Papafox's Daily TSLA Trading Charts

[Papafox]

Congrats, longs, the streak of 7 red days in a row has now been snapped. TSLA's barely finishing in the green should be celebrated as a success, nonetheless, as high selling by shorts and bad NASDAQ macros today made it a tough environment. I have to say, though, that the amount of downward pressure on TSLA today would be hard to pin solely on the shorts. Some could be from concerns about tonight's interview (9:30pm Pacific Time) with Joe Rogan. Other bulls believe that some large stakeholder has been selling over the past couple of weeks, judging by the downward pressure. If that's the case, in good time this too shall pass. We do see lots of buying pressure anytime TSLA descends below 280. It was very much like what we saw at 300 last week. Let's hope the interview is positive enough so that 280 isn't breached. If it is, though, I really don't think TSLA will spend much time below it. The news about M3 deliveries in August is very good, and today we saw lots of M3 reservations holders contacted to get their paperwork in order for a September delivery. Meanwhile, Tesla has announced a temporary early-out of leases for S and X owners who want to buy or lease a newer S or X. This step is consistent with the higher production numbers we've been observing for S and X and suggests Tesla wants to reduce inventory prior to the end of Q3. All these steps suggest that Tesla is going to put in a real push to maximize Q3 ER results. Can't wait.

Don't fret too much if TSLA takes a dip tomorrow, following the interview. No doubt the FUDsters will cherry pick all the nasty stuff and try to make Tesla and Musk look as bad as possible. TSLA will recover soon enough, there's too much good news coming. My hope is that Elon will keep the shareholders in mind and filter his responses more than before on certain topics, and by so doing demonstrate his suitability as Tesla's CEO. The positive is that this will be a chance for Elon to really tell his story, which is something he's been trying to do for some time but potential outlets such as the New York Times were more interested in sensationalism than in peeling back the many faceted layers of Musk's personality and reveal the complex and creative soul within. Maybe that process can happen tonight, and Elon will explain just how successful Tesla now is, how biased the news coverage is, how detrimental to Tesla's mission (and therefore the welfare of this planet's people) the non-stop barrage by the shorts has been. Hope so.

Shorts sold 63.59% of TSLA today as manipulations are frantic in order to keep the downtrend going

Conditions:
* Dow up 21 (0.08%)
* NASDAQ down 72 (0.91%)
* TSLA 280.95, up 0.21 (0.07%)
* TSLA volume 7.4M shares
* Oil 67.89, up 0.12 (0.18%)
* Percent of TSLA selling by the shorts: 63.59%

 

[Papafox]

Consider today to be the turning point for TSLA in this overdramatic dip. The morning was brutal with selling induced by a combination of Elon taking a hit on a combination tobacco-marijuana cigar on last night's Joe Rogan show and the announced resignation of Chief Accounting Officer Dan Morton. The knee-jerk reaction was to assume there was something sketchy going on in Tesla's finances to justify the departure after so short a time with Tesla, but it turns out that Morton was extremely frustrated by Elon's unwillingness to listen to Morton's list of reasons why the privatization might be problematic. Fortunately, a CNBC story rather cleared the air when the story reached:

"I want to be clear that I believe strongly in Tesla, its mission and its future prospects, and I have no disagreements with Tesla's leadership or its financial reporting," Morton wrote in his statement today.

Then, after closing, Tesla released an Elon email to employees that includes this paragraph:

We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter. For a while, there will be a lot of fuss and noise in the media. Just ignore them. Results are what matter and we are creating the most mind-blowing growth in the history of the automotive industry. Even the Ford Model T, which held the world record for the fastest growing car in history, didn’t grow as fast in sales or production as the Model 3.

Tom Randall from Bloomberg interpreted the quarter as Q4, but many of us Tesla observers think he's referring to Q3. If so, 84,000 deliveries would indeed make Q3 18 an epic quarter for the company. Then the letter announced a number of promotions, including Jerome Guillen as president of automotive, plus several other promotions of extremely capable individuals. The Guillen promotion, along with the others, is in many ways the perfect response to Tesla's critics about Musk being overworked. He did it his way with a trusted friend, and that type of a relationship is needed in order for Elon to shed some of the responsibility.

For all these reasons, the noise of last night and this morning is going to be overwhelmed by the steak of huge delivery numbers coming and a better management structure. I wouldn't be surprised to see a significant gap up on Monday, provided there's clarity that Elon was referring to Q3.
.

Meanwhile, Ihor Dusaniwsky confirms that shorts have once again been increasing their positions, just in time to be caught by the announcement of Tesla doubling deliveries and a better management structure.

Looking at the tech chart, you can see that the lower bollinger band has been rather ineffective in slowing down the dip because it is plunging almost as fast as the SP was. Instead, the round number 260 has proven to be a much more reliable support number, and 262 gets a nod for support as well.

This was a brutal week. TSLA closed at 263.24, down 38.42 from last Friday's 301.66. The prospects for next week and the remainder of the year look bright, though. Enjoy your weekend.


Conditions:
* Dow down 79 (0.31%)
* NASDAQ down 20 (0.25%)
* TSLA 263.24, down 17.71 (6.30%)
* TSLA volume 22.2M shares
* Oil 67.75, down 0.02 (0.03%)
* Percent of TSLA selling by shorts: 58.88%

 

[TrendTrader007]

View attachment 332898
Consider today to be the turning point for TSLA in this overdramatic dip. The morning was brutal with selling induced by a combination of Elon taking a hit on a combination tobacco-marijuana cigar on last night's Joe Rogan show and the announced resignation of Chief Accounting Officer Dan Morton. The knee-jerk reaction was to assume there was something sketchy going on in Tesla's finances to justify the departure after so short a time with Tesla, but it turns out that Morton was extremely frustrated by Elon's unwillingness to listen to Morton's list of reasons why the privatization might be problematic. Fortunately, a CNBC story rather cleared the air when the story reached:

"I want to be clear that I believe strongly in Tesla, its mission and its future prospects, and I have no disagreements with Tesla's leadership or its financial reporting," Morton wrote in his statement today.

Then, after closing, Tesla released an Elon email to employees that includes this paragraph:

We are about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter. For a while, there will be a lot of fuss and noise in the media. Just ignore them. Results are what matter and we are creating the most mind-blowing growth in the history of the automotive industry. Even the Ford Model T, which held the world record for the fastest growing car in history, didn’t grow as fast in sales or production as the Model 3.

Tom Randall from Bloomberg interpreted the quarter as Q4, but many of us Tesla observers think he's referring to Q3. If so, 84,000 deliveries would indeed make Q3 18 an epic quarter for the company. Then the letter announced a number of promotions, including Jerome Guillen as president of automotive. That is in many ways the perfect response to Tesla's critics about Musk being overworked. He did it his way with a trusted friend, and that type of a relationship is needed in order for Elon to shed some of the responsibility.

For all these reasons, the noise of last night and this morning is going to be overwhelmed by the steak of huge delivery numbers coming and a better management structure. I wouldn't be surprised to see a significant gap up on Monday, provided there's clarity that Elon was referring to Q3.
.

View attachment 332904
Meanwhile, Ihor Dusaniwsky confirms that shorts have once again been increasing their positions, just in time to be caught by the announcement of Tesla doubling deliveries and a better management structure.



View attachment 332900
Looking at the tech chart, you can see that the lower bollinger band has been rather ineffective in slowing down the dip because it is plunging almost as fast as the SP was. Instead, the round number 260 has proven to be a much more reliable support number, and 262 gets a nod for support as well.

This was a brutal week. TSLA closed at 263.24, down 38.42 from last Friday's 301.66. The prospects for next week and the remainder of the year look bright, though. Enjoy your weekend.


Conditions:
* Dow down 79 (0.31%)
* NASDAQ down 20 (0.25%)
* TSLA 263.24, down 17.71 (6.30%)
* TSLA volume 22.2M shares
* Oil 67.75, down 0.02 (0.03%)
* Percent of TSLA selling by shorts: 58.88%

I am actually very happy with the rapid waterfall drop in SP over a span of 22 days approximately 35% drop
This seems similar to January 2012, January 2014, January 2016 etc drops which all led to rapid and substantial price recovery

 

[Sudre]

I don't know if this is the right place but I find it insane to look at the short chart up there. When Tesla hits a peak shorts start covering and when it hits the bottom of a dip they start piling on. I am completely confused. Isn't that the opposite of how it should be if shorts want to make money?

 

[Papafox]

I don't know if this is the right place but I find it insane to look at the short chart up there. When Tesla hits a peak shorts start covering and when it hits the bottom of a dip they start piling on. I am completely confused. Isn't that the opposite of how it should be if shorts want to make money?

Yep, it's a sure way to lose money (selling low and then buying high). People have described the cause of the behavior in two ways. First, there are the shorts who feel that Tesla is going to zero, and this is the big break that's needed to get the ball rolling and send it to zero. Then there are the "kill Tesla" types who want to punish Tesla whenever there is any perceived weakness, hoping that the additional pressure on the SP will magnify Tesla's problems and help either lead to its demise or at least slow it down considerably. I suspect you have plenty of both types out there. The losses by shorts in 2018 may hit epic numbers if the production and delivery numbers suggested by Musk in today's letter pan out. Can't wait to see.

 

[Papafox]

Short-selling uptick rule in effect for TSLA

At 9:40am today, TSLA descended 28.52 below the previous closing price of 280.95, which is a greater than 10% decline. We saw some crazy high selling, such as at 9:38am when over 125,000 shares traded hands in one minute. A decline over over 10% triggers the SEC's Rule 201 "circuit breaker" which prohibits short selling for the remainder of the day and the full next trading day (in this case, Monday) at advertised short-sell prices that are less than the national highest bid price. Looks like for most of today's trading and all of Monday's the SEC has or will slap this requirement on all short sales.

If you look at today's trading chart, you can see that TSLA bottomed out at 9:40am and then rose quickly for a while as the circuit breaker popped. The close to 59% selling by shorts would have been much higher today if not for the 201 rule coming into play.

What will be extremely interesting to see will be the effects of this short-selling restriction on Monday. If TSLA starts climbing quickly, the "circuit breaker" restriction may make it more difficult to cap the climb. Looking forward to seeing how it plays out!

 

[Fact Checking]

A decline over over 10% triggers the SEC's Rule 201 "circuit breaker" which prohibits short selling for the remainder of the day and the full next trading day (in this case, Monday) at advertised short-sell prices that are less than the national highest bid price. Looks like for most of today's trading and all of Monday's the SEC has or will slap this requirement on all short sales.

If you look at today's trading chart, you can see that TSLA bottomed out at 9:40am and then rose quickly for a while as the circuit breaker popped. The close to 59% selling by shorts would have been much higher today if not for the 201 rule coming into play.

So, just to sum it up (and please correct me if I'm wrong), the 'circuit breaker' prevents the following market action:

• SELL MARKET orders by short position holders (and also similar STOP orders) are not allowed and not executed on NASDAQ and any linked market, because they'd execute below the current national highest bid price
• SELL LIMIT orders by short position holders that are at the national highest bid price will not be executed either.

I.e. shorts are not allowed to increase their positions at all while the 'circuit breaker' is in effect, correct? Is there any way how shorts can increase their position while the 'circuit breaker' is in effect?

If my description is correct then this is pretty conclusive proof that the big drop was mainly driven by shorts selling aggressively and thus magnifying the fall artificially - not by longs closing positions...

Right?

 

[ggr]

So, just to sum it up (and please correct me if I'm wrong), the 'circuit breaker' prevents the following market action:

• SELL MARKET orders by short position holders (and also similar STOP orders) are not allowed and not executed on NASDAQ and any linked market, because they'd execute below the current national highest bid price
• SELL LIMIT orders by short position holders that are at the national highest bid price will not be executed either.

I.e. shorts are not allowed to increase their positions at all while the 'circuit breaker' is in effect, correct? Is there any way how shorts can increase their position while the 'circuit breaker' is in effect?

If my description is correct then this is pretty conclusive proof that the big drop was mainly driven by shorts selling aggressively and thus magnifying the fall artificially - not by longs closing positions...

Right?

My understanding (which could be wrong) is that they can place sell limit orders above the current ask, which can be fulfilled only when the price rises. It still tends to cap rises, but can't depress the price. This is called the "uptick rule". Uptick Rule

 

[Navin]

 

[winfield100]

View attachment 333351

how do i copy this over to the "free for all" that the market action thread has become?
It seriously agrees with my A/D line
(i can delete this post if you like, if too much noise)

 

[Fact Checking]

My understanding (which could be wrong) is that they can place sell limit orders above the current ask, which can be fulfilled only when the price rises. It still tends to cap rises, but can't depress the price. This is called the "uptick rule". Uptick Rule

Makes sense!

 

[Stormy]

Hey y'all. I've been looking into this SEC rule 201 and trying to wrap my head around what the effect is going to be on Monday. Here's what I got so far. Could you guys with more experience let me know what you think.

The rule prevents a short seller from accepting the current bid and thereby removes their ability bring the price down (rapidly) by their selling. As the SEC publication describes, the intent is to put long sellers at the front of the line if they want to sell by letting them accept the top bid. The shorts have to put their sell orders (their asking price) in at least above the highest bid (not necessarily above the lowest ask) in order to get in line, and then wait for a buyer to accept their ask. Basically shorts can only offer to sell, approximately at or above market rate. (To answer an earlier question, they can increase their short positions this way.)

So, to my thinking, a coordinated, determined group of shorts with deep pockets could potentially cap the price, by putting up a lot of shares for sale, and then any price increase will have to wait until buyers burn through their asks first. But the shorts won't be able to create a dip by rapidly accepting bids. This should remove a lot of volatility, and so remove a lot of day traders who make money from volatility. So Rule 201 basically limits the amount of market manipulation by shorts to capping? And we would see this manipulation by a flat SP chart, high shortvolume, and a corresponding increase in shares shorted?

Per Ihor's friday chart, shares shorted didn't change on friday. And the SP chart shows a steady slow increase over the day (after circuit break). The shortvolume was high, but we could say a lot of that was before circuit break (since we didn't see an increase in total shares shorted).

Personally, I imagine that most shorts are the money motivated shorts along for the ride as opposed to the devious kill-Tesla shorts. So I wouldn't expect too much manipulation on Monday if all they can do is cap. (I'm really interested in Monday's shortvolume.) I would imagine we'll see a continuation of Friday -- a slow increase over the day. Perhaps bolstered at the start by Elon's email. Selling would be by longs giving up, being margin called, or profit taking if they got in low enough.

But Tuesday... Then the flood gates open and the dance resumes.

Feel free to pick apart anything I said and point out any flaws in my understanding. I welcome any feedback.

 

[Papafox]

First of all, thanks to @ggr and @Stormy for some clarification on the uptick rule that will be in effect tomorrow. I've been traveling long distance and have not had time to research the details of Section 201, and so I appreciate these contributions.

My guess is that until 9:40am on Friday, we saw a dip on steroids engineered by the shorts. Once the uptick rule fell into place, there was an immediate recovery, but longs were still a bit skitish about buying because this has been such a long and steep descent, and nobody wants to catch falling knives. @Navin 's post about smart money buying on Friday suggests buying pressure may continue on Monday, especially with the executive promotions and word of double the deliveries over last quarter. Overall, I expect to see a climb on Monday, likely without the 10:00am ish mandatory morning dip. I'm very curious to see how well the shorts will be able to cap on Monday with the uptick rule active. I'm a spectator rather than a fortune teller on this matter tomorrow. Shorts are frothing at the mouth to keep this descent going, and so I expect to see an effort to derail a big climb.

Another big question is trading on Tuesday. Will we see the shorts attempt a big MMD? My guess is they'll try. The issue they'll probably run with is that the RWD delivery events this weekend shows there's a lack of demand for Model 3. In truth, @neroden offered the best explanation weeks ago, which is that Tesla didn't anticipate the number of reservation holders (10s of thousands, perhaps) who switched their orders from RWD to AWD when the option came available. Thus, there are some unassigned LR RWD M3s that need to find homes and by holding an event for first-day reservation holders and then expanding that event to others, if need be, Tesla will find homes for these orphan RWD M3s and the Q3 delivery numbers will be on target. Let's see what feedback we get before Tuesday morning on Tesla's RWD events to see how much optimism the shorts might have on Tuesday when they no longer have the uptick rule.

For myself, if I can buy a couple calls at a decent price early Monday morning before a big run up, I will do so. I'd be careful about buying after a big gap up on Monday, however, because of the possibility of the shorts coming back big on Tuesday and a better price possibly being available Tuesday around 10am.

Overall, I'm very optimistic. Shorts have depressed the SP, taking advantage of some Elon goofs and a thunderstorm of FUD these past weeks, courtesy of the ever-willing media. Shorts embrace (and amplify) the negatives and discount anything Musk says. OTOH, longs are likely listening to the double-the-previous-quarter deliveries and we have a fair amount of clarity that Q3 ER will be epic unless there's a surprise. It's a great time to take advantage of this likely last opportunity to buy TSLA at such an amazing price.

 

[Boomer19]

First of all, thanks to @ggr and @Stormy for some clarification on the uptick rule that will be in effect tomorrow. I've been traveling long distance and have not had time to research the details of Section 201, and so I appreciate these contributions.

My guess is that until 9:40am on Friday, we saw a dip on steroids engineered by the shorts. Once the uptick rule fell into place, there was an immediate recovery, but longs were still a bit skitish about buying because this has been such a long and steep descent, and nobody wants to catch falling knives. Navin's post about smart money buying on Friday suggests buying pressure may continue on Monday, especially with the executive promotions and word of double the deliveries over last quarter. Overall, I expect to see a climb on Monday, likely without the 10:00am ish mandatory morning dip. I'm very curious to see how well the shorts will be able to cap on Monday with the uptick rule active. I'm a spectator rather than a fortune teller on this matter tomorrow. Shorts are frothing at the mouth to keep this descent going, and so I expect to see an effort to derail a big climb.

Another big question is trading on Tuesday. Will we see the shorts attempt a big MMD? My guess is they'll try. The issue they'll probably run with is that the RWD delivery events this weekend shows there's a lack of demand for Model 3. In truth, @neroden offered the best explanation weeks ago, which is that Tesla didn't anticipate the number of reservation holders (10s of thousands, perhaps) who switched their orders from RWD to AWD when the option came available. Thus, there are some unassigned LR RWD M3s that need to find homes and by holding an event for first-day reservation holders and then expanding that event to others, if need be, Tesla will find homes for these orphan RWD M3s and the Q3 delivery numbers will be on target. Let's see what feedback we get before Tuesday morning on Tesla's RWD events to see how much optimism the shorts might have on Tuesday when they no longer have the uptick rule.

For myself, if I can buy a couple calls at a decent price early Monday morning before a big run up, I will do so. I'd be careful about buying after a big gap up on Monday, however, because of the possibility of the shorts coming back big on Tuesday and a better price possibly being available Tuesday around 10am.

Overall, I'm very optimistic. Shorts have depressed the SP, taking advantage of some Elon goofs and a thunderstorm of FUD these past weeks, courtesy of the ever-willing media. Shorts embrace (and amplify) the negatives and discount anything Musk says. OTOH, longs are likely listening to the double-the-previous-quarter deliveries and we have a fair amount of clarity that Q3 ER will be epic unless there's a surprise. It's a great time to take advantage of this likely last opportunity to buy TSLA at such an amazing price.

regarding the short sale restriction, i didn’t see an actual notice on my trading mkt data (usually you see one from IB on their tws) or on bloomberg terminal you see a bulletin under the CN (company news) function. then again, friday was such a rough day i may have overlooked it.
...just saying as a precaution is all, keep up the good work! love your posts.

 

[Papafox]

regarding the short sale restriction, i didn’t see an actual notice on my trading mkt data (usually you see one from IB on their tws) or on bloomberg terminal you see a bulletin under the CN (company news) function. then again, friday was such a rough day i may have overlooked it.
...just saying as a precaution is all, keep up the good work! love your posts.

I saw a notice of TSLA's status on a nasdaq.com site. Here's the link.

 

[Cattledog]

It's a great time to take advantage of this likely last opportunity to buy TSLA at such an amazing price.

This. It's the last revisit (I hope) of 11/16 and 2/16 FUD sales.

 

[Artful Dodger]

First of all, thanks to @ggr and @Stormy for some clarification on the uptick rule that will be in effect tomorrow. I've been traveling long distance and have not had time to research the details of Section 201, and so I appreciate these contributions.

My guess is that until 9:40am on Friday, we saw a dip on steroids engineered by the shorts. Once the uptick rule fell into place, there was an immediate recovery, but longs were still a bit skitish about buying because this has been such a long and steep descent, and nobody wants to catch falling knives. @Navin 's post about smart money buying on Friday suggests buying pressure may continue on Monday, especially with the executive promotions and word of double the deliveries over last quarter. Overall, I expect to see a climb on Monday, likely without the 10:00am ish mandatory morning dip. I'm very curious to see how well the shorts will be able to cap on Monday with the uptick rule active. I'm a spectator rather than a fortune teller on this matter tomorrow. Shorts are frothing at the mouth to keep this descent going, and so I expect to see an effort to derail a big climb.

So I'm definately confused on the effect of the short-selling curcuit breaker on tomorrow's price action. If Shorts are forced to buy at the highest Offered price, why wouldn't I enter a sell-order for 50 shares @ $320 and expect that some bigger Short would buy them up so he can continue to sell short (then of course immediately buy back at market price to bag a bunch of shares).

What am I missing here?

TIA, and Cheers!

 

[geneclean55]

They can only short on an uptick....when the price is going higher. However, those upticks can occur incredibly rapidly and fleetingly ... HFT and the like

 

[madodel]

They can only short on an uptick....when the price is going higher. However, those upticks can occur incredibly rapidly and fleetingly ... HFT and the like

So they are unable to trigger stop loss settings which is in part how they manipulate large dips. Interesting.

 

[Cohiba]

Wouldn't today be the perfect day for a short burn?