Papafox's Daily TSLA Trading Charts

[WentOffGrid]

Expect to see shorts launch FUD attack in an attempt to keep the stock price from running up into the ER

Looks like a change to their strategy, with the flip. Amazing that they get away with this, and constantly repeat the cycle.

I enjoy seeing these real facts come out to a big audience from those who almost always tell lies. Profit by lies is their only motivator, and they are not good people.

 

[Unpilot]

It is very sad to see the naked market manipulation and blatant flipping all in the name of greed.
Yet the SEC forces one of the few Honest people into a rigged settlement.

 

[neroden]

I sometimes think people get in legal trouble more often for mistakes than for deliberate maliciousness. Sort of makes sense if you think about it... if you're deliberately malicious, you make special clever efforts to avoid legal trouble, whereas if you're honest but make a mistake, you don't.

 

[N5329K]

It is very sad to see the naked market manipulation and blatant flipping all in the name of greed.
Yet the SEC forces one of the few Honest people into a rigged settlement.

Everyone thinks Galileo "invented the telescope" so that he could solve the mysteries of the universe. He actually intercepted a shipment that contained Dutch optics, took tubes and lenses back home and refashioned his spyglass to serve a naked market interest: seeing which ships were arriving in port before others could, so that he and his pals could make appropriate "investments" in commodities accordingly. Short and long, I expect. Didn't stop him from wondering what the moon looked like, or Venus or Jupiter. But still.
Market manipulation is not Tesla specific. It's been around for so long you might say it's just how the market operates. To materially benefit those who can make informed bets, or convince others to make really dumb ones. There's money to be made either way.
Robin

 

[Unpilot]

Everyone thinks Galileo "invented the telescope" so that he could solve the mysteries of the universe. He actually intercepted a shipment that contained Dutch optics, took tubes and lenses back home and refashioned his spyglass to serve a naked market interest: seeing which ships were arriving in port before others could, so that he and his pals could make appropriate "investments" in commodities accordingly. Short and long, I expect. Didn't stop him from wondering what the moon looked like, or Venus or Jupiter. But still.
Market manipulation is not Tesla specific. It's been around for so long you might say it's just how the market operates. To materially benefit those who can make informed bets, or convince others to make really dumb ones. There's money to be made either way.
Robin

I have no doubt greed knows no time or national boundary's.

 

[Papafox]

All those in favor of a $33+ rise in TSLA today please raise your hand. Yeah, I thought so.

Yesterday's announcement by Tesla of the Q3 ER taking place tomorrow (less than 48 hours notice) set the stage for a lot of pressure on the short-sellers today. Surprisingly, few made a dash for the exits during the first 5 minutes of trading, allowing some longs to take advantage of the slow start and do some trading. By 9:37am, the buying picked up with 103,000 shares that minute and the march uphill was relentless. The significantly depressed macros on opening likely caused the slow start for TSLA.

The NASDAQ started low, dipped to a daily low at 10am and then barely touched green in late afternoon before fading into close

The event that really added rocket fuel to today's TSLA trading was the story that short-seller Andrew Left had switched from his short position to a long position at Tesla. Here is Citron Research's paper on the subject. Basically, Left said that Model 3 has no real competition and that the Tesla story has become too compelling to bet against. His move is, of course, considered heresy in the short-seller camp. The whole idea is for the shorts to stick together through this Q3 ER, sing a chorus of "it's only a one time thing" and then try to manipulate the SP back down after the inevitable pop if the numbers are indeed good. With Left's departure, though, it is going to be difficult to hold the coalition together as other shorts start to understand what Left is saying and they too tiptoe to the exits.

The Left departure puts one other group on notice besides the short-sellers. Left basically said that even though he thinks Elon Musk is misbehaving, the thousand pound gorilla in the room is the Tesla Model 3. MODEL 3 IS THE STORY. The problem with this revelation is that it exposes the media as doing exactly what led Left astray, which is to focus on Musk while the real story, the Model 3's amazing success, is going virtually unnoticed (although one could argue that the Model 3 is itself inseparable from the Musk phenomenon, but that's a different story). This is the reason the media is so quiet today. The veil has been lifted and they have been exposed as ignoring the thousand pound gorilla in the room. My guess is the media will remain rather tight-lipped until after the ER and conference call and then begin to bestow attention on Tesla's success and the Model 3, doing their best to ignore the Andrew Left heresy. Thus, it's entirely possible that Left has forced the media's hand, and proper positive attention will now be placed on Tesla and Model 3, mixed in with the inevitable negativity. A more positive media outlook on Tesla would have a major effect on the stock price. Can't wait to see what happens.

Amazingly, shorts were tagged with 56.79% of TSLA selling today. Can't wait to see Dusaniwsky's short interest numbers because the covering might have been somewhat less than we would have imagined for a day like today.

Edit: Responding to MikeC's post below, I viewed Dusaniwsky's research note and saw that short interest did not budge much today, compared to yesterday. Amazingly, some shorts were establishing new positions even as the SP ran higher today. Thanks MikeC.

TMC active member vgrinshpun has a technical term for short-selling in the face of such a buying frenzy. He calls it "pissing into the wind."

Looking at the tech chart, you can see that we closed above the 50 day moving average and well-above the mid-bollinger band. Expect to see these indicators trending in an upward direction as Tesla heads into its ER tomorrow.

Conditions:
* Dow down 126 (0.50%)
* NASDAQ down 31 (0.42%)
* TSLA 294.14, up 33.19 (12.72%)
* TSLA volume 18.8M shares
* Oil 66.10, down 3.26 (4.70%)
* Percent of TSLA selling by shorts: 56.79%

 

[MikeC]

S3 Report is out, you just need to fill in name and email for free access: https://s3partners.net/Research/20181023_164600_Citron.php?v=1

S3 Analytics: Citron Reversal & Early Earnings Cost Tesla Shorts $1.1 Billion

"Tesla’s short interest has been declining since “The Tweet” on August 7th, down $3.2 billion, or -27%, even as Tesla’s stock price declined by -14% over that same time period. Short sellers had covered 1.4 million shares since August 7th, taking profits as they made back over $2.5 billion of mark-to-market profits before today’s rally. Over the last week we have seen renewed short selling with 886k of new shorts hitting the tape and even additional short selling into today’s price move."

 

[madodel]

S3 Report is out, you just need to fill in name and email for free access: https://s3partners.net/Research/20181023_164600_Citron.php?v=1

S3 Analytics: Citron Reversal & Early Earnings Cost Tesla Shorts $1.1 Billion

"Tesla’s short interest has been declining since “The Tweet” on August 7th, down $3.2 billion, or -27%, even as Tesla’s stock price declined by -14% over that same time period. Short sellers had covered 1.4 million shares since August 7th, taking profits as they made back over $2.5 billion of mark-to-market profits before today’s rally. Over the last week we have seen renewed short selling with 886k of new shorts hitting the tape and even additional short selling into today’s price move."

And more of the same tomorrow. If the idiots who shorted more today try to get out tomorrow it will just drive the price up more. Anyone want to bet there will be more shorting tomorrow betting on bad QR numbers to tank TSLA on Thursday? These are true believers who think TSLA will go to zero because as we all know, "Tesla loses thousands on every car they sell" and they have sold a lot of cars. I hope for once things go as we expect. I know there is next quarter, but I would love to see these shorts get burned.

 

[adiggs]

And more of the same tomorrow. If the idiots who shorted more today try to get out tomorrow it will just drive the price up more. Anyone want to bet there will be more shorting tomorrow betting on bad QR numbers to tank TSLA on Thursday? These are true believers who think TSLA will go to zero because as we all know, "Tesla loses thousands on every car they sell" and they have sold a lot of cars. I hope for once things go as we expect. I know there is next quarter, but I would love to see these shorts get burned.

Don't forget - if TSLA was a good short at $250, it's a GREAT short at $290.

 

[neroden]

S3 Report is out, you just need to fill in name and email for free access: https://s3partners.net/Research/20181023_164600_Citron.php?v=1

S3 Analytics: Citron Reversal & Early Earnings Cost Tesla Shorts $1.1 Billion

"Tesla’s short interest has been declining since “The Tweet” on August 7th, down $3.2 billion, or -27%, even as Tesla’s stock price declined by -14% over that same time period. Short sellers had covered 1.4 million shares since August 7th, taking profits as they made back over $2.5 billion of mark-to-market profits before today’s rally. Over the last week we have seen renewed short selling with 886k of new shorts hitting the tape and even additional short selling into today’s price move."

I believe this entire downward stock price move was the "smart shorts" giving themselves an exit strategy by driving the stock price down (market manipulation, probably illegal). The covering was the "smart shorts", who have now exited, while the "dumb shorts" kept adding. They are leaving the bag in the hands of the "dumb shorts", who are now doubling down. They probably took out some weak or overleveraged longs as well. I think the smart short-sellers are out now, and Left has signalled that.

 

[Johan]

I believe this entire downward stock price move was the "smart shorts" giving themselves an exit strategy by driving the stock price down (market manipulation, probably illegal). The covering was the "smart shorts", who have now exited, while the "dumb shorts" kept adding. They are leaving the bag in the hands of the "dumb shorts", who are now doubling down. They probably took out some weak or overleveraged longs as well. I think the smart short-sellers are out now, and Left has signalled that.

I hope this is the case, as it would be a very nice set up for some kind of squeezish price action in the near future. Many analogies come to mind, one being how the recent depression in the stock price of TSLA can be likened to a weight being added on top of a spring, the weight being made up of several smaller parts, one of which was Citron research, now the Citron part has been removed and although it was just a small part of the entire weight depressing the spring there was a strong signaling effect that will lead to the rest of the weight disintegrating. Now what happens when the weight gets removed and the energy stored in the spring gets released?

Another way to picture it is a theater where the short sellers have been pouring in over a long periode of time through a rather narrow door (proportional to the "free" free float of stock, i.e. actively traded stock) and now one of the prominent characters of that group has unassumingly moved to the back of the room without catching anyone's attention, and then turns back to the crowd still inside yelling through the narrow door: "Fire!" (in this case the fire is the 1000 pound gorilla that @Papafox talks about, i.e. the Model 3). And there's an actual fire in the theatre, or an actual gorilla. And there's an usher at the door saying: "OK, no one panic, everyone exit in an orderly fashion". But then people in the theatre realize that this is a special kind of theatre in which you, unlike a regular show, got paid for going in and left your ticket (which is in fact now the exit ticket) at the entrance (instead of giving away an entrance ticket) and in order to get out you have to buy back the exit ticket from the people tending the narrow door. And as more and more people are moving toward the exit suddenly there's a bidding war going on for exit tickets, all the while you feel the heat of the fire on the back of your head, or if you prefer you hear the roar of the gorilla approaching....

 

[neroden]

Agreed that this is the sort of dynamic which leads to a short-covering rally. (I still think there are too many shares in the hands of "weak longs" for a true "trading halts, no shares for sale" squeeze, which are super rare.)

 

[N5329K]

I believe this entire downward stock price move was the "smart shorts" giving themselves an exit strategy by driving the stock price down (market manipulation, probably illegal). The covering was the "smart shorts", who have now exited, while the "dumb shorts" kept adding. They are leaving the bag in the hands of the "dumb shorts", who are now doubling down. They probably took out some weak or overleveraged longs as well. I think the smart short-sellers are out now, and Left has signalled that.

Here's to the dumb shorts!
Robin

 

[ChrML]

Don't forget that the latest TSLA run up to 300$ is also in the opposite direction as the general market (SPY) which has gone significantly down last 2 weeks. This indicates significant buying pressure, also without the shorts covering.

If we get a SPY reversal or TSLA continuation the rest of this week to get above 300$, there is significant support at 300$ and we should see 320$ again very soon.

I don't think the earnings report will have much impact now. Probably already priced. Well, slight risk it could even cause a drop if slightly less good than anticipated.

Also there's always the Elon risk factor, such as making another pedo statement or something, as always with this stock ..

 

[AWDtsla]

Also there's always the Elon risk factor, such as making another pedo statement or something, as always with this stock ..

Should get a new daily metric:

* Days since twitter injury: 20

 

[Papafox]

Anyone in favor of back-to-back $30+ increases in TSLA stock price yesterday and today, please raise your hand. Yeah, I thought so.

I'm working on the daily TSLA trading chart now. In the meantime...

* Here's a link to the 3Q PDF earnings report: http://ir.tesla.com/static-files/725970e6-eda5-47ab-96e1-422d4045f799

* Here's the link from which you can listen to the conference call: Tesla Releases Third Quarter 2018 Financial Results | Tesla, Inc.
cheers and congratulations longs!
Papafox

 

[Papafox]

Just a little bit about market hours trading and then on to the ER and CC. Today was a miserable macro day again, with the DOW down 2.4% and the NASDAQ down 4.4%. Looking at the NASDAQ chart below you can see there wasn't much relief from the constant descent, and so TSLA held up very well, considering the environment.

The NASDAQ dropped 4.43% as the day went on

Meanwhile, shorts did a robust 56.86% of TSLA selling today, about even with yesterday and extremely high when you consider the positive news lately.

Looking at the high level of short-selling on a day without likely increase in short interest, I'd say we saw a fair amount of short effort to keep TSLA from gaining today by playing an extended game of whack-the-mole. Because of bad macros, the strategy worked. Looking at trading at 4:00pm, the final minute yielded over 300,000 shares trading hands, likely with lots of day-manipulating shorts covering as well as non-manipulating shorts covering as well. These non-manipulators were likely hoping the bad macros would drag TSLA down today and were likely very disappointed.

Then came the earnings report and conference call. The headlines of the earnings report did a great job of laying out what a massive success this quarter was:

The GAAP and non-GAAP net income numbers were quite a bit bigger than most anyone expected. LuvB2B's original computations were for something in excess of 700 million of free cash flow positive and we exceeded that number. Hopes of achieving 15% gross margins were surprised with gross margins in excess of 20%.

Here's a summary of short-seller talking points that have been vaporized today:
* "Tesla is going BK soon because they can't pay off debts in March of 2019"
ZAP! Funds available RIGHT NOW to pay off those bonds and cash will only grow betwen now and then

* "Tesla loses money on every car they build"
Kaboom! Mighty M3 has exceeded 20% GM this quarter

* "Demand issues lay ahead for Model 3"
Zing! Delivery of high grossing Model 3s begins in Europe during Q1

* "Elon is going nuts"
Hiss! Executive idiosyncrasies are better tolerated by the market when the company is making money, and Tesla is a money-maker now. His Twitter behavior has been constrained from previous days and his manners on the ER's conference call were excellent

Overall, I was quite pleased with the conference call. Tesla did not elaborate much on Q4 expected results other than to say the company will be profitable, and I think that's a good thing. Rather than setting the bar high and missing, Tesla is being guarded with its predictions. In fact, Elon admitted that the 15% GM for M3 this quarter was a "conservative" number.

TSLA was up more than $30 early in after-hours trading, but typically you do see a settling of the ER spike as the late hours and low volume of ER after-hours trading settles in, so I see no reason for concern. The conference call went well. That is not the reason for the slow settling of after-hours pricing.

Elon did not go out of his way to elaborate on what a killer quarter Q4 is going to be. For this reason, and because macros are doing so poorly, we're not likely to see a big squeeze. Nonetheless, Tesla has made it clear that it has turned a corner and so we should anticipate positive traction in the remainder of Q4, leading up to the Q4 production and delivery numbers and the Q4 ER in February. A likely scenario would be to see analyst upgrades, institutional investors increasing their TSLA holdings, and positive trading during the quarter, with some influence from the macros.

Looking at the tech chart, it is entirely possible for TSLA to be trading in the 320s or 330s tomorrow, and so it would initially open above the upper bollinger band. TSLA should be able to maintain that SP or build upon it since today's news was so positive. Thus, I don't expect to see TSLA descend to fall within the upper bb within 2 days, but rather the upper bb to adjust its position to Tesla's new realities. The one pertinent dread in TSLA investors right now is macros. Let's hope they calm down so that TSLA can reclaim all its lost ground and then some. At this point, the next ATH is no longer a question of if but when.

Conditions:
* Dow down 608 (2.41%)
* NASDAQ down 329 (4.43%)
* TSLA 288.50, down 5.64 (%)
* TSLA volume 15.6M shares
* Oil 66.46, down 0.36 (0.54%)
* Percent of selling by TSLA shorts: 56.86%

 

[Papafox]

Considering that the macros were way up today, Tesla's $26 gain today was really quite mild compared to the much higher gains seen in after-hours trading yesterday. The question is why. One explanation is that today was a day for the weaker longs to jump ship. Many traders are exhausted from the ups and downs of TSLA in recent months and some wanted out. Today's climb well into the 300s was their exit point. The good news is that these weak longs are best exchanged for new longs who buy in at the current price and set their sights on holding until the new ATH or above. Some will be shaken out by the shorts in the inevitable volatility ahead, but many will stay.

Another factor can be exits by traders with too much emphasis on technicals and not enough on fundamentals. Yesterday's earnings call was epic in almost all areas. Fundamentals look great. A trader who has focused on TSLA's ping-pong bouncing between upper and lower bollinger bands would conclude the stock is ready to begin the inevitable descent, though. Too bad the fundamentals of the ER haven't sunk in with these traders because they're jumping ship just as the game gets interesting. Progress with autonomous driving alone could send this stock to the moon within a year, to say nothing about consistent profitability as Model 3 production continues its upward ramp.

A third factor in today's restrained trading was active participation by short-sellers. Overall, Ihor Dusaniwsky suggests that short interest didn't change much today. With short percentage of FINRA selling reaching nearly 54% today, however, we can assume they had their hand in the morning dip. NASDAQ's chart shows 187,000 shares sold in the second minute of market trading today (9:31am) which caused a noticeable dip before longs bid TSLA back up toward pre-market trading levels. Another dip after 10am surely scared some weak longs out of the underbrush, and I strongly suspect shorts had a hand in this dip because the NASDAQ reveals no similar dip in that time frame.

Finally, the dip in after-hours trading appears to be influenced by a somewhat disappointing Amazon earnings report.

Thus, a combination of flushing out the weak longs, flushing out traders focused on the bollinger-band ping-pong behavior, mischief by TSLA's shorts, and a disappointing NASDAQ earnings report after hours combined to mute TSLA's climb today.

Just how high is TSLA's short interest? It appears to be higher than we originally thought. Consider the following two charts from Ihor Dusaniwsky:

Above is the chart published today

And above is one from Oct 23. What has happened, IMO, is that the NASDAQ short-interest data for 10/15/18 has come out as 34.1 million shares, which is quite a bit above the 10/15 number given in the graph above. I think Dusaniwsky's people re-calibrated the top chart to show 34.1 on 10/15. The result is a massive 35.4 million Tesla shares being shorted. The shorts have apparently been sipping the kool-aid together and have not been covering with the current news. This behavior suggests we will see some covering before long as margin calls come in this afternoon and evening, but the effort by the shorts to constrain TSLA's run-up today suggests they are worried about margin calls setting up a cascade of covering-rising SP-covering, etc. The downside of such a strategy is if the short numbers stay this strong into the Q4 ER, the shorts will likely be annihilated in a true squeeze. Please stick around and see how this mess shakes out for the shorts. There's a big bonus for longs once the exodus picks up speed and forces more of an exodus.

Shorts did 53.92% of TSLA selling today, which is quite high for a day with such large gains

Looking at the tech chart, you can see that with the upper bollinger band today right around 312, TSLA sunk to a safe spot (311ish) just under the upper bb after shorts pressured the stock in the morning and it spent much of the day near the upper bb.

Should TSLA consolidate these gains over the next few days, the technical indicators will have an opportunity to begin readjusting to the new realities of a profitable Tesla. As the upper bollinger band rises, institutional investors will be more comfortable buying within the bands to add to their holdings, in anticipation of Q4 results. The big wildcard remains the macros. For this reason I continue to advocate holding TSLA long-term and avoiding option plays that can be defeated by short-term volatility. Tesla is poised for great things in the long-term. Trade accordingly.

Conditions:
* Dow up 401 (1.63%)
* NASDAQ up 209 (2.95%)
* TSLA 314.86, up 26.36 (9.14%)
* TSLA volume 20.4M shares
* Oil 66.99, down 0.34 (0.50%)

 

[neroden]

Well, it seems I might be right and the markets won't catch up with the reality of Tesla until Q4 numbers come out -- or even Q1 numbers. If the short-sellers keep piling on at *this* point... a massive short-covering rally becomes likely.

 

[Sudre]

I am thinking that the shorts are making a fortune on the other bets that are all rather low now. That means if they get a margin call of any kind they can simply sell their profitable shorts in NVDA, NFLX and others to cover. Most likely they don't have to sell anything. Their Margin Maintenance is taking care of itself as the other tickers go down. Heck they probably have more funds to short TSLA with.