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Papafox's Daily TSLA Trading Charts
- Thread starter Papafox
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- elon is an ass TSLA
Do you mean the shorts? I'd say burnt to a crisp is more like it.
Today's morning climb was far more robust than I expected and TSLA topped out for the day at 11:28am in the vicinity of 594 with 104K shares traded that minute. Take a look at the 15 minutes of climbing leading up to the new ATH. Volume was extremely high and it felt very squeezy to me, as if shorts were capitulating and covering while algos jumped in and bought like crazy because someone else was about to. Maybe Dusaniwsky will share some data on today's trading fairly soon. He seems to hold back his data on the most critical days (likely to give his paying customers first shot at that data). The afternoon saw the retreat I mentioned yesterday might happen. If you check out the tech chart at the bottom of this post, you'll see that TSLA closed very close to the upper bollinger band. Translation: the big whale buyers might have sat out some of this buying as TSLA ran too high above the upper bb for their liking and they may have jumped back in with about 40 minutes to go as the price had settled to about 561 and the new buying allowed TSLA to climb into the close. Let's keep an eye on that upper-bb at these elevated prices and see if it become more of a predictor in terms of big buyer behavior.
News today included this CNBC story of Wedbush's Dan Ives maintaining his hold rating on TSLA, raising his price target from 370 to 550, and saying that success at GF3 could add $300 to this stock and make it an $800-$900 stock.
The NASDAQ was bumpy today but still eaked out a 0.14% gain at close
TSLA shorts were tagged with 45.5% of TSLA selling today
Looking at the Opricot.com max pain chart, you can see that expectations towards TSLA have changed hugely, with max pain at 520 and with calls towering well above puts. As @KarenRei pointed out in the main investor's thread today, there's a huge number of 550 and 600 calls expiring on Friday, and so the market makers will have to be on their toes to respond to stock price changes that could affect these two strike price and move them into or out of the money. I suspect that over the next two day the hedge funds might push to bring those 550s out of the money in much the same way them pushed downward at the end of last week. If we climb toward 600, expect resistance close to that number.
I've used hedge fund manipulations to explain the price movements into Friday closes because the correlation between apparent targets of downward pressure aligns too well with large strike prices of expiring call options sold. In retrospect, if a hedge fund did no delta-hedging on sold calls and just sought to use manipulations, that hedge fund would likely have long gone out of business. Perhaps some hedge funds have been delta-hedging but sought to manipulation instead in the final day or two before expiration of options because they had previously been successful at such short-term manipulations. Nevertheless, even that tactic could lead to extinction. I assume that any hedge fund that is manipulating is protecting not only its strike prices of calls sold that expire that Friday, but also trying to influence the damage being inflicted on its TSLA short positions (I understand that hedge funds hold a LOT of TSLA short positions). So, when I hear of a story like that above, I sincerely hope that investigations can be made to determine if failed manipulations were a component in the death of a hedge fund that held TSLA short positions. We'll likely never know.
Looking at the tech chart, the most salient point is that TSLA closed almost even with the upper bollinger band after the huge morning runup and the afternoon correction. Also, notice the immense volume today, nearly twice as much as yesterday's huge rise day. If you look in the afternoon, you can see heavy volume. It's an easy guess that the selling was primarily profit-taking by retail investors and traders. I suspect that TSLA has quite a few traders working the stock at the moment.
Where do we go for the remainder of the week? I'm guessing the weekly trends will still hold and by close on Friday we'll be lower than we are right now. For that reason I sold a small amount of stock (less than 4% of my IRA holdings) this morning and plan to buy it back on Friday (aiming for about 30 minutes before close). We'll see how this experiment works, and since it is IRA money, there's no tax considerations.
Next week will be a different animal, however, with the ER after close on Wednesday. How we do for the remainder of next week will hinge upon the ER results and guidance. By Tuesday and Wednesday of next week the stock price will likely reflect positioning for the ER.
Conditions:
* Dow -10 (0.03%)
* NASDAQ +13 (0.14%)
* TSLA 569.56, up 22.36 (4.09%)
* TSLA volume 31.0M shares
* Oil 55.85
* Percent of TSLA selling tagged to shorts: 45.5%
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Waiting for the post today 
Thursday's pre-market trading included prices way down in the 550s, even though the NASDAQ was just barely in the red. I wouldn't put it past the hedge funds to have encouraged unusually low pre-market trading. We saw for a while an apparent strategy of a push-down in the final hour of pre-market trading leading up to the opening and MMD, and perhaps today's pre-market red was just a modification on the patterns we've been seeing lately. A short Mandatory Morning Dip ensued, then when it recovered we saw the typical run upwards into the green to celebrate the feat. With the whole day's trading looking much like a prolonged game of whack-a-mole, the stock never gained any momentum in either direction after the opening hour. I suspect the hedge funds were putting in some efforts to keep trading under control so that they could engineer a dip on Friday. There's no guarantee that plan will work, however, because if the market sees that Friday is turning into an up day it may see this deviation from the norm as a positive omen and start buying. We live in interesting times.
The NASDAQ closed up 0.20 in a mild session
The fact that shorts have lost $3.8 billion in January alone and yet the number of shares held by shorts has not changed much during that time is truly amazing. It also suggests that if Q4 ER has unexpectedly good news and guidance that the stubborn 24 million shares that won't budge could actually be put into play and could supercharge the resulting climb.
TSLA shorts were tagged with 46% of TSLA selling
Looking at the tech chart, the upper bollinger band has risen above 583 as we slowly build some headroom leading up to the Q4 ER. If the news during the ER was positive enough, the stock could ignore the upper bb, as it has done when really important positive news has come forth.
I include this TSLA chart going back to 2013 because sometimes you need to step back for perspective. During 2013's rapid rise, it would have been unwise to sell in anticipation of calling a top. During most of the next six years, anticipating a top was a much more reasonable choice. Looking at the 2019/2020 run, you can see its magnitude is far closer to 2013's than any other year's, and a technique of riding it out and seeing where you end up may be just as justified.
@Speedr117 , we're really in an unprecedented situation in terms of price action leading into this particular ER. @Fact Checking looked at the 4Q18 ER trading for perspective, and this post would be helpful. I'm just not seeing a lot of fear of falling at the moment, likely because S&P500 inclusion would likely bring us back to at least this price point if the market is unhappy with some details of the 4Q19 ER. There will of course be some profit-taking next week, but I suspect the whales will be picking up the majority of those shares sold. I'm not trading on expectations of a big rise or drop leading up to the ER but of course either is possible. I do think we'll get see some price rise from the usual Monday morning buyers exuberance unless macros spoil the party.
I hope many of you have watched Dave Lee's excellent youtube video about the long-term potential of investing in Tesla. The appreciation potential in coming years remains enormous. As stated in an earlier post, I've deleveraged quite a bit plus paid off a few things and I am comfortable going the distance now. I see @TrendTrader007 has recently done something similar, which is to deleverage into 2022 350-strike calls. He too is positioned now to go the distance, if he chooses. With Tesla facing little real competition on the horizon for the next two years, there's much incentive to just snug up the seatbelt and hang on. At these high stock prices the market would be very unforgiving to Tesla if it faltered, and so deleveraging helps to lock in some of the gains. We need to monitor Tesla's performance and keep a finger on the pulse of demand as we press forward. A series of positive events are lined up ahead. The fun has barely begun.
Conditions:
* Dow down 26 (0.09%)
* NASDAQ up 19 (0.20%)
* TSLA 572.20, up 2.64 (0.46%)
* TSLA volume 19.2M shares
* Oil 55.81
* Percent of TSLA selling tagged to shorts: 46%
Friday began with pre-market enthusiasm towards TSLA pushing the price to near 480 before the stock began a slow descent to opening. We've seen these descents into opening become a major theme lately, and I believe they're sponsored by the hedge funds. This was, after all, an options expiration day, and the hedge funds weren't about to take it lying down. To no one's great surprise, as the macros dipped into the red, the manipulators had an easier time with their task this day. A dip to a price point of 550 would have made certain hedge funds ecstatic, and judging by the ferocious starting around noon, they were trying to get it down that far. Alas, too early a push can be problematic and TSLA never this day equalled that effort. The manipulations created quite a breathtaking array of icicles today, confirming mischief underway. About 30 minutes before close, I did indeed do some buying (remember that I had sold Wednesday morning with this plan of a Friday rebuy), and I was quite happy with the result. I was expecting the usual loading up on shares that traders do in the final 20 minutes of a Friday afternoon in order to benefit from the Monday morning buyers' exuberance, but I was blown away by the extent of the buying and its effect on the stock price during the final 20 minutes. The result was so striking that I suspect traders will amend their techniques and start buying earlier on Friday afternoons for a while. Remember that if a pattern is too obvious too many weeks in a row, it will be changed by opportunists front-running the pattern.
Considering that the NASDAQ was down nearly 1% on Friday, TSLA's dip of 1.29% was very mild. I'd normally expect about a 150% response by a tech-like stock to a NASDAQ dip.
Look at the downhill movement of TSLA in after-hours trading. Was this fear of coronavirus's affect on the market come Monday or was it yet another manipulation artifact? I checked the after-hours trading of a few tech companies for comparison. Some had no dip in after-hours trading, and some had a minor dip (noticeably less than TSLA's). With NASDAQ futures down about 1.2% on Saturday night, we could well see unhappy macros come Monday morning. That said, the combination of just 3 days to go before the TSLA ER plus the usual Monday Morning Buying Exuberance might be enough to offset it.
This week's fudster of the week award goes to Craig Irwin of Roth Capital Partners who proclaimed on CNBC that a large part of the buying of this recent TSLA rally was likely retail investors. Here's a Tweet that brings some sanity to the subject:
This week's best supporting actor award for TMC member stripping away the BS of an analyst to the core goes to @Leo9 for this comment:
"Adam Jonas put out a $10-500 price target on $TSLA and was still wrong."
Concerns about the economic impact of coronavirus brought the Dow down 0.58% and the NASDAQ down 0.93% on Friday. Is there a possible silver lining to the cloud for Tesla? TMC's @printf42 thinks so in this interesting post.
Short-sellers were tagged with 44.5% of TSLA selling on Friday. Recently I've anticipated fairly low percentage of selling by shorts on days such as Friday, even with a daily chart showing so many artifacts of manipulations. I think the hedge funds just find a way to keep their slight of hand out of the FINRA space on such a days, so as to avoid raising too much attention.
Consider, for example, that TSLA has risen $121 during the past three weeks, yet every Friday during that time has been red. Coincidence that these down days just happen to fall on options expiration days? Hardly. Today's daily trading chart was a regular tornado alley with the multiple deep dips and quick partial-recoveries that I call "icicles" and that mark manipulative bursts of selling meant to activate the algos to join in and to trip the stop-loss targets of retail longs. There's no way that a legitimate institutional investor is going to sell like that. Why push the stock price down in the most fearful manner possible if you're trying to unload a large quantity of shares at the best price?
Looking at the tech chart, you can see that Wednesday morning's close brought us to the high 560s, where we've been closing plus or minus about $5 these past three days. Bad macros could spoil this coming Monday's party, but if macros behave themselves I suspect the ole gal might have more Monday morning buyers exuberance in store for us to begin the week. Tuesday and Wednesday will be positioning for the ER and concerns about coronavirus will play some type of role in the balancing. The upper bollinger band stands at nearly 593, which makes $600 TSLA look a whole lot less daunting.
For the week, TSLA closed at 564.82, up 54.32 from last Friday's 510.50. If you include the 173.61 gains from the previous 6 weeks, TSLA is now up 227.93 in 7 weeks. I'm glad I'm still riding this train. Enjoy your weekend.
Conditions:
* Dow down 170 (0.58%)
* NASDAQ down 98 (0.93%)
* TSLA 564.82, down 7.38 (1.29%)
* TSLA volume 14.4M shares
* Oil 54.19 (on 1/25)
* Percent of TSLA selling tagged to shorts: 44.5%
TrendTrader007
Active Member
Hi Papafox- you’re absolutely right to deleverage. Prognosis of TESLA sp is excellent both long-term as well as short to intermediate term as evidenced by your daily charts as well as long term yearly, quarterly, monthly and weekly charts that I follow.
I personally have been trading $tsla since late 2013 and this is the only stock I have primarily traded in the last 7 years after I traded $fb in 2013. Similar to you I have had significant ups and downs in my portfolio. Back in 2018 I was carrying a large share position with significant margin and had to liquidate due to broker Morgan Stanley freaking out and forcing my hand despite my portfolio not facing any imminent margin calls at the time just because their idiot analyst Adam Jonas who is typically wrong forecasting drop in tsla which at the time did not materialize . Anyway, that is a story for another time. Subsequently I controlled long term Tesla $400 long term calls and endured a crushing drop of 75% of my entire portfolio between December 2018 through June 2019 which was not easy. I stayed long all my calls despite wondering by the end of those difficult several months if I will lose my entire net worth. Then came the turn around and I recovered sharply all my losses plus made very good returns enough to retire by most standards. From the bottom to when I last liquidated my entire portfolio went up 13X within last 7 months. I had to make really tough decision to deleverage to a point where my portfolio will never go below a certain level no matter what. So I placed 90% of my portfolio in June 17, 2022 $350 calls as you mentioned above and 10% in tsla common stock. My reasoning being that no matter what happens I will never again go broke- I will always have adequate trading capital while still participating in future $tsla sp appreciation. One of the happy side-effects of my vicissitudes was that in a moment of sheer desperation back in June 2019 I switched and placed all my Roth from stock into long term DITM tsla calls and that catapulted my tax free account 5X or so and now I have 50% portion of my total net worth in tax free! So, good things can happen from moments of darkness and despair and one should never lose heart.
I despise the short sellers and I am glad that we long standing longs are finally making these despicable creatures pay back billions of dollars. Tesla short sellers deserve zero sympathy and I hope they continue to watch their portfolios burn and continue to lose billions more.
For every $100 Tesla goes up from here on I will make less thanin profits in my now de-leveraged DITM calls instead of that I was making in my prior higher risk options position but I am okay with that because I plan to keep on trading tsla for next several years and the future is bright for longs
I personally have been trading $tsla since late 2013 and this is the only stock I have primarily traded in the last 7 years after I traded $fb in 2013. Similar to you I have had significant ups and downs in my portfolio. Back in 2018 I was carrying a large share position with significant margin and had to liquidate due to broker Morgan Stanley freaking out and forcing my hand despite my portfolio not facing any imminent margin calls at the time just because their idiot analyst Adam Jonas who is typically wrong forecasting drop in tsla which at the time did not materialize . Anyway, that is a story for another time. Subsequently I controlled long term Tesla $400 long term calls and endured a crushing drop of 75% of my entire portfolio between December 2018 through June 2019 which was not easy. I stayed long all my calls despite wondering by the end of those difficult several months if I will lose my entire net worth. Then came the turn around and I recovered sharply all my losses plus made very good returns enough to retire by most standards. From the bottom to when I last liquidated my entire portfolio went up 13X within last 7 months. I had to make really tough decision to deleverage to a point where my portfolio will never go below a certain level no matter what. So I placed 90% of my portfolio in June 17, 2022 $350 calls as you mentioned above and 10% in tsla common stock. My reasoning being that no matter what happens I will never again go broke- I will always have adequate trading capital while still participating in future $tsla sp appreciation. One of the happy side-effects of my vicissitudes was that in a moment of sheer desperation back in June 2019 I switched and placed all my Roth from stock into long term DITM tsla calls and that catapulted my tax free account 5X or so and now I have 50% portion of my total net worth in tax free! So, good things can happen from moments of darkness and despair and one should never lose heart.
I despise the short sellers and I am glad that we long standing longs are finally making these despicable creatures pay back billions of dollars. Tesla short sellers deserve zero sympathy and I hope they continue to watch their portfolios burn and continue to lose billions more.
For every $100 Tesla goes up from here on I will make less thanin profits in my now de-leveraged DITM calls instead of that I was making in my prior higher risk options position but I am okay with that because I plan to keep on trading tsla for next several years and the future is bright for longs
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@TrendTrader007 , Thanks for sharing the details of your TSLA trading (one such story from TT007 is a plus, but there's not space here for everyone to join it). Yep, we've both been through the crushing dips and ecstatic rallies, as have others in this group. It's good for you to share the stories of the bad times too so that others on this forum can learn about the margin calls and the leveraged rides over the falls to provide some perspective. TSLA can offer enormous surprises.
Sometimes watching your trading in the past I've felt like someone at an airshow watching a fascinating performance but holding my breath at the same time. Now that you've deleveraged a bit it's like you're completing your loops with more soft air between you and the ground, and that's a relief to all concerned. Glad it has worked out for you at this moment in time and best wishes going forward!
Each summer my dog Iceman and I take the Model S on a mainland roadtrip, and along the way we like to visit Aspen. Some day in the future if I see a gorgeous jet parked on the ramp with the words "Contrarian Indicator" painted on the nose, I will assume it's yours. A sense of humor is golden.
Sometimes watching your trading in the past I've felt like someone at an airshow watching a fascinating performance but holding my breath at the same time. Now that you've deleveraged a bit it's like you're completing your loops with more soft air between you and the ground, and that's a relief to all concerned. Glad it has worked out for you at this moment in time and best wishes going forward!
Each summer my dog Iceman and I take the Model S on a mainland roadtrip, and along the way we like to visit Aspen. Some day in the future if I see a gorgeous jet parked on the ramp with the words "Contrarian Indicator" painted on the nose, I will assume it's yours. A sense of humor is golden.
Today's Monday morning buyers exuberance was canceled due to the flu.
In pre-market trading, TSLA traded down over 4% at times but the stock price recovered considerably as the day wore on. Possible explanations for the unusually low pre-market trading: profit-taking by retail investors or (more likely in my opinion) a manipulation by the usual suspects. We've seen a really unusual flurry of deep dips in pre-market trading in recent days and I suspect this is yet more tactic being used to try and dip the stock so that some short could sneak out the back door before the ER. Judging by the run higher between 11am and 2pm, I think this is a reasonable theory.
Lots of shares trading during the opening and closing minutes: 417K shares and 467K shares, respectively. This is huge trading volume for two minutes of a trading day when volume was a mere 13.6M shares. I attribute the low volume to a lack of longs being willing to sell prior to the ER.
Tesla's drop of 1.2% today was mild compared to the NASDAQ's 1.89% dip. Once the coronavirus fears calm down in the macros I expect TSLA to turn green again.
Both the Dow and NASDAQ opened in the dumpster and stayed there, with the NASDAQ closing down 1.89%
Tesla Daily plotted on a graph the latest NASDAQ-reported short interest for TSLA... about 25M shares. Check out the graph of short interest above, which is actual reported data. Now take a look a Ihor Dusaniwsky's graph below. You would think from looking at the lower graph that shorts were actually increasing their shares in January, but that data says otherwise. The real data above paints a much bleaker picture for the shorts: continuous covering and no end yet to the trend. I suspect the graph above will give remaining shorts something to fret about.
TSLA shorts were tagged with 37% of selling today. Judging by the daily chart, I suspect we witness lots of shorting in pre-market trading in order to give a head fake so that a few shorts could sneak out under cover of red ink.
Looking at the tech chart, you can see that the upper bollinger band has now risen to nearly 600, which puts us in great shape to take out that price should the ER exceed expectations.
Only two trading days now remain before the ER. Tick, tick, tick.
Conditions:
* Dow down 454 (1.57%)
* NASDAQ down 177 (1.89%)
* TSLA 558.02, down 6.80 (1.20%)
* TSLA volume 13.6M shares
* Oil 52.93
* Percent of TSLA selling tagged to shorts: 37%
Today we saw the broader markets regaining a large chunk of what they lost yesterday, and TSLA responded favorably. Notice the extreme volatility of the TSLA trading, however. Notice how vertically the stock price climbed right after opening. I think we have longs who bailed over the past couple days with macro fears and they are eager to get back in when the SP is rising. Ditto for nervous shorts who want to exit prior to the ER but are looking for the lowest point. I suggest that we also have lots of traders in TSLA right now, many who have ridden this rocket up for a portion of the past 7 weeks and some who never planned to hold through the ER. These nervous traders sell when the stock price begins to sink, such as we saw from shortly after the opening high until slightly before noon. Thus rising begets more rising and falling begets more falling. Consider today and Wednesday as ER jockeying into position days, and such behavior is to be expected.
Take a look now at the after-hours trading. I see no news that is the catalyst for the climb. There definitely was buying pressure and typically we see a strong opening the following trading day after we see a strong climb like this in after-hours trading.
News twist:
CNBC ran the following headline earlier today: Cramer: Tesla's Stock May Sell Off Hard If It Fails to Meet Earnings Expectations
It then offered a print version of the story with the following headline: Jim Cramer: Expect Tesla's Stock to Fall Hard on an Earning's Miss
Notice the difference? Hint: the second headline suggests that Cramer is expecting an earning's miss. One probably wouldn't trigger the bots, the other might.
Margin Interest Changes: One of our fellow Tesla bulls just had his margin requirements raised by Etrade from 35% to 55% today. That's making it harder for retail bulls to take full advantage of the post-ER run-up, if it happens. I'd be very curious if Etrade is doing the same with TSLA shorts. If so, some may get forced out of their positions tomorrow before the ER, which could affect the stock price. Please report if anyone hears.
The NASDAQ opened green and spent much of the day climbing. It closed up 1.43%
Looking at the Opricot.com max pain chart, you can see that 500 puts and 600 calls rule for Jan31 expiration. Look at all the other high strike prices.
The upper bollinger band now stands at 606 as we near Earnings Report day. Headroom secured for 600 penetration, ER permitting. Notice, too, the stock price has once again wandered back to the mid-560s spot after 5 trading days.
With the volatility of TSLA, it's going to be difficult to predict where the stock price ends up prior to ER, but I'd wager that we have a green start to the day if macros allow, due to the strong after-hours performance today. Good luck to all!
Conditions:
* Dow up 187 (0.66%)
* NASDAQ up 130 (1.43%)
* TSLA 566.90, up 8.88 (1.59%)
* TSLA volume 11.8M shares
* Oil 54.23
* Percent of TSLA selling tagged to shorts: 41.5%
Congratulations longs, TSLA exceeded 650 at times in after-hours trading. Tomorrow should be a fun day. The ER beat Wall Street estimates although profits fell somewhat below what our TMC spreadsheet wizards had been expecting. Trading was volatile, as expected, during market hours, with a big sell in the final 30 minutes. Bottom line is that all the gyrations of the day meant nothing because the stock price shot up after the ER.
Here's the NASDAQ chart, which closed up 0.06%. The afternoon dip may have been an excuse for the much larger TSLA dip right before market close, and pre-ER volatility magnified it.
Here's the TSLA chart showing after-hours trading. Not bad. Notice the dip just prior to the release of the ER. Caution for head fakes.
Here's the financials in a chart:
The GAAP profit was lower and margin was slightly lower than in Q3. The good news? Cash has risen to a whopping $6.2 billion. Although Adam Jonas predicted negative cash flow of $100M, cash flow was instead $1.0 billion. Oops.
You and I received a kudos from Elon. He suggested that retail investors (us) typically do better at understanding Tesla than institutional investors and analysts. Pat yourself on the back on your way to the bank tomorrow.
Of the possible blowout scenarios, the one that came through was word that Model Y deliveries would begin this quarter. This is old news to us but apparently it caught the attention of some analysts. We're not going to be a rocket to 1000 quite yet, but this was a solid ER all the same. As such, the strategy of staying long and strong with an emphasis on holding for the next year or two remains a rewarding investment strategy in 2020.
The one really unanswered question as the dust settled was S&P500 inclusion. Will Q1 be sufficiently profitable to give the necessary profits to qualify? I strongly suggest that inclusion will be easy later in the year, but without a definite feeling about short term inclusion we will lack the short-term support that the Q4 ER provided us up until this date. Thus we'll have to do our climb for a while without the safety net we've been enjoying up until today.
I would expect high volume and plenty of buying tomorrow as some shorts cover, some retail investors jump back in and the whales hopefully resurface. Delta-hedging by the market makers will add to the day's gains. At some point, profit-taking will occur, there will be at least one dip, and then the climb returns. The year 2020 will be a good one for us.
Looking at the tech chart, the upper bollinger band has now risen above 611, and so this afternoon's after-hours rise won't be such a shock.
Congratulations for having the fortitude to ride this bucking bronco to today's excellent price. Excuse me now, I have to go demonstrate my Model 3 to a friend who's eager to buy one.
Conditions:
* Dow up 12 (0.04%)
* NASDAQ up 5 (0.06%)
* TSLA 580.99, up 14.09 (2.49%)
* TSLA volume 13.5M shares
* Oil 53.14
* Percent of TSLA selling tagged to shorts: 39.5%
Thank you, as always for great analyses. My thinking about; “The one really unanswered question as the dust settled was S&P500 inclusion.”
I think TSLA is better off by itself, without the inclusion, because it will be less dependent of market movements, out of control. Tesla will have a bright future outside the S&P
I think TSLA is better off by itself, without the inclusion, because it will be less dependent of market movements, out of control. Tesla will have a bright future outside the S&P
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Let's talk a second about S&P500 inclusion. In terms of possible effect upon TSLA's share price, I've heard estimates as high as plus $100 from S&P500 inclusion. The increase might be even more in TSLA's case because inclusion could actually set most of the remaining shorts scrambling to cover. Lots of 401Ks offer index funds that mimic an index such as the S&P500. The S&P500 is the grandaddy of indexes in certain ways because it does a better job of mimicking the performance of America's top businesses than other funds. Now, consider that the indexes are weighted relative to a company's market cap, so when Tesla is brought into the S&P500 it's going to require S&P500 index funds to buy LOTS of shares. Funds can't leave out shares in companies, they have to buy, and this situation puts significant buying pressure on the stock.
Index Funds are HUGE these days. A number of years ago a report came out that showed the vast majority of fund managers fell short of achieving the results of the indexes. Investors took this information to heart and started moving money into index funds. It's diversification and one of the highest returns of funds out there. What's not to like?
Moreover, once the big brokerage houses have acquired their shares, they aren't selling those shares anytime soon. It's like you're bidding the stock price up and then just sitting on the acquired shares. When there's bad news, unlike T. Rowe Price in recent times, the index funds are not selling their shares. Thus S&P500 inclusion gives TSLA both a boost up in value around the time of the inclusion and removes a large number of shares from circulation, which puts constraints on available shares when people are buying (and as we all know about supply and demand, if there's a restricted supply but robust demand, the price rises until it reaches an equilibrium).
Elon and other Tesla execs manage the company as they did before, but the stock price rises with inclusion and likely stays higher.
Sorry for the late posting, but it's taking some time to digest what's been going on. Looking back at yesterday's after-hours trading following the ER announcement, we saw two clear plateaus at about 620 and 650. Was this the work of a big buyer limiting the buying around 620 and then realizing the need to go higher to achieve desired number of shares or was it a capping exercise where someone found a near-equilibrium price and capped 620ish to keep the stock price under control until the cap had to rise to 650 because of buying pressure? I'm thinking it's more likely the latter scenario since we saw some overshoots of the 650 number which might not have happened if the plateaus were caused by buyers.
Looking at Thursday's trading I ask a similar question. The stepping down of the stock price in pre-market trading looked similar to pre-market stepdowns to opening that we've been seeing these past two weeks. Then came the anemic mandatory morning dip, followed by the rise to 650ish, followed by a dip and then climb right back. It looks to my eye that the very level nature of Thursday's trading was also some capping exercise, but it might also have had some help from market-makers (including some hedge funds) because they needed to pick up TONS of shares today to delta-hedge the many outstanding options with this strong price increase. It's possible you had two separate efforts underway simultaneously and some recognition between the parties that there were similarities in objectives.
Then there's the scenario brought up by @Fact Checking that after Q3's ER the stock price rose beyond a critical point and then market makers needed to start Delta-hedging, which further increased the stock price by that buying in order to hedge. If we see apparent capping in the morning below 650 and then a breakout in the afternoon, that scenario might be in the process of playing out.
The NASDAQ traded mostly in the red on Thursday but managed to climb into close for a positive 0.26% close.
Getting back to the question of why we saw TSLA remain below 650 for most of yesterday and today's trading, take a look at the opricot.com chart of expiring options for Friday. The hedge funds lack the power to get this stock down to 600 for the close, but they'd love to see it remain below 650, and so I think that is one explanation for the past two day's trading since the ER. Take a look at the bottom half of the Opricot chart, and you can see that there's lots of volume currently for 650 call options expiring Friday. If 650 falls and the stock price starts advancing higher, you can imagine the delta-hedging needed to stay neutral and the positive effect that delta-hedging could have on leading the SP higher.
OTOH, don't be surprised to see a mandatory morning dip too. Any sizable dip can induce some profit-taking. The shorts may have more success with the dip on Friday than on Thursday, due to the huge quantity of delta-hedging done Thursday.
Shorts were tagged with 46% of TSLA selling on Thursday. This chart is from shortvolume.com. Our previous source, volumebot.com has closed. The blue line is the "percent of selling by shorts" and Thursday's level was 46%.
Looking at the tech chart, the upper bollinger band resides at nearly 628 now, and so this big jump in price today just places TSLA slightly above where it would have been if it had stayed on schedule marching along the upper bb if last week's dip hadn't occurred.
Conditions:
* Dow up 125 (0.43%)
* NASDAQ up 24 (0.26%)
* TSLA 640.81, up 59.82 (10.30%)
* TSLA volume 29.0M shares
* Oil 53.21
* Percent of TSLA selling tagged to shorts: 46%
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Papafox, thanks for all of the excellent analysis that you do on TSLA. I would like to congratulate you on having an almost clairvoyant ability to call the next day's stock moves. Here we are at 650 in the last few minutes of trading with high volume
In addition to understand TSLA moves better, your insight has led me to understand the overall stock market in better detail. Thank you.
JimboAZ,
Thanks for the message of appreciation. Although I wish I were clairvoyant, my methodologies are pretty straightforward. More so than anyone else I'm aware of, I try to predict what comes next by looking at TSLA trading as primarily a tug-of-war between shorts and longs. Many times, on the short side I am primarily anticipating what hedge funds will do because 1) they own a large amount of the shorted shares outstanding, and 2) they apparently manipulate so as to minimize losses on call options they sold which expire each Friday. By looking at the opricot.com max pain chart, we can get a pretty good idea of what price points they'll try to protect.
Originally, I was somewhat surprised by the SP going all the way to 650 and above right after the ER was released. In time, I realized like many of you that the understanding of many analysts and the investor community in general was much farther behind that of TMC forum members than we understood, and this ER was a catch-up moment for them. Why did the SP plateau first at 620 and then at 650, though? In time, looking at the distribution of call options expiring this Friday, the need for the hedge funds to protect 650 and above became evident.They moved the front lines of the battle down to 645 to give a little breathing room, which held reasonably well until the final 20 minutes of the day.
It's in those final 20 minutes of a Friday market trading when the traders usually load up on shares for an anticipated Monday Morning Buyers Exuberance. @Fact Checking added clarity to this 20 minute buying window on Friday afternoons because the amount of time remaining is too little for market makers to use in combating the climb through other means. Rather, they delta-hedge to stay as neutral as possible, and it's that delta-hedging responding to the end of day buying pressure that accelerates the final 20 minutes of Friday Market trading. Look at last week's final 20 minutes to see a similarly robust climb into close.
Ironically, the success of the final 20 minutes of Friday buying frenzy will lead to its own self-destruction as traders and shorts work to get one step ahead of the established trend. A new pattern will develop in time, and we'll profit from it before it too gets exploited, exhausted, and then disappears.
I know there are very knowledgeable investors who roll their eyes when I mention manipulations, but the shorts vs. longs fight has worked surprisingly well so far in understanding what comes next with TSLA. I leveraged up heavily in TSLA when it was at 190 and rising and my whole IRA was at stake (and I'm no spring chicken!). I had to watch this stock like a hawk and I figured as long as I'm putting many hours a day into the research I might as well share my findings with the TMC community not only so that we can all benefit but also to learn how to make my model work better. So far, so good. Definitely compare my expectations to those of other investors who use more conventional tools. It's always good to expose yourself to a wide variety of theories and see which ones do the best job.
Thanks for the message of appreciation. Although I wish I were clairvoyant, my methodologies are pretty straightforward. More so than anyone else I'm aware of, I try to predict what comes next by looking at TSLA trading as primarily a tug-of-war between shorts and longs. Many times, on the short side I am primarily anticipating what hedge funds will do because 1) they own a large amount of the shorted shares outstanding, and 2) they apparently manipulate so as to minimize losses on call options they sold which expire each Friday. By looking at the opricot.com max pain chart, we can get a pretty good idea of what price points they'll try to protect.
Originally, I was somewhat surprised by the SP going all the way to 650 and above right after the ER was released. In time, I realized like many of you that the understanding of many analysts and the investor community in general was much farther behind that of TMC forum members than we understood, and this ER was a catch-up moment for them. Why did the SP plateau first at 620 and then at 650, though? In time, looking at the distribution of call options expiring this Friday, the need for the hedge funds to protect 650 and above became evident.They moved the front lines of the battle down to 645 to give a little breathing room, which held reasonably well until the final 20 minutes of the day.
It's in those final 20 minutes of a Friday market trading when the traders usually load up on shares for an anticipated Monday Morning Buyers Exuberance. @Fact Checking added clarity to this 20 minute buying window on Friday afternoons because the amount of time remaining is too little for market makers to use in combating the climb through other means. Rather, they delta-hedge to stay as neutral as possible, and it's that delta-hedging responding to the end of day buying pressure that accelerates the final 20 minutes of Friday Market trading. Look at last week's final 20 minutes to see a similarly robust climb into close.
Ironically, the success of the final 20 minutes of Friday buying frenzy will lead to its own self-destruction as traders and shorts work to get one step ahead of the established trend. A new pattern will develop in time, and we'll profit from it before it too gets exploited, exhausted, and then disappears.
I know there are very knowledgeable investors who roll their eyes when I mention manipulations, but the shorts vs. longs fight has worked surprisingly well so far in understanding what comes next with TSLA. I leveraged up heavily in TSLA when it was at 190 and rising and my whole IRA was at stake (and I'm no spring chicken!). I had to watch this stock like a hawk and I figured as long as I'm putting many hours a day into the research I might as well share my findings with the TMC community not only so that we can all benefit but also to learn how to make my model work better. So far, so good. Definitely compare my expectations to those of other investors who use more conventional tools. It's always good to expose yourself to a wide variety of theories and see which ones do the best job.
Hey, we did it: 650 secured. Of course that price point could fall at some future date, but it's quite an accomplishment for this stock. If you check out the trading, today was mostly one giant game of whack-the-mole, especially in pre-market trading. The hedge funds were determined to make sure that TSLA didn't get too frisky today and run much above 650. Anytime it showed too much of a transgression into the green, "Whack!" went the mallet and TSLA sank back into the red abyss. You can see several icicles which represent selling flurries designed to push the stock price down (take a look at the volume below the icicles).
Draw a line across the chart at $645, and you can see that until those final 20 minutes, the hedge funds succeeded in turning around any transgressions above that number until the final 20 minutes arrived. At that point, traders jumped in to load up for Monday morning's buyers exuberance and the hedge funds had to start buying to remain delta-hedged as TSLA approached the closing bell.
The big news today was that the macros were in the toilet after fears of coronavirus rekindled. The Dow was down more than 2% and the NASDAQ sank throughout the day and closed down 1.59%.
If you compare TSLA's performance to the NASDAQ's, you will realize that TSLA performed more than 3% better than the NASDAQ today, which shows substantial strength. Look at the volume on this volatile day and it was only 15.4 million shares, which suggests longs aren't in any big hurry to sell. Today was also the first Friday in four weeks when TSLA closed green. That's saying a lot on a day with the macros in such a descent.
This chart by Dusaniwsky highlights just how thoroughly shorts have been covering since TSLA turned around this summer. The tan line is short interest (expressed in millions of shares) and you can see that the plummet continues. Until there's a reversal in the stock price trend, shorts will continue to cover and the stock price will benefit from the upward pressure of covering. Also notice this is the lowest short interest (in terms of shares) that we've seen since 2016. Some of the shares shorted are simply hedges against convertible bonds, but there are also hard-core shorts finally throwing in the towel now.
For the week, TSLA closed at 650.57, up 85.75 from last Friday's 564.82. If you include the 227.93 gains of the previous 7 weeks, TSLA is up 313.68 during the last 8 weeks, which is less than two months. Have a great weekend!
Conditions:
* Dow down 603 (2.09%)
* NASDAQ down 148 (1.59%)
* TSLA 650.57, up 9.76 (1.57%)
* TSLA volume 15.4M shares
* Oil 51.56
* Percent of TSLA selling tagged to shorts: 40.5%
SageBrush
REJECT Fascism
The scales distort the relationship. SP has increased > 3x while the fraction of shares outstanding has dropped by ~ 50%
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