Papafox's Daily TSLA Trading Charts

[Papafox]

Today was a really, really bad day for the manipulators. After an anemic and short-lived mandatory morning dip, TSLA climbed above 300 and into the green. Seeing no whack-the-mole pushdown from you-know-who, buyers realized the coast was clear and bid TSLA up more than $28 today. The benefit of knowing TSLA's behaviors intimately is that you can spot clues not only from what happens but also from what doesn't happen but should have if the hedge funds still controlled the narrative. Nonetheless, their algobots churned on through the day, racking up a 57% selling by shorts number on a day with no relief for the shorts. If the manipulators were hedge funds that didn't delta-hedge, their combined losses from trying to manipulate on a steamroller rally day such as today plus losses on expiring calls sold would be mind boggling. Karma.

Whereas yesterday's 29M volume contained a good amount of delta-hedging by market makers, today's buyers would obviously contain a higher percentage of short covering than Thursday because the continually rising stock price when it is already within a painfully high price range, would undoubtedly have led to more margin calls and more panic covering. In the afternoon, the morning's rise led to more delta-hedging, which led to more covering, which led to ... (you get the picture).

At some point this leg of the rally will have run its course and there will be a profit-taking correction, but who is to say exactly what that turning point will be? It could be Monday, it could be later. In theory, the covering of shorts, the entry of more momentum traders, more margin calls, and more upward pressure because of delta-hedging could actually accelerate. Higher prices beget more margin calls and panic covering, particularly if the climb rate is high. Remember, too, this is just leg one of the rally. Leg 2 comes with a good Q4 ER (or anticipation of it) and Leg 3 comes with S&P 500 inclusion in 2020 (or anticipation of it). Please stick around, I think you're going to enjoy the show.

The NASDAQ gained 0.70% on word that the U.S. and China are making progress with some details of the trade agreement

TSLA shorts were tagged with a mind-boggling 57% of selling on a day with more than 29 million shares sold and a stock price that steadily rose throughout the day to the tune of some $28.

So, what does a tech chart look like two days after a really good ER? Check it out above. The green upper bollinger band, acting as a faithful puppy dog, has caught up with yesterday's close and should shortly catch today's close. On Thursday the manipulators kept the ending price close to the opening price, and it shows with the candle being mostly wick. Today, however, we have what looks to me to be one of the most gorgeous candles I've ever seen, very tall with a small wick on top. The volume today nearly reached yesterday's volume.

Today's SP gains should have unwound the profits of the short-sellers for 2019. By year end we should see a perfect record of shorts being taken to the cleaners every year they participated in shorting TSLA.

For the week, TSLA closed at 328.13, up 71.18 from last Friday's 256.95. Not bad. Have a great weekend.

Conditions:
* Dow up 153 (0.57%)
* NASDAQ up 57 (0.70%)
* TSLA 328.13, up 28.45 (9.49%)
* TSLA volume 29.4M shares
* Oil 56.66
* Percent of TSLA selling tagged to shorts: 57%

 

[Speedr117]

@Papafox, not an expert on margin calls, but can they carry over the weekend (i.e. is there is a time delay before they need to cover)? As always, thanks!

 

[Curt Renz]

@Papafox, not an expert on margin calls, but can they carry over the weekend (i.e. is there is a time delay before they need to cover)? As always, thanks!

During the weekend the stock market is closed. There is no one from whom to buy shares through an exchange. So weekend margin called short sellers have to wait until Monday to cover.

 

[ggr]

During the weekend the stock market is closed. There is no one from whom to buy shares through an exchange. So weekend margin called short sellers have to wait until Monday to cover.

Also it's up to the broker when they will take action on a margin call. My own experience is that ETrade gives you a day to fix it yourself, but will step in and start liquidating stuff if there is still a house call* on the second trading day.

So basically the shorts woke up to a nightmare on Thursday, but might have held on to see if things got better. On Friday some of them had to cover, at least some of their holdings, but they probably waited and hoped... and by close some would have been still or again under water. So Monday is when the brokerages will start taking a chainsaw to those accounts. I hope and won't be surprised if some large buys-to-cover hit the market early on Monday.

*a house call is when the margin lending limit is broken. It is also possible to get margin calls that have to be satisfied because you hit some federal regulatory limit, like being a pattern day trader and falling below that cash maintenance requirement (I don't know much about what happens then).

 

[Right_Said_Fred]

@Papafox Is it usual for shorters to use margin? Simply buying puts would not involve a margin, but selling calls could. Any information on the percentage of them using margin?

 

[STARR X]

Buy some more?

 

[MP3Mike]

Is it usual for shorters to use margin? Simply buying puts would not involve a margin, but selling calls could. Any information on the percentage of them using margin?

Technically I don't think buying puts counts as being short. (It isn't included in the S3/NASDAQ short interest reporting.)

 

[Curt Renz]

@Papafox Is it usual for shorters to use margin? Simply buying puts would not involve a margin, but selling calls could. Any information on the percentage of them using margin?

If shares of a stock are not bought through margin, the potential loss is limited to the amount of the investment, i.e. the price has fallen to zero. However, the potential loss from a short position is unlimited, since the price can move upward to any imaginable amount.

Short sellers must trade though a margin account. Proceeds from a short sale are segregated, while the short position remains in place, and are unavailable for other purposes. However, short sellers may use other money in their account to buy stocks, bonds or options. Some of that could be on margin. It is not unusual for losses in a short position to cause a failure to meet margin requirements, thus resulting in a margin call.

 

[Papafox]

@Papafox Is it usual for shorters to use margin? Simply buying puts would not involve a margin, but selling calls could. Any information on the percentage of them using margin?

In the case of Mark Spiegel, I remember during one of the recent runups to 370ish that he closed his short positions when being margin called and shifted to buying way out of the money puts. I'm going to place an example of how margin calls can get out of hand in the main investing forum, so please take a look there. The main advantage to holding a position as a short vs. buying puts is that the interest rate is pretty low for maintaining the short position, but the time decay on purchased puts can be quite a bit more expensive.

 

[Stormy]

Ihor just posted a Friday-ending short interest of ~32m shares. That seems really high to me, given the price action. I expected shorts are going to have to cover down to ~24m once we got above $300, but if both myself and Ihor are right, then there's plenty more rocket fuel left onboard. More so than I dare to hope, actually.

Whats your take @Papafox ? I know you see some of Ihors posts as being geared to the benefit of his clients, but stating a higher-than-actual short interest seems like it would be deteimental to them right now. Do you think his data is just lagging? Or does Fridays $30 jump actually constitute only ~2m shares covered?

 

[madodel]

Ihor just posted a Friday-ending short interest of ~32m shares. That seems really high to me, given the price action. I expected shorts are going to have to cover down to ~24m once we got above $300, but if both myself and Ihor are right, then there's plenty more rocket fuel left onboard. More so than I dare to hope, actually.

Whats your take @Papafox ? I know you see some of Ihors posts as being geared to the benefit of his clients, but stating a higher-than-actual short interest seems like it would be deteimental to them right now. Do you think his data is just lagging? Or does Fridays $30 jump actually constitute only ~2m shares covered?

Could this be evidence that a lot of these remaining shorts are funded by/defending oil interests or just insanely committed to their delusions? Twitter is certainly full of examples of shorts insisting that Q3 ER was all fraud and some insisting the Q10 would reveal this and TSLA will resume it's trip to bankwuptcy.

 

[TechOps]

Also it's up to the broker when they will take action on a margin call. My own experience is that ETrade gives you a day to fix it yourself, but will step in and start liquidating stuff if there is still a house call* on the second trading day.

So basically the shorts woke up to a nightmare on Thursday, but might have held on to see if things got better. On Friday some of them had to cover, at least some of their holdings, but they probably waited and hoped... and by close some would have been still or again under water. So Monday is when the brokerages will start taking a chainsaw to those accounts. I hope and won't be surprised if some large buys-to-cover hit the market early on Monday.

*a house call is when the margin lending limit is broken. It is also possible to get margin calls that have to be satisfied because you hit some federal regulatory limit, like being a pattern day trader and falling below that cash maintenance requirement (I don't know much about what happens then).

The stock is slightly up this morning, so I expect a lot of shorts are either paying out $$ to cover their position, or seeing their accounts dismantled today..

 

[BrooklynEV]

Papafox: Just wanted to thank you for these daily $tsla trading charts, analysis and commentary. I very much appreciate and look forward to reading them. I appreciate your time & effort plus you are very consistent. Thanks again.

 

[Papafox]

The often-reliable Monday morning buying spree gave TSLA a good start today with macros highly positive and an opening minute of trading that saw over half a million shares exchange hands in one minute. Volume for the day was down about a third to 18.9M shares, which is still a very heavy amount of trading and something that makes manipulations more difficult. Nonetheless, we saw some hugely high-volume selling sprees that were not linked to either macro movement nor news, and so I think the manipulations continue. Surprisingly, the percentage of selling tagged to shorts fell sharply today to 38.5%, yet the steep selloffs plus two hours of whack-the-mole in the afternoon suggests otherwise, and I am more inclined to believe a shift toward non-FINRA sources of shares to short than to believe TSLA was trading without significant manipulations today.

Bullish indications include a double-bottom today, which suggests the market was not ready for a pushdown to 322 because too many buyers were willing to pick up at that price. I would also say that a day of consolidation today is an overall positive because each day that TSLA trades in the high 320s is one more day in which investors acclimatize to this sudden ascent in altitude. Additionally, if Dusaniwsky is somewhat correct, nearly 33 million shares are still short and remain ready to add additional upward price pressure at some future date.

Overall, it is hard to predict what will happen tomorrow because you have the momentum of the hugely positive Q3 ER pushing upward while you have the prospects of the typical profit-taking posing a downward possibility. Interestingly, it looks as though there was plenty of profit-taking today but there also existed sufficient buying pressure to keep TSLA basically neutral for the day. The quicker you clear out the traders and replace them with investors who bought in at these current prices, the sooner your stock will be prepared to move higher again.

One event likely coming this week will be the release of Tesla's 10Q. With demand more solid than at any time in Tesla's history, with improving automotive and energy margins yielding profits (and likely to continue improving in Q4), the shorts have very little to fall back upon than fraud, and so that's where they're hanging their hat these days. Expect some type of accusations to erupt once the 10Q is released, then expect calmer minds to call it a nothing-burger, and then expect to see some more short covering as this last leg to stand on vanishes.

If you are trying to anticipate a dip and playing for that possibility with your trading shares, I recommend watching this stock like a hawk because we truly are in a volatile situation that I believe no one is able to call with certainty in the short run. In the medium term, Tesla's 4Q performance looks really solid so far, which says the stock goes up.

Today the NASDAQ gained 1.01% in a big gap up on opening and then slow climb

I take Dusaniwsky's charts with a grain of salt these days, due to the substantial inaccuracies we saw recently. Nonetheless, his statement that shorts are down over $400 million for the year is welcome. My feeling is that shorts are waiting for this stock to peak and then take the profit-taking dip before they choose to cover. If the stock starts heading up without a dip, though, covering will occur, and the dynamics of TSLA compared to today changes with the addition of short covering (if you believe the chart with minimal short covering so far). Unfortunately for the shorts, investors who did some selling prior to the ER are looking for a re-entry point, and the shorts will be competing with the re-entering longs (as well as those who played the dip) and the rise could be quick.

We finally saw a big drop-off in percent of selling by shorts (to 38.5%). Now we have to decide if it is a real change of sentiment and tactics or a head fake. The daily chart suggests head fake.

Conditions:
* Dow up 133 (0.49%)
* NASDAQ up 83 (1.01%)
* TSLA 327.71, down 0.42 (0.13%)
* TSLA volume 18.9M shares
* Oil 55.71
* Percent of TSLA selling tagged to shorts: 38.5%

 

[Papafox]

Today we saw profit-taking that was enhanced by a down macro day and FUD related to Tesla's release of the 10Q. Volume decreased substantially again, from about 18M shares on Monday to 12.4M shares traded today, which is in line with a return to normality and an acceptance that TSLA is once again a stock trading above 300.

For FUD we had Reuters somehow feel the need to kick a dead horse again with a headline Tesla filing shows U.S. sales tumbed 39% in third quarter. Barrons didn't want to be outdone and produced a story Why did Tesla report a surprise profit? We know part of the story.
In that story, the reporter concentrates on Tesla's reduction in funds withheld for Model 3 warranty claims. A scandal and example of fwaud? Ah, no, as @KarenRei so ably pointed out in this TMC story today, complete with chart. Quite simply put, Model 3's defects have continued to decline as production lines improve with time. If Cathie Wood was here, she would say, "It's a clear example of Wright's Law!"

Thus, the 10Q produced no salvation for the shorts, but the combination of down macros and a consolidation period underway after the big climb gave incentive for some profit taking today. The opportunity for a substantial FUD effort will wane in the near term, I suspect, and once TSLA starts climbing again as investors look ahead to Q4 and 2020, the shorts have very little to rely on any more, and I suspect once the stock starts climbing again, we'll see the covering pick up, which will beget more climbing. Patience, my friends.

Looking at the daily chart, I could envision most of the ups and downs being the result of profit-taking today and only limited covering by the shorts. Exceptionally light percentage of selling tagged to the shorts is consistent with less hedge fund manipulations today. The place where there certainly was a strong possibility of manipulations, though, would be in the final hour of trading as an acceleration of TSLA's dip was not warranted by macros or news, and I think it was too easy a manipulation to pass up.

The NASDAQ lost 0.59% today, which was a mild loss compared to TSLA's dip today, especially in the final hour of trading

TSLA shorts were tagged with 36.5% of selling today, even lower than yesterday's number and suggesting a significant reduction in manipulations

Looking at the tech chart, you can see that the upper bollinger band has finally caught and passed the stock price today. As the upper bb rises, it will make large investors more likely to start buying. Notice, too the rather quick rise of the blue 100 day moving average as it curves upward towards a golden cross with the red 200 day moving average.

Waiting for the profit-taking consolidation to complete is no fun, but once the stock price starts moving up again, we longs will be in a very positive position, and we're hopefully not far from that transition back to the green. In the meantime, keep an eye on production and delivery indications for Q4. Best I can tell, it's really hard to get your hands on a Model 3 right now in most parts of the globe as a small navy of ROROs prepare to storm the waterfronts of Europe, China, and Korea. Some locals continue to see a lack of SR+ deliveries for Q4, suggesting enough demand for Tesla to bump the average sale price up with more expensive varieties delivered this quarter.

Conditions:
* Dow down 19 (0.07%)
* NASDAQ down 49 (0.59%)
* TSLA 316.22, down 11.49 (3.51%)
* TSLA volume 12.4M shares
* Oil 55.25
* Percent of TSLA selling tagged to shorts: 36.5%

 

[Papafox]

Here's the puzzle: percent of TSLA selling by shorts continued to drop today and yet today's trading chart suggests a fair amount of shenanigans nonetheless. For example, we saw an MMD that was quickly defeated and turned into a climb into the green, then the pricing descended into a significant icicle at 11:18am that required a monstrous 82K shares sold in one minute to accomplish.

Of course one explanation could be that some sellers were fearful this profit-taking correction could continue for longer and sold with that incentive, but then why did we see numerous icicles as the stock price was slowly recovering throughout the remainder of the day? The price 315 has been identified by some as a resistance point, so there's a reasonable explanation there for the difficulty in retaking it, but with positive action from the Feds on interest rates and a nice climb of the NASDAQ in the market's closing hour and a half, why didn't that macro action help TSLA more?

The good news is that this profit-taking looks to be winding down. TSLA has dropped from well over 20M volume to 18M to 12M and today down to 9.6million. I see the dip in stock price as an adjustment needed to find enough buyers to meet demand for selling. As the price dips, it generates more selling from fearful investors as well as generating selling from market makers doing their delta-hedging against options sold. Yesterday, TSLA dipped noticeably in the afternoon. Today, TSLA bottomed out at 11:18am and spent the rest of the day recovering. All these developments are encouraging to me. Now it looks like the Tesla pickup will be revealed at or before the Nov. 22 LA Auto show. Q4 is looking strong and it's only a matter of time before the green returns.

The NASDAQ rose 0.33 today, with a big jump after 2pm when the Fed announcement was made

Percent of selling tagged to TSLA shorts fell to an unusually low 35% today.

To me, the most important takeaway from the tech chart today is the continued dip in volume. 9.6M shares is near the "ordinary" volume for TSLA. Meanwhile, the 100 DMA is only about 14 away from crossing the 200 day moving average.

Should we hold onto 315 on Thursday, I'm told the next resistance is in the 320s and with the upper bb at 328 we'll have some headroom to run. Fingers crossed.

Conditions:
* Dow up 115 (0.43%)
* NASDAQ up 27 (0.33%)
* TSLA 315.01, down 1.21 (0.38%)
* TSLA volume 9.6M shares
* Oil 55.23
* Percent of TSLA selling tagged to shorts: 35%

 

[Sudre]

I am curious if you know when certain large entities have to report shares shorted?

Can they wait a day or two? Say they shorted a few million yesterday but don’t want to spook or encourage retail shorts who would jump in the next day and drive the price down to PUT profits. Can they then drive the price down to 310 for Friday (max pain) then report all their short activity that day making it a sudden 60+% short day..... or even spread the shorting report out over a few days so it appears they shorted a lot on a few days giving us this high jumping up and down we see when in reality they just report the short when they want because they have three days to cover or report.

 

[Papafox]

I am curious if you know when certain large entities have to report shares shorted?

Can they wait a day or two? Say they shorted a few million yesterday but don’t want to spook or encourage retail shorts who would jump in the next day and drive the price down to PUT profits. Can they then drive the price down to 310 for Friday (max pain) then report all their short activity that day making it a sudden 60+% short day..... or even spread the shorting report out over a few days so it appears they shorted a lot on a few days giving us this high jumping up and down we see when in reality they just report the short when they want because they have three days to cover or report.

One of the frustrations of the law is that, as i understand it, shorts are not required to report their short positions. People like Ihor Dusaniwsky publish their best estimates from time to time, but there is no required timetable. In fact, I think Dusaniwsky waits a few days after a big push down as a courtesy to his short-selling clients. We really could have used the information in his most recent chart a few days ago.

 

[Toolsmack]

One of the frustrations of the law is that, as i understand it, shorts are not required to report their short positions. People like Ihor Dusaniwsky publish their best estimates from time to time, but there is no required timetable. In fact, I think Dusaniwsky waits a few days after a big push down as a courtesy to his short-selling clients. We really could have used the information in his most recent chart a few days ago.

Ihor’s chart today matches your short interest observations the past couple days. Still a lot of covering has been occurring. The disappointing part of it to me is the share price reduction along with short covering. That means either Ihor’s data is wrong or long-selling/profit taking swamped all that covering since 340.

 

[Papafox]

The trend from profit-taking to consolidation to normal trading continued today as TSLA traded higher for most of the day despite macros being down. Importantly, volume dipped to a mere 5.1M shares, which indicates that the profit-taking spree is pretty much over now. Of particular interest is Dusaniwsky's chart below, which suggests there has been robust covering by shorts in recent days. If that covering continues while the selling declines, then we should see some price appreciation soon.

The lack of buyers today could likely be explained by care being shown to not buy back into TSLA until the stock price starts climbing again, accentuated by negative macros. One needs to digest how profound the climb from the 250s to the 330s was and consider that time indeed is necessary to cement the new realities about Tesla. Once the climb begins, though, the care being shown by buyers could disappear quickly. I'm somewhat cautious about Friday, though, because of the typical manipulations prior to options expiration.

Looking at the trading chart, I've noticed that today as with yesterday that the end of market trading for TSLA was considerably depressed compared to what the macros were doing, and I attribute this to a good old-fashioned short-selling manipulation into close. When the buyers return there will be no holding the price back like we've been seeing this week.

The NASDAQ spent most of the day in negative territory but recovered during the final hour of trading to close down 0.14%

Looking at the very significant short covering in the chart above since the big ER run-up, you would expect to see the stock price turn around and start climbing, but I think the profit-taking plus consolidation needed just a bit more time to cement the idea that TSLA really could be trading much higher after the next ER. It'll take a climb to convince some investors that this really is a decent price for TSLA, given the implications of the Q3 ER.

Percent of selling by TSLA shorts dipped further to 34% today, and yet I see some evidence of end of day manipulations.

The opricot.com max pain chart says 310 is max pain, but looking at this chart you can see that anything to the left of 317.50 has more puts than calls, and so effectively 317.50 is the number that typical market-makers would like to see TSLA close at tomorrow. Certain hedge funds might prefer lower, however.

The biggest story of the tech chart today is the significant reduction in selling and therefore volume. At 5.1M shares traded, TSLA is now on the light side of volume. What we need is a catalyst to get the climb started. The profit-taking has now tapered into consolidation, and every day this week is stronger than the day before.

Conditions:
* Dow down 140 (0.52%)
* NASDAQ down 12 (0.14%)
* TSLA 314.92, down 0.09 (0.03%)
* TSLA volume 5.1M shares
* Oil 54.31
* Percent of TSLA selling tagged to shorts: 34%