Is Zhelko essentially mainly talking about "Max-Pain" or something similar?? "Max Pain | Maximum-Pain.com"
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Zhelko Dimic
Careful bull
Max pain is similar, yet different effect created by expiration of options.
I was discussing effect of convertible bonds Tesla sold and associated hedges Tesla bought.
They both have expiration in 2024, so will have an effect for long period of time, as long as price isn't too removed from bond conversion price ($310). As discussed, they are immaterial when price is far enough from $310. But this is starting to look like a tangent, so I'll stop. I initially offered it as an alternative explanation to Papafox to explain increased buying we've seen last few days.
Today was a rather boring day of TSLA trading until about 3:30pm when the broader markets took a nosedive. TSLA dipped, but since it was already down a bit it didn't dip much, compared to the NASDAQ below. On the other hand, we can see continued erosion of the TSLA price in after-hours trading, reflecting the market's concerns about China's talk of retaliatory tariffs if the U.S. raises tariffs after Trump said that "China broke the deal". Tomorrow should be a rocky day on Wall Street but there's a small chance things could turn around quickly if Vice Premier Liu has approval for a more accommodating position. Tomorrow is one of those critical days to keep an eye on the news.
Looking at ships with Teslas aboard bound for China, It looks like Glovis Captain will have landed in Shanghai already, but two more underway would not be in China by Friday. Would the U.S. and China grant exceptions to ships already underway? Who knows. Thus, Q2 deliveries would most probably be significantly affected by a tariff war.
On the more mundane topic of today's trading, I think we saw additional selling by parties that purchased shares this week under the hope of a arbitrage gain. When TSLA was trading at 255 and you could buy shares at 243, the arbitrage was nearly 5% gains. As the China situation got worse, however, I think we've seen some selling today to just avoid the risk of holding the stock should a tariff war begin, and so some of the new shareholders were willing to take very little arbitrage gains.
In other important news today:
* it looks like Tesla's acquisition of Maxwell has gone through. This is hugely important because Tesla's whole battery road map in the future depends upon accommodating that new technology.
* Tesla's oversubscribed cap raise offering is now complete with some $2.7 billion raised. Such a strong response to the offering sinks the bear case that Tesla can't raise money
* Trailer hitches will soon be offered on Model 3. This is huge because a trailer is extremely popular in Europe and some buyers will not consider the car unless it can pull a trailer.
The NASDAQ spent most of the day in the green but did a swan dive in the closing half hour and was down 0.26%.
Percent of selling by TSLA shorts continued its dip today, down to 44%
Looking at the tech chart, you can see TSLA closing with a very small quantity of arbitrage gains for those who bought shares at 243ish. Given the concerns about the possible tariff wars, a close at this level today made perfect sense. If a white knight ever existed during the cap raise days, now is the logical time for that white knight to bow out completely and return TSLA trading to the marketplace. A mere 6.2M shares traded today reinforces that view.
Finally, here's a tip of the hat to Zhelko for offering some useful perspectives on how different entities might be inspired to trade as a result of the 2 offerings in the recent cap raise.
Conditions:
* Dow up 2 (0.01%)
* NASDAQ down 20 (0.26%)
* TSLA 244.84, down 2.22 (0.90%)
* TSLA volume 6.2M shares
* Oil 61.54
* Percent of TSLA selling tagged to shorts: 44%
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Yeah, I jumped the gun a bit on the Maxwell news after reading an interpretation from a third party. I'll be keeping an eye on the news and will post a source next time.
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To no one's surprise, the continued negative news on a possible tariff war sent both TSLA and the broader markets lower today, and there was definite correlation between TSLA's trading and NASDAQ trading. A big drop in the morning and then a partial recovery as the day progresses is also becoming common with such news. TSLA closing down a little over 1% today was a bit better than most tech stocks I follow. We once again saw considerable trading in the final minute of market trading, with 204K shares trading hands during that 60 second period.
With a Chinese delegation in Washington now, the longer we hear nothing, the more chance there is of a deal, so at the moment no news is good news.
In other news, the well-respected auto magazine in UK, Auto Express, did a test drive of my version of the M3 (LR AWD) and published a very positive review.
Although the NASDAQ was deeply down by 10am, it closed only 0.41% down for the day
Percent of TSLA selling by shorts was lower for the 4th day in a row, at 42.5%. These declining numbers suggest lower efforts by shorts to manipulate TSLA.
We know that shares are shorted both because speculators are gambling on TSLA going down further and also because of various hedging techniques.
Looking at Dusaniwsky's chart from yesterday, you can see net short covering over the past few days, which is likely smart shorts covering because Tesla has plenty of money in the bank now and is near historical lows for the recent trading ranges, and finally because good news on the China negotiations could be the catalyst needed for a climb to begin.
Looking at the tech chart, I return to a view of both the October and the current dips. Where Tesla goes from here depends not on technicals but on news, so please don't get carried away by looking at this chart. Nonetheless, if the news turns out to be positive on the China negotiations, a comparison of the two bottoms suggests it would be time for TSLA to start climbing again. What we see with both October and May bottoms is a double bottom (separated by a few days), then a climb of about $20, a retreat, and then the day before the big run upwards in October we saw a wide trading range for the day but the stock closing very close to its starting point and toward the high side of the daily trading, such as what we saw today.
If China news is negative, we'll likely see more red, but if China news is positive, maybe even a delay of new sanctions is enough, then I think we climb away from this bottom. For this reason, I am watching the news carefully and will do so on Friday as well, ready to trade quickly on good news.
Conditions:
* Dow down 139 (0.54%)
* NASDAQ down 33 (0.41%)
* TSLA 241.98, down 2.86 (1.17%)
* TSLA volume 6.6M shares
* Oil 62.27%
* Percent of TSLA selling tagged to shorts: 42.5%
A friend with some experience as a Proctor and Gamble executive,who often negotiated with the Chinese over purchase and sale of factories, frequently lamented it was difficult to determine who had ultimate authority to make a decision. In some countries of Asia it is often the case there is a great deal of attention paid to consensus building, compared to the cowboy motif of Americans. It is possibly a very good sign that the Chinese negotiating team is large. They may be able to achieve consensus on the spot. If a correct surmise, they may prove surprisingly nimble. Not an advice.
Given the dearth of business experience and outlying perspectives of Trump's "talent pool," it is likely any singular one of the Chinese team will dance around the dunces. Contrarian alert: there are at least two geniuses surrounding Trump, Stephen Miller on immigration and Michael Mulvaney on almost everything else. Peter Navaro on tariffs, on the other hand.... (Source: Krugman.) Not as bad as Trump's recently failed appointment to the Fed, but wrong-headed.
Given the dearth of business experience and outlying perspectives of Trump's "talent pool," it is likely any singular one of the Chinese team will dance around the dunces. Contrarian alert: there are at least two geniuses surrounding Trump, Stephen Miller on immigration and Michael Mulvaney on almost everything else. Peter Navaro on tariffs, on the other hand.... (Source: Krugman.) Not as bad as Trump's recently failed appointment to the Fed, but wrong-headed.
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Although the trade talks are done for the day and no agreement, the Dow is positive now and NASDAQ about to turn positive as administration and China both speak of constructive talks in this CNBC story. .I've done some limited rebuying of leaps today with the understanding that if I wait for confirmation of a trade deal the options will be much more expensive and so I take a calculated risk here. I'm also thinking China deliveries won't be too horrible in Q2 with 3 ships in port or on the way, and so the downside may not be as bad as it seems if no trade deal is reached.
On Friday morning the broader markets were depressed as no deal came forward in the U.S.-China trade negotiations. Nonetheless, the broader markets turned positive by end of day, reflecting continued effort by both countries to reach an agreement and recognition that the tariffs placed on Chinese goods would not truly be realized for at least another week or two, giving time for an agreement before imposition of retaliatory tariffs. That time should allow Tesla's two ships en route to reach harbor in time.
While TSLA traded somewhat below the NASDAQ on Friday, so did most tech stocks.
News on Friday included:
* S&P still giving TSLA low credit scores
* This reddit post includes information from a Panasonic earnings report that gives important information about Panasonic's expectations for output at Tesla's gigafactory. In a nutshell, the 3 high-speed lines are not up yet, some work on jigs is necessary and greater output should be realized, starting in June. With changes, Panasonic should be able to use more local labor and eliminate losses. Overall, Panasonic is working to realize the full 35GWh of output from the factory this year (up from 24GWh).
* A TMC member posted here an unsubstantiated report that a friend has knowledge of the Maxwell deal with Tesla being completed. Let's get this deal officially done so that Papafox can salvage some of his credibility.
The NASDAQ did a nasty dip Friday morning but managed to close up 0.08% for the day. `Notice that even TSLA's gyrations at end of day were actually influenced by the NASDAQ's movements, though I suspect the shorts or hedge funds protecting 240 calls expiring may have given TSLA a bit extra push down in the final half hour of trading.
In case you're interested, my personal mid-term trading strategy goes something like this. TSLA should recover a fair amount of lost value should Q2 deliveries fall within or come substantially close to predicted 90K-100K vehicles. Wall Street is skeptical regarding Tesla demand right now, and a high delivery quarter would help restore confidence after Q1. Monitoring number of ships sent to China and Europe is important, as is InsideEV estimates of U.S. deliveries. The biggest threat at the moment would be a tariff war that substantially decreases China deliveries, but since there are already 3 ships that will get to China prior to imposition of any retaliatory tariffs, the threat is somewhat diminished for Q2 now. Should an agreement between China and the U.S. be announced regarding the talks, you can expect the broader markets and TSLA to very quickly rally. For this reason I increased my TSLA position slightly on Friday, just in case of an agreement in the near future. Since my leaps are J21 in the money calls, I think we're close enough to the bottom right now for them to pay off well at some point. The Panasonic earnings report news is positive and increases my confidence that we'll see an end to the cell shortages as the year progresses. OTOH, I'm willing to trim my TSLA position if evidence suggests issues in delivering enough Teslas in Q2 to satisfy the market.
Percent of TSLA selling by shorts continues its downward path, suggesting that the big manipulation effort is over for now. TSLA shorts were tagged with 41.5% of selling on Friday.
Looking at the tech chart, and looking at the rather low volume of TSLA trading (7M shares), you can see there's no big fear right now with this stock at week's end. Instead it was moving downward with the broader markets on concerns about tariff wars.
For the week, TSLA closed at 239.52, down 4.68 from last Friday's 244.10. Keep in mind that this week's dip was primarily macro-related. Have a good weekend.
Conditions:
* Dow up 114 (0.44%)
* NASDAQ up 6 (0.08%)
* TSLA 239.52, down 2.46 (1.02%)
* TSLA volume 7.0M shares
* Oil 61.66 (on May 11)
* Percent of TSLA selling tagged to shorts: 41.5%
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The market had a conniption today about the worsening tariff war, and for a change I couldn't blame it. The POTUS's comment over the weekend that U.S. negotiations had been "beating the pants" off the Chinese suggested a real lack of understand how to negotiate with leaders of a powerful Asian country and allow them to preserve face while you are simultaneously making progress. Consequently, my hopes for a quick agreement have been dashed. An agreement will eventually happen, but when is now unclear.
Overall, most tech-like stocks I follow were down over 5% and so what we see with Tesla today was primarily a reaction to macros.
The NASDAQ closed down 3.41% today
Comparing Tesla's trading to the NASDAQ's you can clearly see short-manipulation icicles at market open and a little after 10am. Nearly 350K shares traded hands in the final minute of market trading as (I suspect) daily short manipulators covered their tracks for the day. A jump upwards in the short percentage of selling stats below adds credence to this theory.
Shorts were tagged with 45% of TSLA selling today, an expected jump upwards from end of last week.
Meanwhile, TSLA is at lows it hasn't seen in a long time, nearly 30% of shares shorted, and Q2 still looking like it's going to be a big improvement over Q1.
Looking at the tech chart, the dip today touched the lower bb and then bounced. With the very steep slope to the lower bb, I wouldn't count on much support from it going forward, however. I know we've all heard some low numbers of the next support point, but with relatively light volume (10m) today I think longs for the most part are going to just hang onto shares and weather the storm. Let's hope the broader markets get done with their conniption within another day or two.
Overall, Tesla still appears on track to disrupt several industries. Wall Street will likely need some time to recover from Tesla's Q1 results, but by stringing together multiple cash-flow-positive quarters, TSLA will in time manage to win over skeptics. The high percentage of shares held by shorts coupled with the low stock price and Tesla's progress in multiple areas does leave room for some upward volatility. Let's hope the trade war with China can be curtailed sooner rather than later and allow macros to switch from substantial headwinds to strong tailwinds.
Conditions:
* Dow down 617 (2.38%)
* NASDAQ down 270 (3.41%)
* TSLA 227.01, down 12.51 (5.22%)
* TSLA volume 10.6M shares
* Oil 61.17
* Percent of TSLA selling tagged to shorts: 45%
Here are a few more news stories for those of you lacking the time to cover the whole TMC Investor's thread
* Posts by members regarding whether automobiles are included in China's new tariffs suggest they are not. If I get a link to a definitive article by a journalist I will post
* Price of M3 SR+ was raised $400.
* Trump says he'll meet with China's Xi amid intensifying trade fight
* Trump: We’ll know in three to four weeks if China trade talks are successful
* Tesla is notifying Canadian potential customers of 5K federal incentive plus 5K BC incentive or 8K incentive in another province (Quebec?)
* Posts by members regarding whether automobiles are included in China's new tariffs suggest they are not. If I get a link to a definitive article by a journalist I will post
* Price of M3 SR+ was raised $400.
* Trump says he'll meet with China's Xi amid intensifying trade fight
* Trump: We’ll know in three to four weeks if China trade talks are successful
* Tesla is notifying Canadian potential customers of 5K federal incentive plus 5K BC incentive or 8K incentive in another province (Quebec?)
Mars ☰mperor
Member
Actually price of all Model 3 variants went up by $400.
smorgasbord
Active Member
Of course, just what some of skeptical about is Tesla's ability to be cash flow positive on a continual basis. Some thinking is probably that the profitable last half of last year was a one-time event supported by a high-spec / high margin product mix, local (US) deliveries, and demand goosed by upcoming expirations of tax credits. Now that the less profitable SR+ is available, deliveries are complicated to other countries, and demand in the US may be having saturation/price/tax credit issues it'll be harder for Tesla to have positive cash flow.
These things won't get fixed quickly. Musk already warned about Q2, didn't he?
My recollection is that Musk said that Q2 would not be profitable but would be cash flow positive. More importantly, though, will be offering proof that demand is stabilizing at a high enough level to keep the factory humming and allow the costs to come down. What should be fixed quickly is a sizable improvement in Q2 financials vs Q1. So much of Q1's cash flow issues had to do with one-time items. They won't be there in Q2 and we'll see better delivery numbers. OTOH, Issues with getting the new versions of S and X out the door are going to affect the Q2 numbers. I suspect Tesla plans to offer the promised faster supercharging on the refreshed S and X, and we're likely seeing a delay there as the right components are put together. Keep an eye on S and X.
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Yesterday after the big market sell offs Trump made some remarks that gave the market just a little more hope that a China deal could happen, and so the broader markets enjoyed a green day. TSLA climbed about double the NASDAQ's % climb, which was quite a positive development.
Upon seeing a green day, my hope was that TSLA would close above 231 and then reestablish this price as support. I suspect the shorts would have done whatever possible to close below 231 and would have enhanced the 3pm swan dive if the market wasn't so ready to resume buying today. I'm quite happy with 232ish close.
The shorts backed off a bit from yesterday's percent of selling (likely because manipulating on an up day is often a money-loser for them), but their telltale marks still exist. Notice how exaggerated the dip just prior to 10am was with TSLA, compared to the NASDAQ. Most afternoons TSLA will start a swan dive and test investors for any fear. Today's swan dive came a little before 3pm but looks like it was more a response to macros than a creation of the shorts. Fortunately, investors bought the dive and TSLA ran higher.
Many eyes are on the Maxwell acquisition because it could be finalized in the next couple of days (I believe May 15 is end of the Tesla offer). Over at Seeking Alpha, Randy Carlson wrote this excellent article to give you a better idea of how the Maxwell dry electrode process could significantly improve both the cost of making Tesla's future battery cells and also improve the performance of those cells. The Maxwell deal is important because I believe Tesla's Gigafactory plans depend upon this new technology and it would be in Tesla's best interest to complete the acquisition before telling all how essential this new technology will be and then adding details for Tesla's growth of battery capacity over the next year. Can't wait.
The NASDAQ gained 1.14% today
TSLA shorts were tagged with 42% of the stock's selling today
Closing above 231 on a low volume day is a good start to redefining the bottom. Fingers crossed.
Conditions:
* Dow up 207 (0.82%)
* NASDAQ up 87 (1.14%)
* TSLA 232.31, up 5.30 (2.33%)
* TSLA volume 7.3M shares
* Oil 61.23
* Percent of TSLA selling tagged to shorts: 42%
Today we saw a spirited mandatory morning dip which faded into a day-long game of whack the mole as shorty managed to put forward just enough effort to keep TSLA out of the green. Macros were up but perceptions of news hurt TSLA today. Let's take a look at the NASDAQ then jump into the news.
The good news is that shorts who participated in the mandatory morning dip likely lost money on their efforts and I suspect some of their covering for the day's mischief was during the final minute of market trading when 119K shares traded hands.
The NASDAQ closed up 1.13% after starting in the red.
Regarding refreshed Models S and X, I have good news and bad news. First the bad news: the shorts are absolutely correct, the refresh S and X vehicles are just sitting in parking lots, gathering dust. Now the good news: the reason is not demand but some type of homologation issue with the U.S. government, which is preventing the cars from being sold until a new, approved sticker is approved with the spec of the updated vehicle. @mongo also suggests that there's a VIN number issue that needs to be resolved because of the new motor in upgraded S and X vehicles. Here's a video of the homologation discussion. In theory, the problem can be corrected in a few days and then U.S. deliveries can commence. Let's see what happens and then assess the situation, but this delay beyond the mid-point of the quarter for refresh X and S deliveries in the U.S. will likely impact Q2 delivery numbers in a meaningful way. I'm now looking more towards Q3 for a serious unwinding of TSLA's adventure below 300.
Good news regarding deliveries is robust demand in Canada for Model 3 as Canadians take advantage of the new subsidies, both federal and provincial.
Other news:
* CNBC: Trump administration to delay tariffs on vehicles up to 6 months. Remember months ago when there was talk of too many vehicles being made outside the U.S. being a threat to U.S. security (not enough manufacturing in the country)? With the present tariff war with China, the POTUS has decided to shelf a fight with Japan and Europe regarding too many vehicles imported into the U.S. and tariffs being used as the way to cut down on imports. The biggest problem for Tesla would be tariff retaliation from these countries against U.S. vehicles. Such a tariff war would be more significant to Tesla right now than the China tariff issues. At least for the near term, a vehicle tariff war with the rest of the world is temporarily off the table.
* Tesla has decided to put out an over-the-air software update for S and X which will help vehicles with thermal management. This is a response to the recent Model S fire in Asia. Apparently, this move is a safeguard move, rather than something that has been defined as absolutely necessary. I'd sure rather see an over the air update than a recall! What other car company can do this?
* Evercore drops Tesla price target for second time in month (from 240 to 200)
* Reuters reports that Tesla's GF2 in Buffalo is primarily exporting its solar cells rather than incorporating them in Tesla products
I think the last two news stories contributed to the MMD this morning, with a little push from shorty. Let's see with the closing of Tesla's offer for Maxwell if we see official approval of the deal tomorrow. Once the deal is official, Elon will be free to speak about how significant the acquisition will be for Tesla and perhaps we'll soon learn more about GF1 plans for increasing cell and battery production and for the beginning of semi and Model Y production once that additional cell and battery production is lined up. There's significant growth ahead for Tesla, and the Maxwell deal is an essential step to realizing that growth.
Conditions:
* Dow up 116 (0.45%)
* NASDAQ up 88 (1.13%)
* TSLA 231.95, down 0.36 (0.15%)
* TSLA volume 7.3M shares
* Oil 62.45
* Percent of TSLA selling tagged to shorts: 40.5%
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If I may be so bold as to comment here, I strongly suspect that most of the stock price drop since December has been T Rowe Price unloading. It's a effect of similar size to when Tencent was accumulating or when the Saudis were accumulating, just by total share count. When this is done we should see different stock price behavior.
Certainly that's a big part, along with Elon's announcement that Q1 wouldn't be profitable.. Take all of that T. Rowe Price selling, add the selling from the shorts that has brought short interest so high, then magnify the movement with delta-hedging due to market makers who sold tons of options working to stay neutral. The nice thing is that when TSLA turns around, the opposite forces start to kick in as the smarter shorts start to cover, delta hedging kicks in (the right direction this time), and big investors realize it's finally time to load up on Tesla once again.
Looking at Dusaniwsky's latest chart, we're finally seeing a day or two of decreasing short interest, suggesting that a small number of shorts have recently taken profits and bowed out.
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Today was a combination of good and bad news, but of course the bad news is what gets all the press and it put downward pressure on TSLA today. Although the percent of TSLA selling by shorts today was only moderate, indications of manipulations suggests a fairly robust effort put forward today. Perhaps shorts are picking up some of their shares from non-FINRA-monitored locations. Notice the severe MMD from 10am to 10:30am. Notice the exaggeration of the dip in final half hour compared to the NASDAQ. Also, we saw yet another final minute of market trading with over 190K shares traded in the final minute, suggesting some shorts covering after their daily manipulations.
The NASDAQ gained 0.97% today
In the news let's begin with the bad:
* The NTSB determined that a Model 3 driver engaged autopilot 10 seconds prior to hitting a semi-truck broadside back in March and being killed. Interestingly, the driver had not used autopilot during the previous miles on the trip.
Now the good news:
* The Maxwell acquisition is now complete
* If you browse the Model S and X forums you will see that a few California residents received their raven-refresh Model S and Xs starting yesterday. These are people who ordered between April 23 and May 1 Expect serious S and X deliveries to now begin.
Now some more bad news ; (
* Elon emailed his employees about a hard core cost-cutting program starting with Zach going over purchase requests. Unfortunately, Elon used some drama in the letter, stating that if the Q1 cash burn was continued for 10 months Tesla would use up its cash. Nobody, especially Elon, expects that type of cash burn to be repeated, particularly over 10 months, but nonetheless the email was of course picked up by the media and Electrek published a story after hours. Here's an Electrek version of the story. Reuters is also running with it. Expect the story to negatively affect trading tomorrow, primarily because of the negative spin placed on the story by Elon suggesting cost cutting is necessary and because of the drama surrounding the nonsensical cash burn statement.
Shorts were tagged with 41% of TSLA selling today, but the amount of apparent manipulations today suggests a higher level of mischief.
Looking at the tech chart, you can see that TSLA has spent 4 days trading in a relatively level fashion which would help to define a bottom. Unfortunately, an overreaction to Elon's email to employees might tomorrow compromise that hard work to define a bottom. We live in interesting times.
Conditions:
* Dow up 215 (0.84%)
* NASDAQ up 76 (0.97%)
* TSLA 228.33, down 3.62 (1.56%)
* TSLA volume 7.5M shares
* Oil 63.36
* Percent of TSLA selling tagged to shorts: 41%
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