Papafox's Daily TSLA Trading Charts

[Papafox]

Chart of TSLA above

Chart of QQQ above

Pre-market optimism in QQQ gave way to a descent that lasted past noon, and this negative pull gave TSLA bears an opportunity to pull the stock price briefly below 760 before it bounced back. The macros headed lower into the close, TSLA followed, and both TSLA and QQQ rose during after-hours trading. Typically, on red days you'll see the multiplier of TSLA compared to the broader markets increase going into close, and I suspect this is more manipulation than any tendency of TSLA to simply not do well in afternoons.

Perhaps the most provocative article today was word from Barclays that TSLA is poised to beat earnings and might even qualify for S&P500 inclusion. The Barclays analyst, Brian Johnson, has never been a friend of Tesla's, and so one needs to consider the possibility of a setup. Certainly the shorts are ready to take advantage of a weak Q1 report and guidance from Tesla. Perhaps that's the reason for the setup. On the other hand, in recent weeks we've seen some big dogs buying into TSLA, including Oregon's retirement system and market maker Citadel. Even Goldman-Sachs has switched from a Tesla bear to a bull. So, expect movement up or down, depending upon the earnings call, and boredom should not be a problem.

Specific reasons for optimism this ER include Elon's tendency to be aspirational and the likelihood he will not reduce the 500,000 vehicle deliveries target for 2020, a chance to finally start recognizing some of the Fiat-Chrysler agreement fees, a statement that Tesla will not be distributing stock-based compensation during the crisis (and thereby significantly helping GAAP profitability prospects), and finally an opportunity to highlight just how positive production and gross margins may be in China going forward.

My reason for holding through the ER is consistent with my overall strategy. If Q1 ER is a surprise beat and the stock shoots higher, I'm riding high and those on the sidelines may never get such a reasonable buy-in price again. If ER disappoints and the SP falls, I simply hang in there for later this year when TSLA does bounce back.

I consider 17M shares traded light, considering the price swings and how close TSLA is to the ER.

Notice that at long last we've seen a dip in percentage of selling tagged to shorts. That number dipped to 46.4% today.

Looking at the tech chart, despite today's dip, TSLA remains so far above the mid-bollinger band that all three bands are busy heading higher now and the upper rests nearly 100 points above today's closing price.

Good luck to everyone with the ER tomorrow!

Conditions:
* Dow down 32 (0.13%)
* NASDAQ down 13 (1.40%)
* TSLA 769.12, down 29.63 (3.71%)
* TSLA volume 15.2M shares
* Oil 14.24
* Percent of TSLA selling tagged to shorts: 46.4%

 

[Papafox]

TSLA chart above

QQQ chart above

Even before the ER, we saw fireworks both in the market and with TSLA. Gilead shared results from a trial that showed its antiviral remdesivir can help significantly with COVID-19 infections, and in this article Anthony Fauci said that remdesivir has become the new standard for COVID-19 treatment. The market rallied under expectations that the pandemic will be slightly more benign after this discovery.

That macro news helped TSLA close the day above 800, with a 31 point gain. Only 12 million shares traded hands, which suggests few sellers ahead of the ER but plenty of potential buyers.

Congratulations, longs, Tesla surprised the market with this ER and we saw significant price appreciation in after-hours trading, with the price up a total of 110 points at its peak before settling a little. Big news was a GAAP profit of $16 million, with non-GAAP profit of $227M. A big surprise was automotive gross margins exceeding 25%, which was made possible by a 5.5% boost from regulatory credits (I assume the FCA agreement helped here). Glad that hodl was my strategy for this ER.

Once the conference call began (not shown on TSLA chart), the stock price rose further as Elon read off the positives. Things got dicy when Adam Jonas of Morgan Stanley asked a provocative question that got Elon talking about the Fremont shutdown, and during that discussion the stock lost about $7. Later in the conference call, Elon mentioned that the date for Fremont to reopen is a risk factor for the company and then he went so far as to call the shelter at home policy "fascist". We understand his frustration, but the language he used is sure to get emphasized by the negative media. For this reason, it's possible there may be an opportunity at some point in Thursday morning's trading to get a discount on the stock if you wish to add below 880. We'll see.

Percent of selling by shorts dipped way down to 39.3% today, building on yesterday's dip and ending a month long elevated trading by shorts

Looking at the tech chart, today's market hours rise set TSLA up well for a continuation of the rally if Fremont can reopen. You can see that the upper bollinger band is at 883, which was eclipsed slightly during the conference call but then settled back into the 870s. The upper bb likely had some bearing upon how high TSLA rose in after-hours trading.

Thursday should be interesting with bears trying to exploit Elon's controversial comments today but Wall Street impressed with Tesla's performance, even with the pandemic underway. Biggest question mark right now is the timetable for opening Fremont. Expect much of the stock's short term movement to revolve around that news. Once that issue is resolved satisfactorily, the direction should be up for this stock's price because Tesla only needs to post a $1 profit in Q2 to qualify for S&P 500 inclusion.

Sorry this is an abbreviated post, but I am dealing with a friend who has an illness and I may be distracted for a few days.

Conditions:
* Dow up 532 (2.21%)
* NASDAQ up 307 (3.57%)
* TSLA 800.51, up 31.39 (4.08%)
* TSLA volume 12.6M shares
* Oil 16.55
* Percent of TSLA selling tagged to shorts: 39.3%

 

[Papafox]

TSLA chart above

QQQ chart above

Today we got that buying opportunity I thought possible, but a whole lot more than I planned on! A descending slope to the macros (see QQQ above) from early pre-market trading until late after-hours trading was a good environment for pushing TSLA lower. The message of the Q1 ER was clear: despite the end of quarter disruption, TSLA managed to get gross margins above 25%, the EBITDA charts now look super-bullish, and Tesla even managed a small GAAP profit. These solid returns led to the following analyst upgrades:
* Goldman-Sachs: Price target raised from 864 to 925
* JMP Securities: Price target raised from 840 to 1020 (GS & JMP numbers from this @Mike Smith post)
* New Street Research (Pierre Ferragu): Price target raised to 1100 (from this @EinSV post)

Such a strong showing gave shorts who want to cover and big dog longs who want to get in a fright and so we saw some success in pulling TSLA lower today. You need to separate the noise from the news. Elon's rants are largely noise, the great results are news, but so is concern about the date at which Tesla's Fremont factory reopens. Thus, we ran lower today on profit-taking while some negative news (Fremont uncertainties and overall C19/economy concerns) remains.

Once the boulder starts rolling downhill, most investors don't want to get in its way. OTOH, once TSLA gets its sea legs again, and it will, the run upwards can be just as impressive. We have battery day in 3 weeks, and many investors want to be positioned for it. Expect to see recovery before then. Further, I'd be surprised if we don't hear plans for Fremont reopening within 2 weeks, so I think the time of uncertainty is fairly short. I don't want to be caught short on holdings when we start up again.

Possible negatives that could be negatives for the stock price would be a serious confrontation between Musk and Alameda County on reopening Fremont, and a serious ramping up on tensions between the U.S. and China as the blame for coronavirus situation plays out.

At some point we get over it all and the stock price regains all of its losses since the ER. Keep your seatbelt snug as we negotiate any short-term turbulence. NASDAQ futures being down for tomorrow and after-hours stock prices also being down suggests another red day ahead.

In future ERs, we ought to consider the upper bollinger band for how high the stock price can rise immediately afterwards.

Conditions:
* Dow down 288 (1.17%)
* NASDAQ down 25 (0.28%)
* TSLA 781.88, down 18.63 (2.33%)
* TSLA volume 28.5M shares
* Oil 19.67
* Percent of TSLA selling tagged to shorts: 44%

 

[LN1_Casey]

@Papafox I adore your detailed analysis's, but Elon Musk didn't say that battery day WILL be in 3 weeks, that it MAY be in 3 weeks. If people say "it will be in three weeks" people will begin to expect that, and then may get angry when it's pushed back for X/Y reasons.

 

[israndy]

It's called Elon Time

 

[Papafox]

@Papafox I adore your detailed analysis's, but Elon Musk didn't say that battery day WILL be in 3 weeks, that it MAY be in 3 weeks. If people say "it will be in three weeks" people will begin to expect that, and then may get angry when it's pushed back for X/Y reasons.

Point well taken @LN1_Casey . We've all learned over the years about "Elon time".

Edit: Randy beat me to it ; )

 

[Papafox]

TSLA chart above

QQQ chart above

Friday was day two of the push-down following the excellent ER.Ironically, if you look at the percentage of selling by shorts number in the graph below, you'll see some unusually low percentage of selling by shorts during the ER day and after. We see artifacts on Friday's daily chart that point to manipulations, and for this reason I believe that sometimes an extra-low percentage of selling by shorts number is a contrarian indicator, suggesting that mischief is likely underway but the short shares are deliberately being borrowed from non-FINRA sources to keep from drawing attention.

In any event, up through 11am TSLA was holding its own. At 10:45am both QQQ and TSLA were down about 1.6%. Alas, at 11:11am Eastern Time, Elon Tweeted "Tesla stock price is too high imo" and the bottom fell out. The NASDAQ closed down 3.2% while TSLA closed down 10.3%. The alternative uptick rule was activated for the remainder of the day and for Monday, as well. Notice the 11:30am recovery of TSLA, only to see volume pick way up and the dip restart. It is this post-11:30am dip that I think is most likely the dip that shorts/hedge funds/market makers most likely were involved in.

Notice the pre-market trading at about 750 and the hovering near 750 until the Elon Tweet. There could indeed have been some trading specifically to move the stock price toward this number for options expiration at end of day. After the Tweet dip, TSLA recovered a bit but then we see this slow progression toward 700 for the close. Again, I see this as a bit of a hedge fund/market maker manipulation.

What led up to the Tweet? Certainly, we saw Elon trying to tamp down expectations during the ER with his statements about closures being "fascist" and this statement later on in the ER:

Yeah. I should say we are a bit worried about not being able to resume production in the Bay Area, and that should be identified as a serious risk. We only have two car factories right now, one in Shanghai and one in the Bay Area, and the Bay Area produces the vast majority of our cars, all of S and X, and most of the 3 and all of the Y. So, the extension of the shelter-in-place or, frankly, I would call it, forcibly imprisoning people in their homes against all their constitutional alliance, that's my opinion, and breaking people's freedoms in ways that are horrible and wrong and not why people came to America or built this country. What the expletive [Phonetic]? Excuse me.

My take is that all of the emotional rhetoric during the ER and the similarly emotional Tweets on Friday were connected (including plans to sell all of his personal properties, which I think is a threat for Elon to personally leave California as his residence if the Fremont situation is not soon resolved). Elon sees the closure of the Fremont factory as a threat to Tesla, and he sees a soaring stock price and his being awarded over $100 million in stock options as working against his ability to negotiate a reopening of the Fremont factory and to justify the pain Tesla workers are feeling with unemployment and pay cuts/moratorium on stock-based compensation. Both the negative implications of a soaring stock price and Elon receiving a huge stock award are delayed by a dip in the stock price.

Regarding stock-based compensation, we've already heard that stock-based compensation awards are on hold at present during the crisis, but if you look at the Q1 ER numbers, there continues to be some realizing of stock-based compensation expenses that has been spread out over multiple quarters. Elon qualifying for $100 million+ in awards (even if he cannot sell those shares for years) is a bad look, particularly with employees taking cuts and the Fremont factory shut down. Even Elon's infamous "funding secured" Tweet was a calculated response to a threat (Saudis buying TSLA stock heavily on the open market rather than participating in a go private buyout as a minority shareholder). Elon is not coming unhinged. He has a very real aim for what he has been saying. Until the timetable for Fremont reopening is known, he's trying to tamp down expectations about TSLA stock and his own earnings.

I've heard some dire stock price predictions in the main thread, and I don't buy into them. True, if the macros tank, TSLA will descend with them, but I don't see this as anything inevitable. As I mentioned earlier, I think we'll hear the date of Fremont's reopening soon, in days or a couple weeks, and then battery day will add additional support to the stock price.

That said, Monday could be another down day if macros are weak and if it's true that a fair number of Teslas employees can sell some of their stock on that date. We'll see. Fortunately, the alternative uptick rule should provide some moderating function on Monday.

Regarding reopening America and avoiding a strong second wave, I am optimistic. We will have many more tools at our disposal. Abbott Labs has created an incredibly accurate antibody test with only 0.1% false positives and 0% false negatives in a large, recent test. Moreover, tests for detecting active virus are proliferating and will be plentiful in coming months. Effective test and trace is a game changer, as long as reasonable social distancing and use of masks continues. A lower percentage of people who catch COVID19 will die, due to remdesivir now being recognized as the new standard of treatment and various non-intervenous existing FDA-approved drugs are proven useful as antivirals. Tourist destinations such as Hawaii will reopen as protocols including 72 hour prior testing for the virus plus temperature checks prior to boarding the plane and arriving at destination are implemented. Companies such as Tesla will implement reasonable measures for avoiding cluster outbreaks and, if a small cluster appears, containing it quickly. America won't look the same for a while, but it will get back to work. Two large pharmacy companies believe they'll have millions of doses of their vaccine ready by September. Dr. Birx recently gave January as an aspirational date for rollout of effective vaccines. The dates differ, but at some point the virus becomes controllable and there's reason to believe that the date is before the worst of the next flu season. Meanwhile, a second shift will be added at GF3 in Shanghai, enabling more than 5K M3s/week to be built later this year.

Shorts were tagged with selling 39.9% of TSLA on Friday

For the week, TSLA closed at 701.32, down 23.83 from last Friday's 725.15. It's been a wild week with a very positive ER on Wednesday, a climb above 880 after hours, and some craziness the rest of the week. We've all ridden in this rodeo before. Hang on we'll get back to new highs when the time is right. Have a good and safe weekend.

Conditions:
* Dow down 622 (2.55%)
* NASDAQ down 285 (3.20%)
* TSLA 701.32, down 80.56 (10.30%)
* TSLA volume 32.5M shares
* Oil 19.78
* Percent of TSLA selling tagged to shorts: 39.9%

 

[Artful Dodger]

Note to All: This is NOT the General Discussion Thread. This is Papafox's thread specifically for his daily updates. Please respect its purpose by taking your comments to an appropriate thread. Thank-you.

Ex-mod: At @Papafox's request, I have used the powers that should have gone away by now to move all those other posts out to the general discussion. I wish I could just will my powers to @Artful Dodger, but it doesn't work that way. --ggr

 

[Papafox]

Pardon the housekeeping, but a helpful mod has agreed to trim some of the excess posts today. I appreciate the good sentiment, though!

Regarding the value of the first tranch of Elon's stock compensation, I appreciate the notes from @Artful Dodger and @The Accountant . Let me make a needed correction to my computations.

Referring to a news story (not original Tesla doc, so please speak up if I am wrong), each tranch is good for an award of 1,688,670 shares of TSLA stock at a price of 350.02. If we consider a stock price about $400 higher than that ($750.02), then the value of the tranch is 1,688,670 x $400 = $675,468,000. As @The Accountant points out, if Elon is awarded a stock option (which essentially is what we have here) taxes are due when he exercises the option. Of course the stock price could (and likely will be) considerably higher at the time Elon chooses to exercise.

We now return you to watching the stock price, which is looking mighty frisky this afternoon ; )

 

[Papafox]

TSLA chart above

NASDAQ Chart above (QQQ chart was gorked by a glitch trade)

We live in interesting times. Just after 7am someone did a big push downward with TSLA stock (QQQ was stable at the time) and close to $20 of value disappeared from TSLA. Looked like someone really wanted to keep the downtrend going and was getting an early start at it. Unfortunately for them, buyers started bidding the price up so that when market trading opened, TSLA was transitioning to green. This defeat of the pre-market trading dip gave the bulls reason to buy in brisk trading the first half hour (highest trading per minute was 101K shares). Within the first hour of market trading, TSLA exceeded 748 in a climb of more than $65 from pre-market trading. Not bad.

Overall, TSLA followed the ups and downs of the NASDAQ but at greatly exaggerated multiple. Notice the TSLA dip at 1pmish that coincided with the NASDAQ dip. As the NASDAQ climbed into close, so did TSLA and closed at 761.19 for the day. News included a price target upgrade to 680 from Morgan Stanley and news that Tesla is buying battery-making machines from South Korea's Hanwha.

Why are investors so bullish about TSLA all of a sudden? Consider the two charts below:

April 3 TSLA Chart above (day following release of Q1 P&D report)

Remember the Apr 2 P&D report and how TSLA climbed from about $480 that day but peaked above $540 after-hours once the news came out? That's a good $60 climb. Take a look at what happened the next trading day, though. TSLA descended back to $480! True, NASDAQ was down about 1.5% that day, but there's no reason that TSLA should have lost all its gains from this good news.

Now, consider what happened the first trading day after the 1Q ER:

April 30 TSLA chart above (day following release of Q1 ER & CC)
.
The previous day, TSLA climbed to about $800 during market hours and then when the excellent ER was released TSLA climbed as high as $880. That's a massive $80 climb. Alas, as April 30 rolled around, you see the same erosion of the gains, first in pre-market trading, then during market hours. In this case, TSLA closed at about $782 for a loss of close to $100 from the previous day's after-hours high. Seems like a deja-vu experience all over again, doesn't it?

What I think happened in both cases is that we had some massive selling by manipulators to get the ball rolling downhill. Once the trend of the day became apparent, many longs started selling because 1) the stock was higher than it had been in a long time and 2) the trend was clearly downward. I'm guessing there was massive shorting to get the rock rolling down the hill on both days, and when the manipulators covered in the afternoon hours, they made a small fortune. They succeeded because investors are spooked enough by the current environment (coronavirus, Fremont closed, Elon saying scary stuff on April 29) that they thought someone else knew better, was liquidating, and they too better get out because look at all the money they've already made and they might as well preserve as much as possible.

My point is that there's a pattern here and we might see it repeated again (battery day, perhaps?). These have been pushdowns that clearly involve manipulations, and once the market figured out that they had been duped, the stock recovered. In fact, TSLA climbed from 480 on April 3 to 800 not much more than 3 weeks later. The kind of recovery we saw from April 3 to the 30th is not likely to happen this time around because investors already had a pretty good idea that Q1 ER wasn't going to be too bad. We could see a nice recovery all the same, so keep that possibility open in your mind. Much depends upon macros, the Fremont reopening, and prospects for the greater economy to bounce back.

Consider, though, that yesterday TSLA dropped from about $750 to about $700 on Elon's troublesome Tweets. Today, TSLA closed above $760, more than erasing the Tweet dip. I suspect that you-know-who added steroids to that dip yesterday in an effort to create a downtrend from what should be recognized as bullish news.

Let's watch for this pattern again and see if we can profit from it. It's easy to think of today's climb as an unwinding of yesterday's dip, but I think you need a broader view so that you consider today's climb as a small start toward unwinding the April 30 dip.

Looking at the tech chart, notice how well today's trading reversed yesterday's and how on both days the SP remained above the mid bollinger band, which has been functioning as support. Also, notice how quickly the lower bb is rising and getting ready to provide support at a higher price point.

My friend who was ill is now fine, I am happy to say. Also, congratulations to Elon Musk, it's a boy.

Conditions:
* Dow up 26 (0.11%)
* NASDAQ up 106 (1.23%)
* TSLA 761.19, up 59.87 (8.54%)
* TSLA volume 19.2M shares
* Oil 21.79
* Percent of TSLA selling tagged to shorts: 39.2%

 

[Papafox]

TSLA chart above

QQQ chart above
.
Tuesday's trading included macros that opened in the green, spent the day climbing slowly and then lost about half of the day's gains in a final hour plunge. The NASDAQ closed up 1.13% for the day, but shortly after opening, TSLA was way ahead of the rest of the market, with a climb to nearly 800 (up about 5%), followed by a (apparently) manipulative walkdown that brought it almost down to the red/green line as 11am approached. Notice, too that both TSLA and QQQ gained in the second hour of after-hours trading. With futures up on Tuesday night, there are signals the market may have another green day in it for Wednesday.

Sometimes the macros don't allow a manipulation to succeed, and take a look at that run higher by TSLA at 3pm. My thinking is that TSLA was being artificially held back compared to QQQ (when increased by a typical multiplier such as 1.5X or 2.0X. The bulls were taking the lead and at 3pm and bidding the stock price up to place it where it should have been relative to the macros. Alas, all macros took a big dip after 3pm, and I think we saw a dip on steroids as our friends the shorts sold into the dip to make it proportionally much steeper for TSLA than the macros.

In news:
* Cramer once again gave a plug for TSLA, saying the company is an industry standout and the stock will go much higher.
* Vehicle sales plunged in the UK during April, but in this report, Tesla Model 3 turned out to be the best selling vehicle in the country
* According to this late tweet, Deutsche Bank just boosted its Tesla price target to $850.00 (which fits in with the view that the pushdown following the Q1 ER was a manipulation that will be unwound. Obviously, many analysts from big companies are doing large upgrades to TSLA as a result of the ER).

Another way of looking at the 700-800 trading range is to consider the large number of 700-strike puts that expire on Friday (market makers want to see TSLA remain above 700) and the moderately large number of 800-strike calls (hedge funds which may not be delta-hedging would be protecting these sold calls by trying to keep TSLA below 800 this week. With all the very high analyst upgrades going on, 800 could potentially fall on Wednesday, but efforts to cap at 800 might succeed if enough resources are thrown at it.

The tech chart is where today's most interesting data can be seen. Take a look in mid-April when TSLA departed the upper bollinger band and started trading in the low 700s, maybe 720ish. The following week we saw a jump to the upper 700s, kind of 780ish, with one outlier day (following Q1 ER) when TSLA began the day above 860 but closed well below 800. If you count the days since TSLA started trading in the 700-800 range, it comes out to 16 trading days. The significance here is that when TSLA hits 800 (unless some strong catalyst comes along) there's enough selling to make 800 pretty strong resistance. People are taking some profits at 800. OTOH, when the stock dips to 700 (or slightly below), there's plenty of buying and the price returns to above 700. What you have is a setup for manipulations within that range, and I think that's a big part of what's going on now. Keep an eye open for manipulations meant to profit on the reluctance to break free of the 700-800 trading range. Before you start selling 800 calls, though, keep in mind that word of Fremont opening up could come this week or next and should be enough to allow TSLA to break out of the trading range, other news and macros permitting.

Conditions:
* Dow up 98 (0.56%)
* NASDAQ up 7 (1.13%)
* TSLA 768.21, up 7.02 (0.92%)
* TSLA volume 17.0M shares
* Oil 24.47
* Percent of TSLA selling tagged to shorts: 41.2%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday's TSLA trading had much in common with Tuesday's, but with some important differences. Whereas on Tuesday we saw 790 in pre-market and nearly 800 just after opening (and such an opening without sufficient catalyst led to a punishing downward push by certain entities in the market), on Wednesday we saw a more conservative 785 pre-market and a battle for 780 that lasted throughout the day.

Right after open, the mandatory morning dip pushed TSLA into red territory (even though such a dip was lacking in the macros). Then a bit past 10am the NASDAQ took a dip and of course with short-selling thrown in, TSLA's dip was considerably deeper. The macros and TSLA quickly recovered, however. Whereas QQQ's peaks remained somewhat level for most of the day, TSLA's price began rising, starting about noon and continuing until at least 3pm.

Take a look at the line on the TSLA chart that depicts the price 780. Notice that this was the skirmish line today as the hedge funds apparently sought to keep TSLA below 780 so as to avoid a greater than 800 close on Friday.

Sometimes what's most important to observe is what DIDN'T HAPPEN. For Wednesday, we saw QQQ begin a descent at 3:20pm into closing. Although the descent looks dramatic above because of scale, it was considerably less than a 1% dip. OTOH, we typically see TSLA take a real swan dive when QQQ takes an apparent swan dive, but that magnitude of descent into close didn't happen today. QQQ's descent continued for a few minutes into after-hours trading, which led to a noticeable after-hours dip of TSLA shortly thereafter, but investors figured out this was a manipulative dip (or certainly an overreaction) and bid TSLA back to 780 by 6pm. Thus, between the denial of the after-hours pushdown and the defeat of the 780 cap today, TSLA defeated the manipulators goals, which I see as a sign of strength.

Volume was light today at 11.1M shares traded.

In news,
* The San Francisco Chronicle tried a Lora Kolodny type of Tesla ambush today by hearing from an unnamed source that a few employees were in the factory making preparations for the restart, the newspaper called the Fremont police hoping for them to bust Tesla, but the police said this type of operation with a small number of socially distanced employees is a bit of a grey area and they refused to intervene.
* Two sources have said GF3 is temporarily shut down for production while some type of part shortage is resolved. One of the sources said the factory was expected to resume on May 9, so we're looking at a 2 day shutdown. Such a break is not particularly troublesome, but watch for FUD, which could temporarily suggest a much bigger issue.
* In this report by a bay area TV station, counties were polled as to whether they planned to implement "Stage 2" (low risk enterprises) openings on Friday. All counties but Solano County (northeast of Bay Area) said "No", including Alameda County, where the Fremont factory is located. In the report, Alameda County was referencing "Mid-May" for Stage 2, and so May 18 continues to look like the most likely date for Fremont to resume production.

Futures are up Wednesday night, so exaggerating these news stories and generating negative trading for TSLA will take a serious effort.

Looking at the tech chart, you can see the 700-800 range remains intact (with 1 outlier) as we await the Fremont factory's opening.

Conditions:
* Dow down 218 (0.91%)
* NASDAQ up 45 (0.51%)
* TSLA 782.58, up 14.37 (1.87%)
* TSLA volume 11.1M shares
* Oil 24.06
* Percent of TSLA selling tagged to shorts: 41.5%

 

[Papafox]

TSLA chart above

QQQ chart above

Looking at the TSLA chart above and the QQQ chart just below it, I don't really need to explain anything to 99% of you. You can take a glance and see that the whole day was one big game of "whack-the-mole" to keep TSLA from rising with the macros. The NASDAQ closed up 1.41% today.

We're in the tail end of the week now, and it's time for the pirates who sold call options but haven't been delta-hedging to up their game. For sure, they don't want to see TSLA above 800, but the various strike prices between 750 and 800 are filled with options, and so we may see an effort for a slight walkdown if the macros allow. Right now, futures are up, so the battle may be to minimize the rise tomorrow, we'll see.

The big short-term negative right now is Fremont opening date. Today Governor Newsom gave the ok for California to move into a limited State 2, but the Bay Area counties remain ultra-conservative on opening up.

Positive news keeps building up:
* In this video with Rob Maurer, Alex Potter of Piper Sandler explains the company's $939 price target for TSLA and explain's Tesla's unique postion
* In this Hyperchange video with Gali, Sandy Monroe reveals that he is long TSLA (according to a report, watching video later tonight). If the country's top teardown specialist is buying Tesla stock after such a detailed inspection of each vehicle, you know he's investing from a position of knowledge
* In this video, Joe Rogan interviewed Elon and nothing horrible happened to the stock price. This video confirms my belief that the recent Tweetstorm was not about Elon coming unglued, but was instead a calculated effort to make his point.
* We learned today in this Tesmanian article that GF3 Shanghai did not have a parts shortage but instead was undergoing scheduled maintenance during a holiday period. This is a positive development because it suggests Tesla is maintaining a stable supply line.
* In this post by TMC member @new_sneakers , the member summarizes the main points in a linked video that looks into the new Tesla patent for tabless electrodes. The battery expert in the video believes it's a really huge deal, which Elon concurs with in a recent Tweet.
* Shark Tank's Kevin O'Leary has recently revealed that he is now long on TSLA

So, to sum today up, we're battling the usual end of week headwinds as TSLA maneuvers near the top of its 700-800 trading range. The stock is in a holding pattern until Fremont reopening date is assigned, at which time it should be cleared to climb to a higher altitude, macros permitting. It is suggested that you keep your seatbelt fastened until the captain has turned off the "fasten seatbelt" sign. The great engineering that has been underway the past year and more is improving the bottom line and positioning the stock price to rise higher. This view is being confirmed by the significant number of industry observers who are now jumping on the Tesla train while raising their expectations.

Looking at the tech chart, you can see the daily maneuvering just below 800 as we await clearance to climb higher. Volume was especially light again today, suggesting investors don't want to sell. The lower bollinger band has now climbed above the 100 day moving average and we're seeing these areas of support rising to cushion any short-term surprises.

Conditions:
* Dow up 211 (0.89%)
* NASDAQ up 125 (1.41%)
* TSLA 780.04, down 2.54 (0.32%)
* TSLA volume 11.5M shares
* Oil 23.86
* Percent of TSLA selling tagged to shorts: 39.7%

 

[Papafox]

TSLA chart above

QQQ chart above

On Friday we saw what can happen when there's word that Fremont factory might be opening up: TSLA ran through 800 like it wasn't there. Granted, we had very nice support from macros, but TSLA quite outperformed the macros and notice that the 2pm dip of QQQ was not reflected with TSLA to any significant degree.

During after-hours trading, Alameda County held their press conference and said that Tesla did not have the green light. TSLA did not fall, however, but remained 820ish throughout.

Let's take a look at this San Francisco Chronicle article from which the chart below was taken. Five of the six requirements for reopening businesses are included in the table. You can see that new cases in Alameda County are decreasing, hospital occupancies are well below 50%, and sufficient staff is onboard for contact tracing. The missing ingredients are testing (Alameda is only at 14% of desired testing after 6 weeks of lockdown) and a 30 day supply of PPEs. With such dismal progress of upping the testing numbers, it's unclear whether Alameda County can meet its testing requirements within months, let alone weeks. Alameda has put forth no plan for addressing the shortcomings anytime soon.

What we can conclude is that the lockdown has served its purpose already. The curve has been flattened, new cases are low and falling, while hospitals have excess capacity. What's missing is the will of the county or its ability to round up enough testing to meet its goal and the ability to acquire enough PPEs to meet that goal. These are not achievements that further lockdown will enable, these are inabilities of the government to secure the necessary tests or PPEs. When the Interim public health official in Alameda said that Tesla ought to just wait another week while we see what the numbers do, it's clear the numbers are not the problem.

The problem is that we've now moved from a "flatten the curve" issue where a physician can be helpful in understanding the situation to a political situation where the economic cost of keeping the county closed must be weighed against fewer deaths by keeping the Shelter in Place active. Unfortunately, no politicians from Alameda are front and center in this discussion. Rather, they're hiding behind the "we believe in science" approach to top any complaints by putting their Interim Health Officer in charge of defending the county's position.

It was in this context that Elon started Tweeting again, on top of selling his California properties he Tweeted on Friday or Saturday that Tesla will be suing Alameda County, he encourages shareholders to sue, he's ready to move Tesla's HQ to Nevada or Texas, and California's response will determine whether he retains auto production within Fremont. His comments brought the following responses:
* Fremont's mayor Lily Mei has vowed that the city is ready to help Tesla reopen its automobile manufacturing operations
* Palo Alto's Mayor Adrian M. Fine says he's ready to help Tesla
Then this lawsuit filed by Tesla became public, accusing the county of contradicting the State of California's designation of auto manufacturing as an essential industry and making further arguments related to the 14th Amendment's Equal Protection clause.
* Both the governor of Texas and Ted Cruz have Tweeted "come to Texas" messages

Shorts were tagged with 39.9% of TSLA selling on Friday

Looking at the tech chart, we were on target in expecting word of a Fremont reopening to cause 800 price to be eclipsed. Since Fremont may not be open on Monday morning, what can we expect pricewise? The shorts would, of course, love to engineer a hefty Mandatory Morning Dip Monday morning to test the fear factor. Fortunately, with this lawsuit filed, I think the market is going to be in a wait and see mood. Clearly, Elon's efforts are placing great pressure on Alameda to reopen soon, and the lawsuit might be successful. I'm thinking that Tesla will be allowed to open within a week at worst and fairly quickly this week if the lawsuit is successful. I'm staying in and am willing to ride out a few days of dip if need be in order to enjoy overall rise once Fremont begins turning out cars again.

On the COVID19 front, big breaking news is that a COVID19 antigen test has been given emergency authorization by the FDA. This article explains how antigen tests could become MUCH more readily available. The kind of robust testing in the millions wasn't possible before an antigen test came along. From the article:

"There will never be the ability on a nucleic acid test to do 300 million tests a day or to test everybody before they go to work or to school, but there might be with the antigen test," Birx told reporters last month.

For the week, TSLA closed at 819.42, up 118.10 from last Friday's 701.32. It's been a good week, my friends. Enjoy your weekend. Looking forward to the rest of May!

Conditions:
* Dow up 455 (1.91%)
* NASDAQ up 142 (1.58%)
* TSLA 819.42, up 39.38 (5.05%)
* TSLA volume 16.1M shares
* Oil 24.74
* Percent of TSLA selling tagged to shorts: 39.9%

 

[Papafox]

TSLA chart above

QQQ chart above

The plot thickened Sunday evening when a report from China listed only 3635 Teslas were sold in April, down 64% from March. Here's a CNBC version. If this story appeared in market hours it would have led to a dip, but with time people figured out 1) this is end of quarter month vs. first month of quarter, 2) the timing of a big government incentive and a likelihood of Tesla lowering the price of M3 SR+ caused many buyers to hold off on their purchases until after May 1, and 3) When the LR version of M3 was revealed, quite a few orders for SR+ were changed to LR orders. It all was overblown, just as the U.S. deliveries in first month of a quarter are always way down compared to 3rd month of a quarter. Nonetheless, the story did likely affect some investors who were not in the know and cast some doubt on today's trading.

Tesla did indeed open the factory on Monday. Elon left no doubt with his tweets and Fremont observers saw the employee lot full and tons of Model 3s in the lot (that weren't there before) and being hauled away. Notice that Tesla said that Model 3, S, and X lines would restart immediately. Why not Y? I think the obvious answer is that Tesla is hustling to get a RORO or two of European Teslas on the way from Pier 80 so that they can be delivered before quarter's end. Then Y will come into the picture big time as Tesla concentrates on North American deliveries.

Looking at the TSLA daily chart, you can see the attempts of the shorts to gauge the fear factor this morning by pushing some noticeably icicles in the Mandatory Morning Dip. With the NASDAQ up 0.78% today, TSLA had the macro backing to climb, but I suspect the leveling about 5 or 6 dollars below the red/green line was the work of hedge funds trying to avoid an excursion into the green which could set the stage for a rally. Look at that bullish rally in final hour that was not reflected in the macros when TSLA dared poke its head into the green for a few minutes and then "whack!" the stock sank back down for the close. Enough uncertainty existed today so that they got away with it.

Will Tesla be allowed to continue running Fremont in defiance of the nonelected Alameda Health Officer's position? I believe it's likely, here's why:
* Tesla hired the ultimate 300 lb. pit bull of a law firm, Quinn, to defend them against Alameda. We're awaiting word from a judge whether the county's actions will be legally put on hold while the case is prepared for consideration.
* The POTUS passed the buck to the governors on when to reopen
* The governor of California passed the buck to the counties if they wished to add some qualifications to the state's plan
* Today, the County of Alameda passed the buck for enforcement of their rules to the Fremont Police Department. Normally a county uses the sheriff to enforce their decisions.
* We already know that the Mayor of Fremont is a supporter of Tesla and wants to see the factory up and running.The police department answers to the mayor
* And so the pass the buck process has place enforcement on the table of an entity that likely has no wishes to enforce the county's position.

What the Governor and the County Officials did yesterday and today was to call Musk a bad boy and suggest he is behaving childishly because everything was set for a May 18th opening and the Governor was going to help make this possible (until he heard that Musk already had opened). These type of condescending attitudes are typical when the government entities want to save some face and suggest that Elon's brave resistance was so unnecessary.

The truth, though, is there was no guarantee that Fremont would have been allowed to open on the 18th. The Alameda Health Officer wanted to see how the numbers looked after a week of other businesses being opened. If you look at yesterday's post, the Alameda new cases are slightly decreasing but close to flat. A trend in the wrong direction could become a reason for holding off. Similarly, number of tests conducted was only 14% of goal, and so Dr. Pan has a readily available reason for denying Tesla the right to open if she wanted.

What would serve all parties the best would be for Tesla to submit the desired documents today that Alameda is asking for and then for Alameda's health officer to realize she has lost the contest and approve Tesla's reopening, as if it was going to happen anyway. Give the bureaucrat one last face-saving opportunity.

What could really mess things up would be for Governor Newsom to take a heavy handed position regarding Tesla. I don't think it's going to happen, though, because he has far more to lose than to gain. And so we are left with some uncertainty, but with every day that Tesla stays open, the market will likely warm to the situation.

The good news is that this week, while the uncertainty is being worked out, the factory is running and Teslas are appearing in the lot.

My biggest regret? The Cybertruck is not yet available. With Elon's bold moves to reopen Tesla, those things would be selling like hotcakes as truck buyers embrace the Elon Muskitude.

Looking at the tech chart, TSLA held onto most of Friday's gains and remains above 800. The upper bollinger band would not be a problem if a solid victory of Fremont reopening is achieved. Otherwise we could see the stock price slowly increase for a while and nudge the upper bb higher. Also remember we've been on a long streak of positive macro days. Some down days is inevitable.

Conditions:
* Dow down 109 (0.45%)
* NASDAQ up 71 (0.78%)
* TSLA 811.29, down 8.13 (0.99%)
* TSLA volume 16.5M shares
* Oil 24.53
* Percent of TSLA selling tagged to shorts: 39.3%

 

[Papafox]

TSLA chart above

QQQ chart above

Up until about 3pm, QQQ was running about half a percent above or below yesterday's close. It was a pretty ho-hum day for the macros but when Trump tweeted that California should let Tesla open now, TSLA galloped higher and exceeded 240 slightly after 11am. We did see some big dips in TSLA that were not justified by either news nor macros, and I would agree with @Artful Dodger that those dips were likely manipulations.

With about an hour to go, Anthony Fauci was testifying before the Senate and said something obvious, which is that if you open the economy too early more people are going to die. This statement put the market's nickers in a knot and we saw a big dip of the macros going into close. Tesla followed at exaggerated levels. Whereas TSLA was up to 3.5% above QQQ mid-day, by close the NASDAQ was down a bit over 2% and TSLA down a smidge. So, that's almost a 2X drop compared to the NASDAQ. I think the way this works is that the TSLA short-selling typically gets going toward the beginning of a bad news macro dip and then algos and weak longs continue the slide. Those shorts (or market makers) who started the dip can cover at close (87,000 shares traded at 4pm) or before and make money on the manipulation. In some cases, keeping TSLA from climbing higher is the primary goal and day-trading profits are just a bonus.

None of the major players changed their positions today. The feds, the state, and the City of Fremont apparently still all support Tesla remaining in operations which the County of Alameda continues to oppose. More news came out from Reuters that the governor of Texas and Elon had been chatting about moving the Fremont production to Texas at some point. Such news is a reality check for California politicians. Looks like we're in a stalemate for now. I would expect the county to come around by next Monday, but until then the uncertainty will have a dampening effect upon TSLA.

Looking at the Opricot max pain chart, you can see a fair number of calls expiring at 800, but quite a few more at 850, 900, and above. I think the hedge funds and market makers would like to keep TSLA below 800 this week, but they especially want to prevent a rally to 850 and above. They may succeed if uncertainty prevails this week, but if there's resolution of the stalemate, this baby is ready to go higher.

Looking at the tech chart, the upper bollinger band was actually above 840 earlier today, and you can see that the climb on Trump's Tweet was constrained by the upper bb. If Alameda gives a thumbs up to Tesla for factory opening, then I think TSLA could run through the upper bb. It's all a matter of how important the news is.

Going forward, the macros have had a nice six day climb (now ended) so some macro adjustment may be in order. At such times, conservative traders sometimes take a little profits from TSLA when it is at local highs. The problem is that word of Fremont opening approved by Alameda could possibly overrule macro weakness in the short term. If you play the dip, you risk a big gap up on opening if good news comes forth.

Conditions:
* Dow down 457 (1.89%)
* NASDAQ down 190 (2.06%)
* TSLA 809.41, down 1.88 (0.23%)
* TSLA volume 15.9M shares
* Oil 25.58
* Percent of TSLA selling tagged to shorts: 39.1%

 

[Papafox]

TSLA Chart above (using market hrs only for both charts today because of a glitch in after-hours TSLA chart)

NASDAQ Chart above

Comparing TSLA's chart to the NASDAQ's today, you can see that the two were pretty much in synch but with TSLA running at a multiple approaching 2X. Unfortunately, we often see TSLA trading down at high multiples like this but not trading up at the same high multiples, which suggests TSLA is getting "some help" on the way down. Hmm....

The bigger picture though is that Tesla's factories in Nevada, California, and China spent the day cranking out products. As long as production and demand are there, what's happening with the price in the short run is a side show. In the long run (either in Q2 or more likely in Q3) Tesla will qualify for S&P500 inclusion and the price of the stock will readjust so that the manipulations are taken out during this repricing. As long as you have a time horizon of at least a year, the mischief tends to get sorted out. Don't sweat the short stuff. Today in reality should have been a big positive for Tesla as the county prepares to give the official thumbs up for Tesla's full production next week.

On the topic of the Fremont factory, the County of Alameda remains in contact with Tesla as the two sides sort out the procedures needed to continue operations. Alameda is calling on Fremont police to verify social distancing within the factory and the county's position remains that next week's "opening" is contingent upon the virus numbers remaining flat or down. All these communications to me mean that Elon did the right thing by forcing the issue. Tesla was designated "essential" by the federal government and later by the state. The county's failure to abide by that designation and instead reshuffle Tesla to a lower priority for opening should indeed be illegal because it is beyond their scope of adding additional qualifications for opening. Let's see how the court responds. Too many issues could have delayed Tesla's Fremont factory opening well beyond May 18.

Looking at the Yahoo after-hours numbers for 8pm, TSLA is just a few pennies below 800. If you consider that all factories are producing and there's sufficient demand for the vehicles, the price should be above 800. If you focus on the short-run, then those are the people selling at less than 800. Personally, I'm taking the long view.

Looking at the tech chart, you can see an effort to push TSLA below 800 today, using macro weakness, but with Fremont open, TSLA really should be an 800+ stock. Notice that the upper bollinger band has started to ease higher, at last.

Conditions:
* Dow down 517 (%)
* NASDAQ down 139 (%)
* TSLA 790.96, down 18.45 (%)
* TSLA volume 18.8M shares
* Oil 25.40
* Percent of TSLA selling tagged to shorts: 37.9%

 

[ggr]

I would point out that the Bollinger Bands are squeezing, which means (to me) that a breakout is more likely.

 

[Papafox]

TSLA chart above

QQQ chart above

What's interesting today is how closely TSLA followed the NASDAQ and QQQ. Granted, the range of trading in % was greater with TSLA, but the two charts were closely connected. Whereas TSLA often trades down 1.7X-2X of the NASDAQ, today it traded up 1.7X, which wasn't too far from the downward multiple. Nonetheless, there was good news today. Alameda County continues to pretend it is in charge of Tesla's reopening and Tesla complied with a police inspection of the facilities. In this CNBC story, we can also see that the trend is toward reaching a go-ahead by Alameda to resume operations next week. Once that go ahead is received, I think the market will breathe a sigh of relief (because the tension is over now) and we should see a measured rise in the stock price.

Other positive news today was this story by Reuters which highlights some of the breakthroughs we might learn about in battery day. I don't expect Elon to mention a schedule for battery day until the Fremont opening is secured.

Looking at the tech chart, the last 21 trading sessions have been close to within the upper bollinger band and the mid bb. For a long time TSLA traded within the 700-800 range with one intraday excursion. Now that Fremont has opened, 800 is no longer the top. I'd say we're more in a 850-750 range at the moment as the Fremont factory situation is sorted out.

Regarding @ggr 's comment yesterday, the narrowing of the trading range brings the bollinger bands closer today, and it is like a wedge pattern that needs to get resolved in one direction or the other. Let's hope we hear on Friday that Tesla has the green light from Alameda for full operations next week. That could well be the needed catalyst for the breakout.

Conditions:
* Dow up 377 (1.62%)
* NASDAQ up 81 (0.91%)
* TSLA 803.33, up 12.37 (1.56%)
* TSLA volume 13.5M shares
* Oil 27.32
* Percent of TSLA selling tagged to shorts: 39.4%

 

[JeffreyY]

Thanks as always for the informative posts. I read the Sheriff came by and approved Fremont for production Wednesday.

Tesla Fremont Factory Gets Green Light To Reopen After Inspected By Local Police