News over the weekend resulted in futures bottoming out at 5% down, but recovering from time to time. No doubt was left come pre-market trading today, however. Notice the big dip about 15 minutes into trading? This was when trading restarted after halting because of an opening price more than 7% down. Prices of TSLA largely followed the NASDAQ, with a rise until about 11:20am and then a decline for most of the day. At opening TSLA was already subject to the Alternative uptick rule, but that rule was reset for yet another 2 days as TSLA lost more than 10% today.
The NASDAQ dipped sharply in the final 20 minutes, likely owing to the POTUS press conference in which the chance of a recession was mentioned. Naturally, the press attributed TSLA's decline to this RBC downgrade, which was just as ridiculous as attributing a previous dip on a 9% down macro day to an Adam Jonas downgrade.
Volume of TSLA was moderately high at 20 million shares. With the broader markets down a bit over 12%, TSLA's 18% drop yielded a 1.5X multiplier, which was about what NVIDIA experienced, as well. If the broader markets keep dropping, does TSLA keep plunging? Not at these multipliers. At some point the price of TSLA considering its post-COVID-19 value gets so low that buyers simply outnumber sellers.
Don't think that there's no shenanigans by manipulators just because the percent of selling by TSLA shorts was a low 31.9% today. @Artful Dodger offers in this TMC link more proof of substantial naked shorting today.
Both the Dow and NASDAQ closed down more than 12% with the NASDAQ showing a decline of 12.32%
Looking at the tech chart, you can see that the lower bollinger band didn't offer much support today, partially due to the magnitude of the macro force, and partly due to the steep downward angle of the band.
So, how low does TSLA go? At some point, investors will look at potential short-term downside (25% more?) vs. potential medium-term upside (100% plus?) and conclude the risk vs. reward equation doesn't allow selling to be a sensible course of action. Certainly a macro bottoming would do it. Here are a few possible scenarios of when the macros could bottom out:
* When investors fully understand the situation- Unfortunately today the mention by a press correspondent of "recession" lit the fire of fear during the final 20 minutes of market trading and you can see the results in the NASDAQ chart above. Further, the extent of the damage in the U.S. from the virus needs to be approximated. Goldman put out a briefing today saying that 50% of Americans will get the virus. In China and South Korea, less than 1/2 of 1% of the populations of these countries will get the virus before it fades into summer. Until investors can get a handle on the numbers, they're going to be running scared. Fortunately, when the new cases discovered each day graph shows that the U.S. has peaked, the necessary info is available, a sigh of relief comes forth, and the bottom is achieved.
* When max fear has come and gone- As I have been saying, I think macros get worse when substantial testing in the U.S. begins, which should be this week and next. That big jump due to better detection, will cause a further decline.
It's also possible for TSLA to bottom out before the macros because of the aggressive multiplier that the stock has been reacting with to the macro drops. This is why I did yet another small buy this morning. Chances are, we're weeks from the TSLA bottom, but I believe we're close enough that a small buy now still made sense. Since that purchase, a few negative stories have come forward:
* This post (with link) in TMC by @Fact Checking details the Santa Clara County (Edit "Close to" where the Fremont factory is located) plans for curtailing the virus, and could lead to a closing of the Fremont factory (but maybe not).
* Some countries in Europe such as France are in lockdown now and no more Teslas will be delivered there before quarter's end. Fortunately, the last Roro ship with Teslas on board arrived Zeeburg and has since begun passage to Southhampton.
If you could put me in a time machine, transport me back to when TSLA was trading at 900, my strategy would of course have been different, but given the risk vs. reward equation going forward at the present stock price, I will continue to be a small buyer and not a seller of TSLA. When Trump mentioned July as an end to the U.S. wave of this virus, Anthony Fauci mentioned it could be earlier. Yes, my friends, this craziness will end and when it does we will own shares in a company well-positioned to shine.
Conditions:
* Dow down 2997 (12.93%)
* NASDAQ down 970 (12.32%)
* TSLA 445.07, down 102 (18.58%)
* TSLA volume 20.5M shares
* Oil 28.86
* Percent of TSLA selling tagged to shorts: 31.9%
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