Responded here in the main investor's thread. If you have a question that would be of interest to a large segment of Tesla investors, you can place in the main investor thread and include @Papafox in your post so that it draws my attention. Cheers!
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Responded here in the main investor's thread. If you have a question that would be of interest to a large segment of Tesla investors, you can place in the main investor thread and include @Papafox in your post so that it draws my attention. Cheers!
Today was quite a positive day for TSLA trading in several ways. Before getting into the chart above, check out the consistent green in the NASDAQ trading with a big dip around 3:30pm. Also notice unusually high percentage of shorting for a strong green day: 55.5%.
Today was the day that yesterday hinted was coming. Yesterday, despite a great quantity of short manipulations and over 60% of FINRA selling tagged to the shorts, TSLA defied this effort and climbed out of a deep MMD to almost make it into the green. Without that deep morning dip, and with much more supporting macros today, TSLA picked up where it left off yesterday, which is climbing. How did the short-selling fit in? You can see lots of peaks along the way as climbs transitioned into dips into climbs again, and so on. By 2:30pm or so, volume had dropped considerably and this was an opportunity for shorts to start working a dip into close with the help of a NASDAQ dip that started a bit later. The NASDAQ recovery into close led to a nice little bump upward in TSLA. Finally, trading in the final minute exceeded 280K shares, suggesting lots of shorts covering their manipulations for the day in that one minute period. Not a bad day!
News today was primarily negative but did not diminish the enthusiasm carried over from the weekend. News included
* A hit piece by Linette Lopez of Business Insider that was in many ways a repeat of her earlier hit piece about waste at Tesla. We're told that for every 3 million battery cells that Panasonic makes, 500K do not make it into the vehicles due to various problems. Let's see if that number is accurate or changes going forward.
* Bullish analyst Colin Rusch says in a Barron's story that Tesla's results will suffer if buyers start delaying Model S and X purchases while waiting for a refresh of the vehicles.
The NASDAQ closed up 0.30% today. The dip at 3:30pm looks enormous because the scale is rather small.
Shorts were tagged with 55.5% of TSLA selling today, a high number on such a green day, suggesting that the gains would have been higher if not for the efforts of the shorts.
Looking at the tech chart, you can see the descending wedge that technical traders have been talking about. Shorts don't want to see TSLA climb above the wedge and suggest establishing a new trend, and so we're seeing the high percentage of selling by shorts, which translates into daily manipulations. Short interest may not be changing at all because the manipulators are covering on a daily basis. Also notice that at one point today's trading reached above the mid-bollinger band. That's where we really want to be so that we get both the upper and lower bollinger bands starting to head upwards.
Conditions:
* Dow up 68 (0.26%)
* NASDAQ up 24 (0.30%)
* TSLA 273.36, up 6.98 (2.62%)
* TSLA volume 7.2M shares
* Oil 64.52
* Percent of TSLA selling tagged to shorts: 55.5%
Welcome to day three of elevated short percentage of selling, with shorts tagged with 57.5% of TSLA selling, up from yesterday. For those of you who follow Option_Sniper on Twitter, he was getting all excited about a possible breakout from the descending wedge pattern. Naturally, the shorts read Option_Sniper and other technical gurus too, and so they had to manufacture an alternative reality for today's trading. We went from retail buyer enthusiasm in pre-market to an immediate mandatory morning dip right after opening. The NASDAQ obliged with an early morning dip of its own, but it trailed the efforts of the shorts to see how far they could push TSLA down in early trading. Notice the distinct icicles in the morning dip. Four minutes after market open 48K shares were sold in one minute to put a little doubt into the minds of bulls, and so the morning went. As with other days this week, the bulls fought back and drove TSLA into the green mid-day and for early afternoon. Alas, volume descended to less than 1500 shares/minute trading and so the shorts took advantage of this situation with some quick selling shortly after 2pm and managed to push TSLA down a couple dollars for the close. Another indicator suggesting considerable manipulations by the shorts is the 96K shares trading hands in the final minute of market trading, a time when shorts like to cover because their buying has very little influence on stock price.
Both the Dow and NASDAQ were close to neutral today with very slight negative closings for each.
Shorts were tagged with 57.5% of TSLA selling today. They've required elevated manipulation levels to keep TSLA from running too much higher into next week's Automation demonstration at 11am on Monday.
Looking at the tech chart, you can see TSLA once again rose above the mid-bollinger band before being knocked down a couple dollars into the close. Volume was really light, just 5.1M shares, which suggests longs are holding their shares and not selling.
Remember that Good Friday is a NASDAQ holiday, and so Thursday will be the end of the trading week for us. Here's a chart regarding open interest in TSLA options that expire this week.
275 is listed as max pain
Conditions:
* Dow down 3 (0.01%)
* NASDAQ down 4 (0.05%)
* TSLA 271.23, down 2.13, (0.78%)
* TSLA volume 5.1M shares
* Oil 63.65
* Percent of TSLA selling tagged to shorts: 57.5%
Thanks Papafox as usual for your great insights. Almost 60% short over the last few days. You'd think there was a conspiracy to drive the SP down or something. PS: I know this as I stayed at a Holiday Inn Express
Today was day four of elevated short percent of TSLA selling with the shorts tagged with nearly 58% of TSLA selling today. A NASDAQ dip around 10:30am was reproduced with TSLA as well, but the afternoon's TSLA trading was very choppy, demonstrating manipulations by the shorts. In particular, while the NASDAQ was stable in the afternoon, TSLA started downhill on multiple occasions before buyers cut the dips short. If you review the dips after 2pm for the past three days you will realize that TSLA gave up substantial percentages of the week's climb, due to downward pressure by short-selling in the low-volume 2pm and later portions of each day. What typically happens after numerous days of afternoon pushdown manipulations is that day traders get wise to the trend and start buying the pushdowns before close. This leads to a rebound at end of day and ultimately leads to an end of the afternoon pushdowns (for a while).
With no trading on Friday and with Tesla's automation demonstration happening during business hours on Monday, we'll likely see Monday afternoon's trading dominated by initial reports from the autonomous driving demo. Any ambiguity in the results will be answered by selling by shorts to create a false impression of how the market views the demo. Nonetheless, I believe that with the new hardware and with unreleased neural net that takes advantage of this power, the opportunity is there to really wow the analysts and investors. Can't wait.
Although the DOW gained more than 4/10ths of a point today, the NASDAQ closed up only 0.02%
Shorts were tagged with 58% of TSLA selling today. Let me remind you that when we see such high percentage of selling by shorts and yet do not see short interest changing, it means that shorts are both selling heavily and covering heavily during the day, which works out to manipulations as the timing of the selling versus the buying is very calculated for maximum effect.The goal is to knock the stock price down, but since the SEC is unwilling to lose closely as these manipulations, it goes unchecked.
Looking at the tech chart, you can see that there's been a serious effort to keep TSLA from closing above the mid bollinger band these past three days. Each day it climbs above the mid-bb, and each day short-seller manipulations are pushing TSLA just below the mid-bb during efforts seen in the final two hours of low-volume trading.
For the week, TSLA closed at 273.26, up 5.56 from last Friday's close of 267.70. Have a great three-day weekend.
Conditions:
* Dow up 110 (0.42%)
* NASDAQ up 2 (0.02%)
* TSLA 273.26, up 2.03 (0.75%)
* TSLA volume 5.9M shares
* Oil 64.07
* Percent of TSLA selling tagged to shorts: 58%
Of course today S3 reported that they saw that short interest is still climbing:
Yeah, it hasn't gone up a lot the last couple days, but it has gone up.
This morning TSLA investors had to deal with double-trouble as Evercore dropped its price target from 330 to 240, and an older Model S in Shanghai was consumed by flames in a widely publicized video. For the Everycore dip, the reasoning that Tesla cars are exhibiting a demand issue is premature. Models S and X will naturally lose some customers to Model 3, but I know of several Model S and X owners who are ready to update their vehicles when the refresh is out, and recent speculation is that the refresh is coming soon. As for Model 3, we'll get a good chance to see demand now that the SR+ vehicle is being shipped overseas, but I strongly suspect there are plenty of buyers for Tesla's newest vehicle. The biggest issue continues to be availability of 2170 cells. At today's Automation Day event, Elon repeated his claim that the availability of cells have been the determinant on how many Model 3s can be made and suggested a bias toward SR+ versions simply to spread the existing cells as far as possible. We definitely need clarity on this issue come the Q1 ER and CC. As for the fire, it's too early to jump to conclusions. Let's see what evidence comes forward in the next week.
The NASDAQ climbed from the red into the green and closed up 0.22%, with a nice bump upwards right before close
I was listening to the Autonomy Investor Day presentation when the stock price started its dip in the final half hour of market trading, and if you look at Tesla news plus the NASDAQ chart, it's apparent that the dip most likely was gamesmanship by the short-sellers. We routinely have seen such dips going into close in recent days, and such is a typical strategy used by short-sellers to gradually push the stock price downward.
My impressions of the Autonomy Investor Day presentation? I was extremely impressed by the engineers working on the hardware and software and believe one of Elon's greatest strengths is hiring and motivating the brightest minds out there. Tesla really does appear to have the A team on board right now, it's use of cameras (supplemented with radar) likely can do just as well if not better than Lidar, and when it comes to the race to deploy tens or hundreds of thousands of autonomous taxis out there, Tesla looks to be in a sizable lead. At one point, one of the engineers showed a video in which cars were depicted as rectangles and their distancing was determined through cameras (multi-camera and multi-frame techniques) and a white circle was used to display direction and distance according to the radar. The white dots rode diligently right on the tail end of each rectangle, suggesting agreement between the two techniques. Very impressive.
Of the analysts in attendance, Trip Chowdhry happened to be one of the most knowledgeable in matters of autonomy, and his comments should not be disregarded. Many of the other analysts were quite over their heads in the technical details of what Tesla has accomplished and they'll likely need a few days to wrap their minds around the significance of the presentation. My biggest disappointment was that we did not see a video demonstrating feature-complete autonomous driving. The investors and analysts appeared impressed, but a video shared with us masses would have been appropriate.
Shorts were tagged with 60% of TSLA trading today, marking 5 days in a row of full-court press by the shorts
Looking at the tech chart, you can see today's difficult trading, which puts TSLA about $5 above the lower bollinger band. I like the fact that the band is still very horizontal, which sould provide a day or two of support if trading gets gnarly, which I think is very possible.
Here's the setup: TSLA is near the bottom of its historic trading range as the ER for the disappointing Q1 period approaches on Wednesday. Shorts are emboldened and are manipulating significantly, as evidenced by being tagged with over 60% of TSLA selling. As @MP3Mike points out above, short interest in TSLA has been climbing slowly in recent days, and we'll probably see more. TSLA is nearing the end of a descending wedge formation and is expected to break either up or down. Shorts are trying to force the issue and engineer a break downwards. Which direction we go likely depends upon the Q1 ER and CC and the type of guidance that Tesla gives. If Elon takes a position that autonomy is Tesla's new future and pivots in that direction rather than telling how the cell count will increase and when TSLA will return to profitability and cash flow positive operations, then I think we 'd see a move downward because analysts are still uncomfortable with the autonomy work ahead at Tesla and with any providers right now. If Tesla can show Q1 financials weren't as bad as expected and predicts a positive Q2, then I think we break upwards. If the autonomous driving continues to improve at an impressive rate, then at some point analysts will start to give value to Tesla for this side of its business and the upside could grow hugely in coming years. I think how much we go in either direction depends upon the content of the guidance in the Q1 ER and CC. Never a dull moment.
Today's Autonomy Investor Day suggests the long-term potential for TSLA looks very promising. We just have to get through the short-term until EVs start delivering consistently positive cash flows or Tesla begins a true autonomous taxi service. One positive development will be getting the Q1 ER out of the way. If guidance for Q2 and beyond is positive, TSLA will be positioned to start recovering lost territory after the ER. For the next couple of days, though, keep those seatbelts snug.
Conditions:
* Dow down 48 (0.18%)
* NASDAQ up 17 (0.22%)
* TSLA 262.75, down 10.51 (3.85%)
* TSLA volume 11.8M shares
* Oil 65.84
* Percent of TSLA selling tagged to shorts: 60%
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I just heard (third-hand) from someone who rode in one of the Teslas during the Autonomy Investor Day. He was very impressed with the new hardware and software combo and even with complex driving on and off freeways, there were no disengagements of the autopilot. I think we're on the road to something very substantial here. For now, it's a matter of getting positive guidance for Q2 and getting beyond the Q1 ER. Hang in there.
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Today was day 6 of elevated short-seller efforts to affect TSLA's stock price. Despite an impressive autonomy day presentation yesterday, bearish analysts apparently maintain their "but everyone else is using Lidar" skepticism, and so it will be a slow process convincing many analysts and investors of the very significant advancement made in the field of autonomy by Tesla. Today was going to be the day for judging this event and naturally the shorts wished to suggest it was a big negative. Thus, we saw a very dramatic dip right after market open which bottomed out at 9:34 when nearly 80K shares were traded in a minute, followed by a rapid climb, followed by several instances of the stock price being pushed down as it approached the red/green line, and then finally followed by a prolonged game of whack the mole that consumed the better part of the day. The theory that shorts were behind the MMD and much of the shenanigans today is supported by the substantial 108K trading in the final minute of market trading, when shorts typically cover at the end of a long day of manipulations.
Important news today came after close when Tesla revealed that it would begin building somewhat refreshed versions of S and X that not only include both battery sizes again, but also substantial range increases due to the permanent magnet motors that will reside in the front of each of these vehicles (project raven). Then this MotorTrend magazine article came out, which detailed a drive from Fremont to Hawthorne in a new long range Model S with advertised 370 mile range. Apparently at the completion of the trip enough range remained in the battery that the driver though he might have been able to make 400 miles before hitting the end of the charge. Although no interior refresh has been done yet, and no substantial battery chemistry change has taken place, the refresh is likely significant enough to tempt buyers to finally jump in and order. One particularly attractive point is free ludicrous upgrade (a $20,000 value) for anyone currently owning a Model S or X. Because of range improvements, two battery sizes once again offered, a better suspension, faster acceleration, and the ludicrous inducement, Elon is going to have an answer tomorrow for concerns about falling S and X sales.
The NASDAQ closed up 1.32% in a strong trading day
The shorts continue to manipulate with great zeal, as demonstrated by today's 60.5% of TSLA selling by shorts figure
Looking at the tech chart, you can see the mandatory morning dip briefly penetrated the lower bollinger band and then quickly recovered.
What to expect from tomorrow's ER and CC? I continue to believe it will be ugly after seeing Luvb2b's spreadsheet and a dip would not be surprising. The good news is that we have to get this ER out of the way before Tesla can recover lost ground. So much of what will determine the attitude towards Tesla after this ER will be how well Elon can reduce concerns about Tesla's core business of manufacturing great EVs. If he tries too hard to pivot toward a new business model based upon autonomous robotaxis, Wall Street will be unhappy with this approach since it maintains great skepticism toward Tesla's autonomous driving future. On the other hand, if Elon and crew can methodically explain how demand is not a problem (and that battery cells were the Q1 Model 3 bottleneck), give some hope regarding the cell constraints at GF1 improving in Q2, and outline how Tesla's core business of producing quality EVs will be improving in terms of profits and cash flow as 2019 progresses, then the damage would be minimized and the healing can begin. What approach Elon takes to charting Tesla's path forward will be vital for determining the stock's trajectory after the ER. Naturally, you can expect the shorts to push hard on Thursday and give the most negative reaction possible to whatever is mentioned in the ER.
Conditions:
* Dow up 145 (0.55%)
* NASDAQ up 106 (1.32%)
* TSLA 263.90, up 1.15 (0.44%)
* TSLA volume 10.9M shares
* Oil 65.86
* Percent of TSLA selling tagged to shorts: 60.5%
I feel my two cents is relevant enough to toss it into the pot today, for your consideration:
I was quite surprised the market moved not a whit after that excellent presentation on Tesla's autonomy lead. Elon could have done a better job breaking down the weakness of Lidar instead of just mocking it, but still. My feeling is that longs have stepped off the field in anticipation of a very weak ER, and they're just waiting for the bad news to come out before they get back in. I think we'll see the effects of this autonomy plan priced in only after the ER.
So, basically what I'm saying is that so much negative expectation has been priced into this report, that I think it would take a real stinker for it to go badly for the SP in the aftermath, despite the best efforts of the little people.
I was quite surprised the market moved not a whit after that excellent presentation on Tesla's autonomy lead. Elon could have done a better job breaking down the weakness of Lidar instead of just mocking it, but still. My feeling is that longs have stepped off the field in anticipation of a very weak ER, and they're just waiting for the bad news to come out before they get back in. I think we'll see the effects of this autonomy plan priced in only after the ER.
So, basically what I'm saying is that so much negative expectation has been priced into this report, that I think it would take a real stinker for it to go badly for the SP in the aftermath, despite the best efforts of the little people.
Today was ER day for Tesla and overall trading was slightly negative in the morning and more negative in the afternoon. Macros were not a big factor as the NASDAQ closed down only 0.23% for the day. Instead, dread about how bad the ER would be led to some investors getting cold feet at the last minute. Short seller percentage of selling reached 60% again today, suggesting significant manipulations.
The release by Tesla of the investor's 1Q 2019 Update letter came more than an hour after market close, which started freaking out some investors and led to the dip around 5:15pm that you see on the chart. The ER results every bit as ugly as luvb2b led us to believe, so we tip our hat at this member for such good work. Here's a tip of the hat to @Stormy as well for an upbeat prediction that has held true in after-hours trading so far. When the letter finally came out, the stock price was bouncing around significantly, going green for moments at a time and then sinking back a bit. This was the first ER for young Tesla CFO Zachary Kirkhorn, and he did well under pressure with his reassuring voice and on the mark comments. Biggest takeaways?
* Even after all the price cuts, Model 3 GM remained at 20%.
* Models S & X are expected to recover significantly toward their normal 100K/year delivery rate
* Only 3% of tradeins for Model 3 are Model S, suggesting that the Osborning of S by M3 is not as high as some think
* April is on track to be the highest delivery month ever for Tesla
* Elon feels it's finally time for Tesla to do a cap raise, which would shoot down the BK hopes of the shorts and would likely make Goldman and Morgan-Stanley analysts behave themselves in the short term
With this good news, the SP stabilized near the market-trading low
Several analysts pressed Elon for information about demand. Elon mostly dodged the questions with broad statements such as goals can be reached without anything extraordinary being required. Nonetheless, deposit funds are lighter than last quarter, which would suggest that while demand is not at present a problem, it certainly could stand to be more robust.
The NASDAQ closed down 0.23% with a big dip in closing minutes
Today was day 7 of extremely elevated percent of TSLA selling by shorts (indicating manipulations). Selling by shorts approached 60%
Looking at the tech chart, you can see downward pressure on the stock in afternoon hours resulted in TSLA crowding the lower bollinger band, but not crossing it. Notice, though, the the lower bb is starting to slope downward, which lessens its value as support.
I attach this longer view of the trading chart for two reasons. First, you can visualize TSLA's descending wedge if you draw a line from the December highs to the early April high and then extend that line. Similarly, draw a line from December's low to the April 25 closing price, extend that line, and you can see the wedge shaping up with lower highs, lower lows, and less distance between highs and lows. The time is nearly here for the wedge to resolve and that's likely why the shorts have been accounting for approx. 60% of TSLA selling for the past 7 sessions.
Do we break up or down from here? Of course the shorts want you to believe that TSLA breaks downward, and they'll likely try an MMD tomorrow morning in an attempt to bring you to their way of thinking. On the other hand, the reason why Tesla didn't fall after the ugly ER today was that the overall message is a positive one. Tesla took a $500 million hit in Q1 on vehicles produced but won't be delivered until Q2. In other words, Tesla was filling the worldwide delivery pipeline in Q1 and hopes to avoid the strong regional delivery scenarios that led to half of Q1 deliveries taking place in the quarter's final 10 days. Margins are fine and will get better. S&X will return to much better delivery numbers. Q1 had lots of red ink, Q2 will have less, and Q3 will be profitable. Do you see the trend? Today's ER is the culmination of two quarters with descending results. We're now told to expect Q2 and Q3 to be improving results, heading back to profitability. The momentum has changed is the message. Further, TSLA is already sitting nearly upon the historical low of the current trading range (roughly 250 to 375). With expectations for improving results, there's no reason for investors to jump out of the stock now at the low of the trading range. Expectations are for TSLA SP to rise this year, it's just a matter of time.
How does Tesla's recovery stay on track? First, the descent has to stop. Shorts will do all within their power to continue the descent, but at some point the effort becomes too expensive. How will we be able to tell when they're giving up or being defeated? Giving up would be signaled by percent of selling by shorts dropping to a more reasonable number of around 30-45%. Being defeated would be illustrated by typical short-seller manipulations that get defeated (MMDs, capping, descents into close, etc.). Investors need to believe there's not enough evidence at present to depart below the historical trading range and that instead we should see recovery as TSLA rises to travel upwards again within the range.
What could go wrong for longs? The biggest negative would be events that signal a demand problem. My guess is that such events are not going to materialize soon enough (if they ever do) for the beginning of the recovery to be squashed. A bad result with the SEC judgement by Judge Nathan could also ring alarm bells, but I don't see this happening.
I do have some dry powder again and will be looking for a good chance to redeploy it tomorrow morning or whenever evidence suggests it is time.
Conditions:
* Dow down 59 (0.22%)
* NASDAQ down 19 (0.23%)
* TSLA 258.66, down 5.24 (1.99%)
* TSLA volume 10.7M shares
* Oil 65.77
* Percent of TSLA selling tagged to shorts: 60%
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The second reason I attached the large version of the tech chart was for you to see the historical trading range. Notice in October how hard it was to get this stock even a smidgen below 250. The effort required to push this stock below the historical range becomes very great. Longs, instead of selling, are more inclined to hold or add when bouncing along the historical range bottom, especially after an earnings report like today's which suggests the downward trend for Tesla has ended and we're heading into quarters with improving results.
Again, the part of the ER that impressed me the most was the apparent bottoming out of Tesla's downhill run from 3Q18 to 4Q18 to 1Q19 and the reasoning of why Tesla was now ready for a 3 quarter run to better performance. Such a change of momentum can be hugely powerful when the stock price is sitting at the bottom of the historical trading range.
Finally, I am thankful that Elon and Zach stayed on target with the meat and potatoes of Tesla's business, the creation of the world's finest EVs. There will be time enough in the future to toot the horn about Tesla's autonomy progress, but this ER should not have been it, and fortunately wasn't. Any effort to divert the analysts away from the numbers and toward a new corporate focus would have diluted the excellent change of momentum that I believe this ER will bring about.
Again, the part of the ER that impressed me the most was the apparent bottoming out of Tesla's downhill run from 3Q18 to 4Q18 to 1Q19 and the reasoning of why Tesla was now ready for a 3 quarter run to better performance. Such a change of momentum can be hugely powerful when the stock price is sitting at the bottom of the historical trading range.
Finally, I am thankful that Elon and Zach stayed on target with the meat and potatoes of Tesla's business, the creation of the world's finest EVs. There will be time enough in the future to toot the horn about Tesla's autonomy progress, but this ER should not have been it, and fortunately wasn't. Any effort to divert the analysts away from the numbers and toward a new corporate focus would have diluted the excellent change of momentum that I believe this ER will bring about.
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ev-enthusiast
Active Member
Papafox, what is your take on SP support levels right now?
Do you think $254.46 from March 25th could provide decent support during the remaining trading days this week?
The 52 week low with $247.77 is not far away either
Currently thinking of adding at these prices.
Thanks!
Do you think $254.46 from March 25th could provide decent support during the remaining trading days this week?
The 52 week low with $247.77 is not far away either
Currently thinking of adding at these prices.
Thanks!
jeewee3000
Active Member
Quick correction, Elon said:
I will also note that we are tracking in April to the largest amount of deliveries from month 1 in the history of the company.
So not the highest deliveries ever, only compared to first month of the quarter.
Thank you for your great analysis!
I would suggest some caution this morning. The message the market is sending so far is that they don't necessarily buy the story that Tesla delivered at the ER (which is that demand is fine and we're back on a path to profitability). I'd rather miss the bottom then jump in too early.
I think much of the skepticism that Wall Street feels toward Tesla will be lessened when Tesla has successfully completed a capital raise. We also have the wild card of the SEC issue to consider since we may hear something today. I'll be curious to see if the shorts do a push down into close once the volume subsides a bit. I'm looking for a bit of stability before deploying further.
I think much of the skepticism that Wall Street feels toward Tesla will be lessened when Tesla has successfully completed a capital raise. We also have the wild card of the SEC issue to consider since we may hear something today. I'll be curious to see if the shorts do a push down into close once the volume subsides a bit. I'm looking for a bit of stability before deploying further.
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I'm being careful but have started limited buying now. The October 2018 dip reached a low of 247.8 and it took about three or four days to resolve the bottom. I'm thinking that investors are referencing this October dip as a support level. Here's the chart from October.
The biggest downside I see is if there's some type of negative catalyst in the next three days, such as unfavorable SEC news, the shorts will use it as an excuse to try pressing down below the October support level. If TSLA goes too far below then investors get worried and it could dip further. Nonetheless, we're at a logical low now and so I'm starting some buying but will likely spread it out, just in case.
The biggest downside I see is if there's some type of negative catalyst in the next three days, such as unfavorable SEC news, the shorts will use it as an excuse to try pressing down below the October support level. If TSLA goes too far below then investors get worried and it could dip further. Nonetheless, we're at a logical low now and so I'm starting some buying but will likely spread it out, just in case.
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Yesterday's benign after-hours trading may have suggested that the wretched TSLA Q1 ER might have already been priced in, but reality intruded today as the short-sellers and Tesla skeptics pulled the stock down to slightly below the past year's previous lows, set in October. The lower bollinger band didn't stand a chance of cushioning such a fall, the 250 price point held for a while, but ultimately it was support from October's low of 247 and change which prevailed this afternoon.
Shorts were tagged with nearly 65% of the selling today, confirming the significant icicle-shaped artifacts on the daily chart. FUD flew freely.
Keep in mind that much of the selling was done by skeptical longs. Adam Jonas of Morgan Stanley said that demand and liquidity are the big concerns of investors right now. Jonas suspects Tesla will improve investor expectations about the company's abilities by delivering improved performance in Q2 and then will seek a cap raise in Q3. He might be right. Unfortunately, Jonas and others have lost faith in Elon's estimates and Jonas has issued his own, lower estimates for deliveries in 2019. Jonas says that investors will discount Tesla's accomplishments in autonomy and elsewhere until the demand and liquidity questions are satisfied. He likely is right. Bottom line is that Tesla needs to deliver in Q2. If it can get close to its forecast of 90K-100K deliveries in the quarter, Tesla can rebuild its image with investors and the stock will climb accordingly.
Looking at the daily chart, you can see the mandatory morning dip right after opening, the defeat of that first MMD and a hint of green as Tesla's strongest supporters started buying, and then the steep dips, partial recoveries, and more steep dips and recoveries pulled the stock down to its lowest point at 2:00pm.
TSLA shorts were tagged with 65% of the selling today, suggesting substantial manipulations
Ihor Dusaniwsky reviewed that short interest has increased to more than 34 million shares, which is a very substantial number. The good news is that once TSLA is performing well and running higher, a portion of these shorts will be jumping ship and accelerating the climb.
Looking at the tech chart, you can see the significantly-sloping lower bb couldn't support TSLA after the 1Q ER and with extreme manipulations by the shorts. Fortunately, last October's low point of 247 and change provided sufficient support to buoy TSLA throughout the afternoon trading.
Where does TSLA go from here? In the next three trading days, much depends upon news and macros. If they remain benign then the low can be established. If not, then shorts will likely take advantage of any perceived weakness and will attempt to use shear muscle to push lower.
Once Tesla does start to recover, much can work in its favor. Short interest is high and departure of shorts will accelerate the climb. Lots of options are trading, and as delta-hedging by market makers sets in during the climb, this too will accelerate the climb. The overall outlook made by Tesla is for improving results, which is a positive. If Tesla enters a prolonged period of profitability in Q3, the current price is a bargain. Ultimately, though, Tesla needs to demonstrate it is on track for delivering over 90K vehicles in Q2. InsideEV numbers for April added to best estimates of cars shipped during the month will be a useful data point.
The Elon Musk we saw in the conference call yesterday was focused and humble. This is precisely the man we need now to work the plan and show the path to recovery in Q2.
What can you do to help Tesla's recovery? If you own a Model 3, consider giving more test drives to friends and co-workers. Nothing sells this car better than time in the driver's seat.
Conditions:
* Dow down 135 (0.51%)
* NASDAQ up 17 (0.21%)
* TSLA 247.63, down 11.03 (4.26%)
* TSLA volume 21.6M shares
* Oil 65.00
* Percent of TSLA selling tagged to shorts:65%
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The big question many are asking is why TSLA had such a deep plunge on Friday. A good number of buyers were willing to support 250 or 247 on Thursday and if these levels had held it would have been the end of the dip. Unfortunately today the shorts managed through significant selling to push TSLA below bottom of the recent trading range (in the mid 240s) and once they accomplished this a whole new level of dread appeared in longs because the historical support level had been breached and there was no clear bottom for the descent. As TSLA passed below 240 the fear in longs and the confidence of shorts were both compounded and the descent steepened. Stop loss triggers were sprung, some longs did panic selling, and some new shorts entered the game. The price 235 held for a while until some seriously-strong short-selling pushed TSLA below 232, but the stock returned to 235 before the end of the day. Thus, 235 is showing itself to be a new possible support level and Friday's trading (with a recovery into close) was more encouraging than Thursday's.
Shorts pushing TSLA below the mid-240s and setting off selling in longs was no coincidence. Shorts knew precisely what plunder awaited them if the historic trading range could be breached, and so they found the resources to do just that. Remember, manipulative selling at 22 million shares volume is a whole lot of money being put forward, but with a predictable continuation of the dip after the mid-240s had been breached, it turned out to be a very profitable (though illegal) victory for the shorts. There's no longer such a clear-cut line in the sand, however, and at some point longs will buy and push the SP back up simply because the value is too great to pass up.
In after-hours trading, TSLA climbed a couple dollars after word arrived that Musk and the SEC had arrived at a compromise of new language for Musk's Tesla-related Tweets. When you consider the size of the dip when the SEC news first came out, a rise of $2 is nothing compared to what is possible, and so this news might be the catalyst that ends the dip. There's no guarantees, however. I'd be suspicious of trading during the first hour of market trading Monday morning as this is the time when over-exuberant buyers tend to jump in. On the other hand, we may quickly see TSLA rise above 240 and never see the 230s again, or we could see a day or slight rise followed by a couple days of descent and a second bottom before the real recovery (judging by the behavior of the October 2018 dip).
The shorts are still on the warpath and the media is giving them their outlet for spreading fear. On the other hand, should the stock price start rising quickly, you would see some shorts getting out, which would add additional push to the rise. You also have a lot of investors who sold their Tesla and are awaiting a sign that the stock is recovering. Once a solid climb begins, they jump in too. Naturally, the shorts will manipulate like hell to try and dampen any rise. It's going to be an interesting week ahead.
Overall, the market fears a demand problem that does not exist, at least not in Q2. Yes, there was weakness in North American demand during Q1, and we have not established the M3's organic demand yet, but S & X sales will surely rebound somewhat with the refresh and the return of standard range versions, and Elon would not have guided for 90,000-100,000 vehicle deliveries in Q2 unless he anticipated enough batteries for 70,000 Model 3s (which is made easier by the introduction of smaller-battery M3s). The likelihood of a stock price recovery after Q2 looks very good, but the job of guessing the bottom is the tough part.
Shorts continued the full court press on TSLA while being tagged with 61% of the selling today.
How will we know when the shorts have conceded that the stock has bounced off the bottom and it's time to cover rather than manipulate? We'll see confirmation after hours by a significant dip in the percent of TSLA selling by shorts graph above. Until then, it will be a game of chicken between investors picking up TSLA shares at amazingly low prices and shorts ratcheting up the fear index.
For the week, TSLA closed at 235.14, down 38.12 from last Thursday's 273.26. Enjoy the weekend. We know how this game is played. There is indeed a bottom to this mischief.
Conditions:
* Dow up 81 (0.31%)
* NASDAQ up 28 (0.34%)
* TSLA 235.14, down 12.49 (5.04%)
* TSLA volume 22.4M shares
* Oil (on 4/27) 63.30
* Percent of selling tagged to TSLA shorts: 61%
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