SEC when manipulative stories that cross the line come along, and I reported the WSJ to the SEC for this. Let's keep the pressure on the media. If the SEC doesn't act, we have good reason to go to Congress and seek regulatory change to make the markets fair for trading again.

Anyway, investors started figuring out that the WSJ story was a nothingburger and the stock price started rising again. The momentum was broken, though, and we never saw just how high above 340 TSLA may have gone today.

Today was the first day we should have seen some short covering from margin calls, and it looks like that occurred. Looks like at least 300,000 short shares covered today. The majority of the buying, then, could still be attributed to longs, since volume today was quite high.

I'm now rethinking whether we might see some type of short-covering slow-squeeze in the near future. The enemies of Tesla will try to stop the SP appreciation with tactics such as today's WSJ article, but if the SP keeps rising (and it seems impervious to macro pressures at the moment) then more margin calls will come and a rather brisk exit of shorts might set in. Thus, I now leave open that possibility.

View attachment 347353
Shorts did 52.94% of TSLA selling today, a high number when you consider both the climbing SP and the net short covering taking place.

View attachment 347352
Looking at Dusaniwsky's latest chart, it looks like that big spike upward was on Tuesday, Oct 24 when TSLA climbed $33 a day before the earnings report. Net covering appears to be the new trend, but look at the high number of shorts still aboard.


View attachment 347354
Looking at the technical chart, you can see the turn the upper-bb has taken after about 312 to a near-vertical climb as it chases the TSLA stock price upward. Such a situation provides no clear lid on where the climb should end. With trading as high as 387 just 3 months ago, and with better news than Tesla has ever seen, there's room to run if the short-seller covering heats up and generates more covering. Don't underestimate the potential of a setup such as this. I did yesterday, but I'm adjusting my perspective tonight.

For the week, TSLA closed at 330.90, up 70.90 from last Friday's 260.00. Not too shabby. Those of us who hung in there through the nonsense dip to 250 and back have earned a good week. Enjoy your weekend.

Conditions:
* Dow down 296 (1.19%)
* NASDAQ down 151 (2.06%)
* TSLA 330.9, up 16.04 (5.09%)
* TSLA volume 27.0M shares
* Oil 67.59, up 0.26 (0.39%)
* Percent of selling by TSLA shorts: 52.94%

Totally agree with your brilliant analysis Papafox. From a long term perspective I’ll take the liberty of quickly posting these 3 charts:
First please take a look at monthly charts, with only 3 trading days left in the month $360 or even $375 is in the cards for $tsla in relation to upper bollinger
Monthly volume trends stunningly phenomenal
MACD turning up beautifully
WSJ and shorts and Electrek notwithstanding next 3 days likely to bring further price appreciation for $tsla

 

[neroden]

Totally agree with your brilliant analysis Papafox. From a long term perspective I’ll take the liberty of quickly posting these 3 charts:

Nice to see you back here, TT007. Hope all the stock price volatility didn't hurt you too much what with your tendency to use margin.

 

[TrendTrader007]

$tsla Q chart most alluringly reflects the close proximity to upper bollinger and real danger to shorts is potential for a quarterly bollinger breakout and excellent volume trends again with deeply oversold MACD about to turn up
A multi quarter rally coming in $tsla
I’m positioned accordingly

 

[TrendTrader007]

Most powerful of all the yearly $tsla chart turned unequivocally and resoundingly positive with this week’s rally and notice the excellent volume trends again
Over the last 9 years of trading only one year 2016 was slightly negative and every single year has been positive
only other major tech company displayed such strong yearly perf $aapl in last decade and $csco 1990s
2019 and 2020 likely to inflict deep psychological trauma to short sellers
I’m long and strong all in $400 January 2021 calls

 

[TrendTrader007]

Nice to see you back here, TT007. Hope all the stock price volatility didn't hurt you too much what with your tendency to use margin.

Thanks Neroden. while I lost quite a bit after the $420 tweet due to being ill positioned with OTM leaps I quickly repositioned myself in J 21 $400 calls and happy to report that have zero margin exposure no interest in being leveraged through margin
Happily leveraged in $tsla calls as follows:
100% positioned in $tsla leaps with 99% in J2021 $400s and rest in J 2020 calls with $410 $500 $610 $700 etc
Also hold $tsla common unmargined
I lost similar amounts to Citron’s Left after the tweet but unlike him I’m not interested in suing Elon or Tesla
The money to be made going super long $tsla over the next few years will far eclipse any short term losses

As an aside, besides Papafox, Factchecking and a few others like neroden and Tradinginvest I don’t really get much out of TMC anymore. Market action thread has deteriorated significantly and Daily charts by Papafox is about the only compelling reason for me to visit TMC anymore
$TWTR is an active cool place to post now that I’ve blocked numerous ill mannered accounts
Now back to bed since it’s early morning in Midwest

 

[defc0n]

View attachment 347399
Today was another strong day for TSLA while the rest of the market was deep in the dumpster. The Dow lost more than 1%, the NASDAQ more than 2% and TSLA gained more than 5%. The TSLA gains would have been significantly more but around 2pm the Wall Street Journal published an article suggesting that there was a major development in the DOJ's inquiry about Tesla's Model 3 production numbers. The WSJ published on online story entitled "Tesla Faces Deepening Criminal Probe Over Whether It Misstated Production Figures". The first reaction of an il-informed investor to that title is the theory of the shorts that Q3 production and delivery numbers were fraudulent and this is a probe of that issue. Not so. Next, you think, good grief, Elon is subject to jail. Then you read the article and realize there's little new to this old news about 2017 production estimates except that the FBI interviewed a couple of former employees of Tesla within the past few weeks. Tesla then put out a statement that there have been no subpoenas of Tesla regarding this probe and no requests for new material in the last few months. In other words, this story was recycled old news meant to do damage at a critical time. I encourage all of you to consider making tips to the SEC when manipulative stories that cross the line come along, and I reported the WSJ to the SEC for this. Let's keep the pressure on the media. If the SEC doesn't act, we have good reason to go to Congress and seek regulatory change to make the markets fair for trading again.

Anyway, investors started figuring out that the WSJ story was a nothingburger and the stock price started rising again. The momentum was broken, though, and we never saw just how high above 340 TSLA may have gone today.

Today was the first day we should have seen some short covering from margin calls, and it looks like that occurred. Looks like at least 300,000 short shares covered today. The majority of the buying, then, could still be attributed to longs, since volume today was quite high.

I'm now rethinking whether we might see some type of short-covering slow-squeeze in the near future. The enemies of Tesla will try to stop the SP appreciation with tactics such as today's WSJ article, but if the SP keeps rising (and it seems impervious to macro pressures at the moment) then more margin calls will come and a rather brisk exit of shorts might set in. Thus, I now leave open that possibility.

View attachment 347353
Shorts did 52.94% of TSLA selling today, a high number when you consider both the climbing SP and the net short covering taking place.

View attachment 347352
Looking at Dusaniwsky's latest chart, it looks like that big spike upward was on Tuesday, Oct 24 when TSLA climbed $33 a day before the earnings report. Net covering appears to be the new trend, but look at the high number of shorts still aboard.


View attachment 347354
Looking at the technical chart, you can see the turn the upper-bb has taken after about 312 to a near-vertical climb as it chases the TSLA stock price upward. Such a situation provides no clear lid on where the climb should end. With trading as high as 387 just 3 months ago, and with better news than Tesla has ever seen, there's room to run if the short-seller covering heats up and generates more covering. Don't underestimate the potential of a setup such as this. I did yesterday, but I'm adjusting my perspective tonight.

For the week, TSLA closed at 330.90, up 70.90 from last Friday's 260.00. Not too shabby. Those of us who hung in there through the nonsense dip to 250 and back have earned a good week. Enjoy your weekend.

Conditions:
* Dow down 296 (1.19%)
* NASDAQ down 151 (2.06%)
* TSLA 330.9, up 16.04 (5.09%)
* TSLA volume 27.0M shares
* Oil 67.59, up 0.26 (0.39%)
* Percent of selling by TSLA shorts: 52.94%

I can’t believe short interest climbed so high again right before earnings, that’s incredible.

 

[adiggs]

I can’t believe short interest climbed so high again right before earnings, that’s incredible.

Remember that data has a big error bar associated with it - the only time we have an accurate number is the 2x/month report that is on a 2 week delay. One of things @Papafox has pointed out a couple of times in the last month or 2, are big changes day to day in the short interest Ihor is reporting. Ihor's got the best up-to-date estimate of the short interest, but even his system gets revised based on the actual report that comes along periodically, because his method of estimating the daily change has errors.

This is clearly a product of the actual required short interest data that the market publishes. I personally believe that it is intentional on the part of the exchanges and market makers - they want the ability for people to short, and the people that short want their shorting activities to be as opaque as possible. The opaqueness helps the people that are engaging in short positions, and the activity they generate is crucial to generating large daily volumes of activity that the market makers and exchanges need to generate their revenue and income.

The opaqueness definitely isn't our friend as longs or investors in companies.


Back to Ihor's data that we get from papafox periodically - I take it as directionally accurate, and as better than complete radio silence. Don't bet the kids college savings fund on it though

 

[Papafox]

I've been putting effort into another thread this weekend, trying to get a better feel for how willing TSLA shareholders are when it comes to challenging unethical journalists and shortsellers with either SEC investigations or with law suits. My discovery is a surprising VERY WILLING. Please take a look at some of the images in this post and you'll see that the Wall Street Journal really put its hand into a hornet's nest last Friday when they made old news appear to be a scoop, two hours before the close of options trading.

With a small army of Tesla investors now scanning the news streams and Twitter for FUD and ready to respond and neutralize, we have taken a load off Elon's shoulders. With a new growing army of investors ready to pepper the SEC with tips and complaints when illegal activity is observed, and some are even willing to file civil litigation against out-of-line news agencies, we have again taken another load off Elon's shoulders and given him the opportunity to do what he does best, which is to create fabulous products and ultimately reward his investors.

Add these two changes to the thousand pound gorilla in the room, the effect of Model 3 on Tesla's income statements and balance sheets going forward, and you have a fundamental change to how TSLA will be traded in the future.

In the short run, we have 34 million shares still sold short, so expect some of the same old tricks to be played while shorts look for a safe exit from their dilemma. Lots can happen in the short run, but the long run looks very encouraging right now. We don't know exactly when the shorts will cover, but when it happens there will be a financial reward to TSLA shareholders of option holders at that time. Please invest accordingly and lend your support to the small army of investors who are actively defending this company from its enemies.

The coming week could be interesting. There's growing belief that the macro correction is nearly done. The WSJ article on Friday has been soundly neutralized. Foxnews.com ran a story on the WSJ story but that Foxnews story was removed from headlines on Saturday. New FUD on Monday would not be surprising, considering what is at stake, but the weekend has been pretty calm.Hoping to see the climb continue.

 

[Papafox]

Today the macros were down yet again and TSLA still managed to close in the green. Shortly after opening, TSLA hit 346, which easily eclipsed the high on Friday, before the WSJ article knocked the SP down. Alas, today the macros had a difficult day of trading (see NASDAQ chart below) and we saw the NASDAQ dip into the red and then accelerate the descent until shortly before market close, when it made a rebound. Notice that TSLA also rebounded in the closing minutes. Compared to the broader markets and other stocks, TSLA showed relative strength today.

Don't worry too much about TSLA falling off its early-morning highs today. A high start of trading on a day with weakness is a nice setup for shorts to profit in their attempts to pull the SP down during the day. At some point, quite possibly this week, the macros will stabilize or turn upwards to signal the completion of the correction. At that point, the TSLA climb should accelerate.

Remember that the 2013 significant climb of TSLA included down days and minor retreats. What we see right now is pretty normal behavior for a stock that is on its way upwards.

The NASDAQ lost more than 1 and 1/2% today and yet TSLA managed to close in the green.

Shorts did 49.67% of TSLA selling today, continuing a three-day downtrend. A downtrend suggests shorts are losing their appetite for manipulations of TSLA (most likely because of losing money and not getting results).

Looking at the tech chart for today, the upper bollinger band is now above 329, doing its best to catch TSLA in its enthusiastic climb since leaving 260.

Conditions:
* Dow down 245 (0.99%)
* NASDAQ down 117 (1.63%)
* TSLA 334.85, up 3.95 (1.19%)
* TSLA volume 14.4M shares
* Oil 66.76, down 0.83 (1.23%)

 

[Papafox]

Today looked like a significant day of manipulation by TSLA shorts, and yet the steadily decreasing shorts % of selling graph (2 below) suggests lower churning of shares by shorts. In any event, nearly 400,000 shares traded hands in the first and last minutes of market trading, suggesting that shorts were indeed stocking up on shares to manipulate with today. We saw a big mandatory morning dip as opening approached, followed by a game of whack-the-mole through noon. For the most part, TSLA was decoupled from the broader markets for much of today, but at 1:30pm, as the NASDAQ made its dip, TSLA dipped unusually deeply with some sharp icicles, suggesting short selling in large batches. Alas, the dip did not last and retreated to nearly the red/green line before heading a bit lower on close, also against the broader market movement.

TSLA's volume was significantly below the past several days of trading, which likely allowed manipulations by the shorts. Some of their incentive could have been some sketchy Tweets by Elon yesterday or perhaps as Curt Renz points out, shorts getting excited by presentations at the Robinhood event today. Curt also pointed out that many investing institutions end their fiscal year on October 31 and with the two day settlement rule, yesterday would have been their last day to complete their "window dressing" portfolios prior to close of the FY.

Whatever clever scheme was afoot for the day of the Robinhood convention, it fell apart today for the shorts.

The NASDAQ (above) and the Dow both had good days. With the exception of the 1:30pm dip of both the NASDAQ and TSLA, the two entities were pretty much decoupled today.

Volumebot.com says shorts did 47.86% of TSLA selling today, down slightly from yesterday. Looking at the daily chart, I'd be inclined to believe the short-selling was higher.

The S3 chart above was released yesterday and shows a fair amount of covering by shorts in past few days and short interest now 33 million shares (plus some change)..

Today, Dusaniwsky gave an estimate of approximately how accurate his technique is for tracking short interest.

Taking a look at the technical chart for today, please notice that TSLA has now dipped below the upper bollinger band. This is actually a much more comfortable place for institutional investors to do their buying. I show the volume to the right so that you can understand just how significantly TSLA's trading has backed off since the big run-up days.

Here's an important technical chart to consider. It is the 2013 TSLA chart from April to October, when TSLA realized most of its gains. What I wish to point out is that leading up to the Q1 ER in May, TSLA had been climbing mostly within the upper bb. For a few days after the ER, TSLA sprinted ahead of the upper bollinger band, just as we saw recently, before it consolidated downward for a little over a week before resuming its climb, consolidating, climbing, consolidating, etc. In other words, even in an epic climb such as we saw in 2013, consolidation periods are a natural part of the progression, so don't let them freak you out. As long as TSLA stays on track for a great Q4, and as long as Elon doesn't rock the boat too much with his tweets, the coming quarter should be a really good one for TSLA longs.

Conditions:
* Dow up 432 (1.77%)
* NASDAQ up 111 (1.58%)
* TSLA 329.90, down 4.95 (1.49%)
* TSLA volume 9.0M shares
* Oil 66.41, up 0.23 (0.35%)

 

[Papafox]

As the broader markets shake off their recent losses and begin recovering, there's money to be made out there and TSLA is a great place to do it. To better understand today's trading, let's compare TSLA to the NASDAQ chart below.

TSLA started the day with a pure piece of manipulation: the mandatory morning dip, which took it briefly into the red. Nothing like it exists on the NASDAQ side. The NASDAQ then ran into shallow peaks at about 10:30am, 1:20pm, 2:20pm, and 3:15pm. So did TSLA, so there certainly was correlation between the two charts, but look at how much steeper the run-ups to the peaks and retreats were on TSLA. This is because you have buyers pushing higher to get to the peaks because they're eager to buy, followed by short-selling to walk the peak down as much as possible before the next climb begins. The overall effect of the effort by shorts was to shave some of the gains from TSLA today.

All of this recovery from the doldrums has Option Sniper quite excited, and he thinks that TSLA could possibly make it to an All Time High by next week if things work out.

Below, you can see the resistance levels for TSLA that Option Sniper anticipates.

To put today's trading into perspective, you need to glance down at the tech chart and notice that the dramatic climb of TSLA is still on track. Notice, too, that the upper bollinger band is at 341.60, more than $4 above TSLA right now and rising fast enough to keep the institutional buyers happy because TSLA is once again within the band.

Consider, though the importance of today's TSLA gains:
* Friday- TSLA lost about $20 when the WSJ FUD came out, regained half of it, but lost the day's momentum
* Monday- TSLA topped 345 shortly after opening but negative macros allowed the shorts to chip away at the stock all day and end with a much smaller gain
* Tuesday- Even though macros turned positive, shorts managed a big push down at 1:30pm after a morning of whack-the-mole and managed to get TSLA to close in the red
* And so today's trading was very important to get TSLA's climb back on track. TSLA should have performed noticeably better than the NASDAQ today both because of the TSLA multiplier vs. the NASDAQ and because of excellent news of Panasonic expanding battery cell production at the Gigafactory so as to exceed 35GWH by spring of next year. We now see the SP and the upper bb flying in formation in a very steep climb, which is a beautiful thing to watch.

As TSLA climbs higher, more shorts will receive their margin calls, more will cover, and their exits should help propel the climb. Anything is possible with tons of short interest still out there, but we end today on a high note.

Conditions:
* Dow up 241 (0.97%)
* NASDAQ up 144 (2.01%)
* TSLA 337.32, up 7.42 (2.25%)
* TSLA volume 7.4M shares
* Oil 64.98, down 0.33 (0.51%)
* Percent of selling by TSLA shorts: 47.78% (almost even with yesterday)

 

[Fobble]

Since Q3 earnings 10/24/2018
Percent of selling by TSLA shorts:
10/24: 56.86%
10/26: 52.94%
10/31: 47.78%

The trend is obvious. Short sellers are fleeing ....

 

[Papafox]

Wow, what a day. The mandatory morning dip can partially be explained by the dipping NASDAQ, but much stranger things were amiss today.

Looking at the NASDAQ, which had a great day, you would not expect TSLA to start a big descent about 2:30pm.

The big jump up after 2:00pm may have been a response to words by video blogger Kara Swisher who will have Elon Musk on the show on Friday. Kara at about 28:50 on this link said that the Model 3 production thing in the factory is fixed, so we'll hear it from Elon tomorrow, but perhaps this prelude gave TSLA the 2pm jump.

Life above 347 didn't last long today, however, because the InsideEV numbers came in for expected "sales" (meaning deliveries) in the U.S.and these numbers are the most likely reason for TSLA to begin a descent to close. Here are the InsideEV numbers given for Model 3 in various months:

Model 3
July- 14,250
Sep- 22,250
Oct- 17,750

Someone with no insight could say that October was less than September and so maybe Tesla isn't doing as well, right? As we all know, Tesla ships a lot of its cars for distant destinations (in this case, east coast U.S.) in the first month of quarter, and so many of those vehicles are still in transit. Tesla also does a furious job of selling in California as the end of the final month of the quarter approaches, and so we of course have a huge bump in the final quarter. We all know that, but some longs may not. Further, if you compare Model 3 sales in October to July, the first month of Q3, Model 3 being up 3,500 vehicles is an understatement because the thousands of vehicles that were not delivered in Q2 as a result of efforts to shift the 200K deliveries to Q3 meant that 40% of Q2's M3s were never delivered in Q2 and most were delivered in September of Q3. The Model S and X numbers were down even more as a % from September because the first month of the quarter is when the majority of production is being sent overseas.

If you understand Tesla, you would look at production numbers to see how well the company was doing in October, and so far it looks like October is far more solid than July of Q3, due to the stable 5K production of M3 underway right now and prospects for higher production as the quarter proceeds.

The bottom line, then, is that some longs may have started to sell on the InsideEV news, the shorts jumped in to make it a dip on steroids, and additional bewildered longs jumped in. That's how it goes. Originally, I thought the shorts were extending their selling effort into after-hours trading, but I later learned after positing in the market trading thread that Apple's Q3 ER was disappointing and after looking at AMZN and NVDA after-hours trading, I realized the after-hours dip of TSLA likely was the results of AAPL, not those dastardly shorts. The market-hours trading was a different matter.

Speaking of TSLA shorts, Dusaniwsky says they're down $1.9 billion so far this year (and I'm guessing the losses are going to get much deeper before the new year). The chart above is significant because you can see continued covering by shorts. They're down to little over 32 million shares of TSLA now. Notice that this chart is scaled differently than recent charts.

The Tech chart shows the upper bb over 350 today, which nicely handles the additional $7 added to TSLA today. Any additional catalyst will speed up the covering and likely speed up the SP climb. Just off the wire is news that a China trade deal might be possible. Futures have responded nicely for Friday. Let's hope the combination of Elon's interview with Kara Friday morning and talk of a China trade deal gives our climb a short of adrenaline to help it end the week on a high note.

Conditions:
* Dow up 265 (1.06%)
* NASDAQ up 128 (1.75%)
* TSLA 344.28, up 6.96 (2.06%)
* TSLA volume 7.9M shares
* Oil 63.62, down 0.37 (0.58%)

 

[Papafox]

Today's TSLA trading was a mixture between positive Tesla sentiments and a collision of macro expectations. Let me explain. Leading into Thursday evening, macros were down on expectations that Apple's disappointing ER would pull the broader markets down. Alas, last night Bloomberg published a story that Trump and China's Xi were talking and that Trump suggested the U.S. prepare a proposed solution to the trade war and suddenly futures were bright again. Then expectations of a trade deal fizzled and the macros turned bearish again. What this did to Tesla is it created lots of movement of options, especially ones that expired today, and the market responded accordingly. When the SP is rising and options are expiring later that day, market makers are also buying to hedge their positions. When SP is descending, MMs are selling to keep their positions in balance. Thus, we see exaggerations on rising and falling stock prices on a day like today, and that's the most likely explanation for the wild ups and downs today. Naturally, day traders will see these gyrations and try to jump in on one end of another to make money from the volatility, and things end up becoming even more volatile.

Looking at the NASDAQ chart today (NASDAQ closed down a little more than 1% today), you can see the run-up shortly after opening, dips at about 1:10pm and 2:20pm, a a slight climb into the close. We saw most of these features in TSLA today, but TSLA spent most of the day trading about 1% above the NASDAQ, which is, of course, a sign of strength. If the NASDAQ had run uphill today, TSLA looked like it was ready to do so as well.

The discussion above about options adding volatility to the stock price brings up an important point. We know that the 32 million shares of TSLA sold short is a coiled spring. As the pressure is released from that spring, TSLA price runs up. Consider, though, the additional pressure on the SP from options (see chart below).

With Max Pain at 322.5 on Friday, there were clearly more puts than calls at a SP between 340 and 350. As those puts get closer to expiration, market makers will be purchasing shares of TSLA to keep their holdings in balance. Similarly, as Tesla runs higher, MMs again have to purchase some shares to keep things in balance. The continued stream of shorts exiting TSLA provides upward pressure and thus you have a situation that even with no news at all, there are forces at work to pressure TSLA to keep rising.

I present a tech chart today that runs from TSLA's recent low (250-something) to a top of the chart of current ATH (high 380-something). Looking at our current location,you can see that TSLA in the past two weeks has run about two-thirds of the way from the low to the ATH. We're doing great. This slow rising, slow draining of the short-inventory still holds the potential to accelerate substantially on good news. Notice that the upper bb is now nearly 359. That's a good amount of head-room, especially given the pressure from short-covering and options effects.

This week, TSLA closed at 346.41, up 15.51 from last week's 330.90. Though we were teased with higher numbers shortly after opening on Monday, TSLA managed to really earn those numbers this week and should be able to build upon this success next week. Let's look forward to the uncertainties of the elections getting out of the way so that the market can stabilize and TSLA can revitalize. Have a great weekend.

Conditions:
* Dow down 110 (0.43%)
* NASDAQ down 77 (1.04%)
* TSLA 346.41, up 2.13 (0.62%)
* TSLA volume 7.7M shares
* Oil 63.14, up 0.55 (0.86%)

PS: If you order any Tesla (Model 3 included) be sure to use a referral code and get 6 months of free supercharging. Many of us would be pleased to share our code and receive something nice from Tesla, too.

 

[madodel]

What is going on this morning? Is it just tech stocks down or is something going on with TSLA? This looks like more than MMD.

 

[neroden]

Probably a bear raid, IMO. Honestly it looks like normal MMD to me. Tesla's volatility has always meant that 5% moves in a day are *normal*.

(edit).... aaaand, bang, there's the bounce off the morning-dip bottom. Like usual.

I suspect someone has figured out the pattern and programmed computer traders to trade on the MMD pattern. Which *amplifies* the pattern.

 

[madodel]

Probably a bear raid, IMO. Honestly it looks like normal MMD to me. Tesla's volatility has always meant that 5% moves in a day are *normal*.

(edit).... aaaand, bang, there's the bounce off the morning-dip bottom. Like usual.

I suspect someone has figured out the pattern and programmed computer traders to trade on the MMD pattern. Which *amplifies* the pattern.

It just seemed to be down faster and deeper than the usual MMD. Guess I'm just skittish because of the idiotic drop in AAPL.

 

[madodel]

On CNBC right now about interview with Elon Musk. "Going forward all quarters will be cash flow positive".

 

[Papafox]

Today, tech stocks were down a lot. Shorts added to the morning selling to give TSLA a dip on steroids, but as you can now see it didn't last. TSLA is again showing strength compared to techs. I see today's price movement as a big disappointment for shorts. Here was their chance to really get some traction but buyers came in and ruined their party. Today's relative strength shown by TSLA should give longs more confidence going forward and shorts another reason to cover now.