Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

The first thing to realize when looking at the QQQ chart above is that the NASDAQ closed up only 0.38% on Thursday, which will hopefully help you realize that the QQQ chart is greatly exaggerated in terms of price movements when compared to the TSLA chart.

In contrast, TSLA got off to a frisky start, climbing more than $20 above Wednesday's close before being pulled lower. I'm guessing we saw shorting used to enhance the dip from the early morning high because the descent was quite steep even though macros were benign during that time period, and secondly because we saw over 600K shares trade in the 4:00pm minute, suggesting plenty of covering from the day's shenanigans. Keep in mind that a successful pushdown through shorting can be a profitable enterprise, especially if the stock closes at a price well below the pushdown level (because shorting used during the day can typically be covered during the day's closing cross).

The most important takeaway from this week's trading so far is not so much what happened as what didn't happen. In previous years, an enthusiastic bear raid could set off a dip that could continue downward for several days and create a noticeable setback in the stock's price. For the past several weeks, however, volumes have remained low as the bear raid takes place because a significant level of buying dries up, but we haven't seen the investor community get scared and start selling in any volume. My personal opinion is that we have a more battle-hardened investor group now, and with bankruptcy no longer in consideration (because of excellent cash flow each quarter and a ton of money in the bank) and with high expectations for the years ahead, the deep dips are much harder to generate. On Thursday we saw the stock price touch the lower bollinger band, and if the price fell below 800 I suspect buyers on Thursday would bid the price back above 800 quite quickly.

Of course with the right negative catalysts any support level could be broken, but my point is that we've been watching some pretty significant attempts to sink the stock price and the results have been far less dip than we would have seen back in 2019 and earlier with similar efforts.

Looking at the tech chart, the lower bollinger band has been a good support level so far this week. Unfortunately, these dips have resulted in the mid bollinger band beginning the first descent we've seen since November.

Conditions:
* Dow down 7 (0.02%)
* NASDAQ up 53 (0.38%)
* SPY up 1 (0.16%)
* TSLA 811.66, up 6.84 (0.85%)
* TSLA volume 21.6M shares
* Oil 57.94
* Percent of TSLA selling tagged to shorts: 43%
* IV 61.0, 11%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday was one of those hang onto your hat days. Macros were fairly sleepy until the final 40 minutes of trading or so, no TSLA news of significance was circulating, and yet at 10:31am we saw a doozie of a Mandatory Morning Dip that pulled TSLA down about 3% and had the shape of an Oklahoma F5 tornado. Such steep descents followed by similarly steep ascents are an earmark of a manipulated dip. My thought is that we had seen multiple attempts this past week to pull TSLA below 800. When the pushdown succeeded, stop-loss selling was triggered and the entities enhancing the dip with short-selling were likely well rewarded for their efforts if they sold near the bottom of that tornado.

For much of the day TSLA traded just above 800 as the market makers likely added a nudge here and there to keep TSLA from closing below the Put-rich 800 level. They weren't going to let that happen.

In the final 40 minutes of Friday's trading, three forces likely worked to pull TSLA higher:
* Hedge funds who manipulated the stock price worked to close their short positions
* Macros caught a nice tailwind and rose significantly (see QQQ)
* The usual Friday afternoon to Monday morning short-term traders bought in

Consider the Mondays since TSLA leveled off in the prolonged, 850ish consolidation that shows a similar stock price 5 weeks later.
Mon 1/11 -3.4% max, -7.8% close
Mon 1/18 +1.5% max, -2.2% close
Mon 1/25 +6.8% max, +4.0% close
Mon. 2/1 +5.8% max, +5.8% close
Mon. 2/8 +3.5% max, +1.3% close
In 3 of the 5 Mondays, you would have made money holding TSLA until Monday's close if you had bought the previous Friday, just at close. In 4 of the 5 Mondays, you would have made money if you sold TSLA near the day's high, after buying that Friday at close.
One takeaway is that buying Friday afternoons is typically a better move than buying Monday mornings
Another takeaway is that buying Friday afternoon and selling at end of trading on Monday produced light profits, but selling at top of range on Monday mornings produced significantly more profits.

News:
* Reuters says Tesla to set up a manufacturing facility in India
* This Tweet shows Troy's Feb 7 Tesla delivery estimates are for 182K in Q1 and 880K in 2021.

Coronavirus Update

The impressive decrease in U.S. daily new cases continues

Most striking this week is the continued decline in daily deaths, which lags the daily new cases by a few weeks

Looking at the tech chart, the lower bollinger band allowed some transgressions through this past week, but the opening and closing prices for the most part responded to the lower bb's support properties. Meanwhile, the mid bollinger band, which had been at 850 has now drifted to 844.

This past week was a good one for keeping in mind that Tesla as a company is delivering, is expanding quickly, and I personally believe Elon's statement that deliveries will be growing by at least 50% yearly for years to come. In a traditionally weak quarter by automakers, Tesla looks to deliver noticeably move vehicles than the strong quarter that ended 2020. The big challenge is creating and obtaining a sufficient number of battery cells. Keep your eye on that detail as we invest in this amazing company.

For the week, TSLA closed at 816.12, down 36.11 from the previous Friday's 852.23. Considering the apparent effort put in to sink TSLA, we did ok. Hoping you had a great weekend.

Conditions:
* Dow up 28 (0.09%)
* NASDAQ up 70 (0.50%)
* SPY up 2 (0.49%)
* TSLA 816.12, up 4.46 (0.55%)
* TSLA volume 23.8M shares
* Oil 59.47
* Percent of TSLA selling tagged to shorts: 43%
* IV 59.6, 9%

 

[Papafox]

TSLA chart above

QQQ chart above

The optimistic coronavirus numbers posted on Sunday had an effect on the market, with airlines and other entities that can most benefit from the recovery rising as buyers took some funds from the tech high flyers. Apple was down 1.61%. Nonetheless, TSLA took a higher than normal dip. The sector weakness allowed TSLA to close. below 800.

I continue to believe that downward pressure on TSLA continues as various players on Wall Street seek to pry shares from weak longs and those shares are in part being bought by benchmark funds which missed the boat when it came to buying TSLA below the S&P500 inclusion prices.

Since 2021 should be a strong year for TSLA and 2022 an extremely strong year, I am hodling through this turbulence with enough cash free for a couple years of personal needs and a TSLA investment horizon that stretches into 2022 and 2023. As often happens with one of these dips that is not related to Tesla's execution, once the upturn happens, traders playing the dip are quick to jump back in and the price can recover quickly. Most likely, anticipation of Q1 results will provide a catalyst for a rising stock price as we get closer to the quarter's end. We're halfway through the quarter already.

Looking at the tech chart, the lower bollinger band resides at about 792, which placed Monday's close above.the lower bb. At the moment, TSLA is riding the lower bollinger band in a slow descent.

Conditions:
* Dow up 64 (0.20%)
* NASDAQ down 48 (0.34%)
* SPY down 0 (0.09%)
* TSLA 796.22, down 19.90 (2.44%)
* TSLA volume 19.8M shares
* Oil 60.05
* Percent of TSLA selling tagged to shorts: 50%
* IV 58.6, 7%

 

[Papafox]

TSLA chart above

QQQ chart above

For a stock that has been mostly trading within the 800s for nearly 2 months, an excursion well into the 700s on Wednesday was an event that caught the market's attention and led to some interesting gyrations. The extent of the Mandatory Morning Dip on market open (without news or sufficient macro weakness) suggests a manipulation as someone on Wall Street wants TSLA lower. TSLA initially shook off the dip, but when the NASDAQ did a mid-to-late morning swan dive, TSLA followed and dipped below 770. About noon, QQQ started rising and TSLA managed to recover faster than QQQ and the NASDAQ, to close slightly in the green.

My feeling is that the NASDAQ's weakness on Wednesday was much like Tuesday's in that the Dow was up and the NASDAQ was down as money flowed in a DOWward direction. One catalyst for this migration to the Dow Wednesday was Warren Buffett's decision to load up on shares of Chevron and Verizon. Throw in a tech stock's typically higher multiplier on its volatility compared to the NASDAQ, garnish with profitable manipulations from the usual suspects, and you have a recipe for a dip.

Fortunately, the NASDAQ recovered much of its losses by closing time and TSLA recovered all of its losses. One positive result of the dip and recovery today is that stop loss triggers that were taken out in today's dip will not be there if TSLA dips further this week. Another advantage is that the mid-day reversal of the dip created FOMO in those who had sold in the 700s and led to some quick rebuying.

News:
* Sawyer Merritt Tweeted that TSLA lowered the cost of the standard range + Model Y by $2000 and the Standard Range + Model 3 by $1000. My take? I think Tesla will be battery cell constrained in Q1 and lowering the price of the Standard Range + versions of these two vehicles will maximize the number of vehicles that can be delivered in Q1.
* Rob Maurer posted a video podcast on the topic of volatility. His advice to look at TSLA from the perspective of a long term investment with your goal set to a certain number at a day well into the future and not let the short term rises and falls worry you. Interestingly, Rob continues to be unwilling to suggest that manipulations take place with this stock but did talk about unfounded 3% dips.

Looking at the tech chart, you can see that TSLA bounced off the 50 day moving average (blue line) today and then managed to close above the lower bollinger band (which was at 795.80).

Conditions:
* Dow up 90 (0.29%)
* NASDAQ down 82 (0.58%)
* SPY up 0 (0.09%}
* TSLA 798.15, up 1.93 (0.24%)
* TSLA volume 26.1M shares
* Oil 61.74
* Percent of selling tagged to TSLA shorts: 56%
* IV 59.1, 9%

 

[BrianZ]

Hi Papafox,

I've been wondering for a long time, what does the second number (the percentage) after IV mean?

 

[Highway2Heel]

Hi Papafox,

I've been wondering for a long time, what does the second number (the percentage) after IV mean?

This should help explain:

Market Chameleon

 

[Papafox]

TSLA chart above

QQQ. chart above

For most of the day, TSLA traded at a much more reasonable multiple of the NASDAQ than in some recent days. I think part of the moderation we're seeing with TSLA vs the NASDAQ on down days is that investors who sold toward the bottom of Wednesday's sub 770 dip got burned by the stock's rapid recovery to the green for the close.

Volume on Thursday was a mere 17 million shares, which leaves the door wide open for manipulations. Maximum pain is 760 for the week, so perhaps the dip of TSLA in the final hour of trading was a manipulation intended to maximize option seller profits come Friday. The dip did not have sufficient connection to the NASDAQ price action to justify it.

One of the ironies is that when TSLA is in a slow descent, volume is reduced because many buyers are waiting for a bottom to be signaled, and that reduced volume in turn makes the stock easier to manipulate (and to keep the descent, if that is the intent of the manipulators).

Overall, the NASDAQ has been down for most of this week, which didn't help TSLA any, and the benchmark funds are still looking for an entry point that is somewhat closer to the S&P500 entry point (and no doubt working with their other Wall Street friends to achieve this aim).

During TSLA's long 850ish consolidation, we had the Q4 earnings report, which was followed by various price target upgrades above 1000 (and some above 1200) as analysts digested the ER. Upward pressure on the stock price existed at the time of these upgrades, but the relatively low volume allowed a successful manipulation to keep TSLA's price from running higher (and therefore maximizing the profits of the option sellers). In more recent days, the overall pressure shifted to downward as the NASDAQ turned red recently and we pass the halfway mark of the quarter without significant numbers of redesigned Model S and Model X rolling off the assembly line. When whatever bottleneck is slowing production of these vehicles is overcome and production numbers ramp up, some of the downward pressure will turn to upward pressure.

The recent downward pressure on TSLA has resulted in the stock price pretty much following the lower bollinger band as it descends. The blue 50 day moving average could provide support and is at 761.25 on Thursday.

Conditions:
* Dow down 120 (0.38%)
* NASDAQ down 100 (0.72%)
* SPY down 2 (0.43%)
* TSLA 787.38, down 10.77 (1.35%)
* TSLA volume 17.6M shares
* Oil 59.39
* Percent of TSLA selling tagged to shorts: 59%
* IV 58.9, 9%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday's trading showed many similarities between the QQQ chart and the TSLA chart. A notable exception was the recovery QQQ showed after 2:30pm that was not copied by TSLA. I suggest that departure of TSLA from the broader market was an end of Friday manipulation by option sellers. Notice that TSLA showed an increase in price during the final few minutes as the closing cross was underway. We saw over 460K shares trade hands at 4pm, which, combined with the closing increase in price, suggests there was a good deal of covering for daily shorting taking place at day's end.

Although max pain was at about 760 last Friday, the chart was so affected by the deluge of $20 puts that picking a practical target for the option sellers was not an easy task. This week, strike bets near the money are much more readable, and you can see that puts dominate up to the $800 strike price, where calls rule at that level and above. For this reason, it's not surprising that this Friday's max pain number is 800. In theory, the market makers would be exerting some upward pressure in the second half of the week.

What we saw on the previous Friday and then again on Wednesday of this past week was a deep morning dip that, once defeated, gave way to a strong recovery. My interpretation is that you have buyers waiting on the sideline for TSLA to bottom out but they're ready to jump in once they suspect a reversal. You also saw multiple deep dips that suggest it's pretty easy for the usual suspects to engineer deep dips at will. Certainly volume has been low enough to assist such efforts.

Friday's max pain chart shows the calls taking control at 800 strike and above for a clean divide between Puts dominating and Calls dominating (just below 800).

Troy's delivery numbers
Troy Teslike just made public here his fourth revision of Q1 delivery numbers. He offers more up to date estimates to his Patreon supporters. His Q1 delivery numbers are now 177K, down from a recent estimate of 182K. The reasons he lists for the lower numbers are no S & X exports in Q1 and Q2, slow Model Y production spin-up in both Shanghai and Fremont, and no Model 3 LR AWD from Shanghai until Q2.


Coronavirus Update

The dramatic downturn of Covid 19 in the United States continues. Further, this dip is pretty much a worldwide dip (though not as dramatic).

The worldwide new cases are dropping as well

Looking at the tech chart, the 50 day moving average line has intersected the lower bollinger band, and TSLA remained above both on Friday. If downward pressure on the stock continues, you may see TSLA following the lower bollinger band down. OTOH good news and good macros should result in TSLA remaining above the 50 day moving average. News and macros are more powerful than technicals in most situations.

For the week, TSLA closed at 781.30, down 34.82 from the previous Friday's close of 816.12. There's a downward trend at present as expected deliveries in Q1 decline each week that next gen S & X fail to be produced in meaningful numbers and Model Y production is not increasing fast enough to make up for the expected lower numbers of S & X. This is a short-term issue that will be resolved as Tesla has resolved every important issue previously. in the coming week, let's see if 800 max pain can counteract some of the downward force of lower delivery expectations. Moreover, today's TSLA investors seem much more resilient to the kind of fear induced by manipulations. Hoping your weekend has been a good one.

Conditions:
* Dow up 1 (0.00%)
* NASDAQ up 9 (0.07%)
* SPY down 1 (0.18%)
* TSLA 781.30, down 6.08 (0.77%)
* TSLA volume 19.0M shares
* Oil 59.24
* Percent of TSLA selling tagged to shorts: 58%
* IV 56.3, 3%

 

[Papafox]

TSLA chart above

QQQ chart above

Please pardon the short post on such a volatile day. I've been driving all day. What you already probably know is that the tech stocks took a big hit, causing the NASDAQ to close down nearly 2.5%. The Dow was up, however, showing that the shift in funds from high-flying tech stocks to lower flying stocks that benefit from Coronavirus progress happened yet again. The big question is why did TSLA close down more than 8.5%? Part of the answer is that investors have been a bit jumpy lately with S & X refresh not yet shipping, Model Y ramp a bit slow, and some confusion recently with Model Y SR receiving a $2000 price reduction and then being pulled off the website menu (Elon Tweeted today that the vehicle is still available off menu).

My suspicion is that entities such as hedge funds that can profit from adding steroids to a dip (short selling on the way down and covering at the bottom) took advantage of this uncertainty and engineered a particularly deep dip today. I say this because if you look at the TSLA chart and compare it to the QQQ chart you'll see that TSLA's descent was very similar to the QQQ's descent, only more than 3X more volatile.If the depth of the TSLA dip was primarily TSLA news driven, then you would see a proportionally higher dip early on when the news would have been traded on, but that really wasn't the case today. Also, for the depth of today's TSLA dip, roughly 37 million shares traded is pretty low volume. It's not a case of investors rushing to sell, it's more a case of a big macro dip that has buyers mostly sitting on the sidelines, waiting for the dip to bottom out.

Keep in mind that this stock can be as volatile on the way up as it is on the way down. At some point, traders who have played the dip and benchmark funds who missed buying in earlier are going to want to take advantage of the deep sale price on TSLA.

Rob Maurer in this Tesla Daily YouTube Video did a nice job of summarizing forces involved in today's dip.

Experienced TSLA investors have ridden through many of these dips. When you consider the number of $1200 plus price targets out there now for TSLA, the upside potential of buying in at these levels is quite high and so the incentive will be there when the stock price turns around. Once again, the moral of the story is to keep your TSLA time horizon long enough so that you can ride out these dips and profit from the long-term growth of Tesla.

Looking at the tech chart, Monday's move was just too great for any of the support levels to be effective.

Conditions:
* Dow up 27 (0.09%)
* NASDAQ down 341 (2.46%)
* SPY down 3 (0.77%)
* TSLA 714.50, down 66.80 (8.55%)
* TSLA volume 35.6M shares
* Oil 61.49
* Percent of TSLA selling tagged to shorts: 37%
* IV 65.1, 23%

 

[Papafox]

TSLA chart above

QQQ chart above

Today I returned to my mainland U.S. house after a week of roadtripping in my Model S. On one hand, it's agony to be away from a computer on such meaningful days for TSLA. On the other hand, it's good to get a reality check by driving a Tesla long distance and talking to all those new Model Y owners at the supercharger stations. The ones I spoke with were ecstatic about their new vehicles. I think this company has a future ; ) Because of time constraints I am giving opinions today about the shapes of the charts without my usual research.

The TSLA morning dip that mirrored QQQ's early morning dip ran lower with every bit the high multiplier as yesterday's dips (significantly more than 3X). Rough calculations give me a dip of 3.5% for QQQ prior to 10am but a monster dip of 13% for TSLA. By end of day, both TSLA and QQQ had recovered the vast majority of their losses and in after hours trading, TSLA tacked on an extra 2.5% to close up for the day.

The implications of TSLA's strong bounce from its morning lows is that fear of missing out (FOMO) is become a real force at these lower prices. Benchmark funds had their chance momentarily to get into TSLA below the S&P500 buy-in price, but that was a fleeting moment and TSLA closed in after-hours trading nearly $100 higher than its bottom today.

Make no mistake that the selloff in the tech sector of the NASDAQ is still the driving force with the market and with TSLA at the moment and the bottom of that selloff is uncertain. Today's recovery by the NASDAQ as shown on the QQQ chart suggests that FOMO is starting to become a factor in other tech stocks. Consequently, we may not see quite as dramatic dips as we saw the past two days with either the NASDAQ or TSLA because of investors more willing to buy the dips after today's experience.

I also think that at these prices we may start seeing TSLA trading at a lower multiplier to the NASDAQ than the 3.5X we saw on Monday and Tuesday if future dips occur. The storm's not necessarily over yet, but the attitude of the traders has been shifted from primarily fear of falling to more fear of missing out now.

A Tip
For those of you who trade from an IRA or 401K (where trades don't generate tax consequences), keep in mind that volatility can be your friend. I use strong climbs and strong dips to roll the expiration date of my leaps farther back. Sometimes I'll guess wrong, but most of the time I guess right. If the stock price is rising, I buy one (or two if you're a big dog trader) of the new (more distant) expiration dates and then sell my nearer one or two leaps of the same strike when the purchase price is reached. Similarly, if the stock price is falling, I sometimes will sell one or two of the nearer expiration date leaps and buy the farther expiration date leaps after their price falls enough to purchase with the proceeds of the earlier sale. You ultimately retain the same number of shares or leaps but you trade for more distant expiration dates.

Looking at the tech chart, you can see the high level of puts at 700, which gives the market makers an incentive to keep TSLA above 700 for Friday's close. The high level of 800 calls suggests the market makers would attempt to keep the price below 800 on Friday if it rose near to that number.

Looking at the tech chart you can see the very dramatic candle created by this morning's deep dip and the afternoon recovery. Notice that the lower bollinger band is descending at quite an angle. I haven't see such mostly vertical bands provide meaningful support.


Conditions:
* Dow up 16 (0.05%)
* NASDAQ down 68 (0.50%)
* SPY up 0 (0.12%)
* TSLA 698.84, down 15.66 (2.19%)
* TSLA volume 66.6M shares
* Oil 61.49
* Percent of TSLA selling tagged to shorts: 34%
* IV 65.3, 25%

 

[Papafox]

TSLA chart above

QQQ chart above

The trend this past week has been noticeable. On Monday, TSLA traded 3.5X worse than the NASDAQ during the downturn, on Tuesday TSLA performed slightly better than the NASDAQ if you consider after-hours, and on Wednesday TSLA traded 6X better than the NASDAQ. Although TSLA volume jumped up to 66 million shares on Tuesday with the strong turnaround, volume on Wednesday (even though it was a very positive day, amounted to only 37 million shares.

Where do we go from here? The worst of the tech selloff is likely over and investors have been scrambling to grab TSLA shares while the price is still a bargain. Looking at the max pain chart below, you can see optimistic options traders grabbing 750 strike calls, so you can expect the market makers to try to keep TSLA below 750 this week. It's all about macros, TSLA news, and the tendency for TSLA to bounce back from dips in this new era of profitability.

News:
* The Killowatts Tweeted this photo of the refresh Model S that has apparently recently been built. Photos of some blue refresh S vehicles were posted elsewhere today. The cars are starting to appear, but not in big numbers yet.
* Sawyer Merrit Tweeted that Fremont has been shut down for a few days (later in the thread he said likely chip shortages) and that Fremont was using the time to do necessary maintenance. Let's see what tomorrow brings in news.
* LG has reportedly begun building 4680 cell production for Tesla and is reportedly trying to beat Panasonic in coming up to speed with production
* Yahoo quoted Cathie Wood as saying the dip was "healthy" and reported ARK Invest picking up over 240K shares of TSLA
* CNBC published the worst photo of Cathie Wood they could find (makes her look older and angry) and suggested that ARK's purchase of TSLA shares might have turned the stock around on Tuesday

The official max pain number is 750 at the moment and coincides with the actual max pain location where dominating puts transitions to dominating call options

Meanwhile, the pirates couldn't work their manipulations primarily with non-FINRA shares to short and started using some FINRA shares in their daily short and cover routines

Although the market makers have reason to stop TSLA at 750, I'd really love to see TSLA above the blue 50 day moving average by week's end.

Conditions:
* Dow up 425 (1.35%)
* NASDAQ up 133 (0.99%)
* SPY up 4 (1.10%)
* TSLA 742.02, up 43.18 (6.18%)
* TSLA volume 36.8M shares
* Oil 63.22
* Percent of TSLA selling tagged to shorts: 52%
* IV 62.8, 17%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday's QQQ bounce was strong enough to get me to let down my guard and assume macros had bottomed out for this tech stock selloff. Alas, Wednesday turned out to be a short-lived recovery because the market took to worrying again about inflation and interest rates, and punished tech stocks for yet another day.

Going into Thursday's trading, we were wondering what effect some stoppage of production at Fremont would have on the day's trading. The morning's effect was light if any, and then Elon clarified the situation with this Tweet:

Thus, the weakness we saw during the close was more related to macros than negative news about the factory.

Interest rates and tech stocks
Whenever the market does a pullback, high flying stocks such as TSLA usually take the biggest hit, and these days the tech stocks on the NASDAQ tend to be the high flyers. Thus, bigger drops in tech stocks during the macro dip is what you'd expect. I believe that the tech pullback is overblown. We don't, of course, expect TSLA investors to move their funds directly into 1.5% yield bonds. What happens sometimes, however, is that high flyer investors move money into value stocks and value stock holders sometimes take a more conservative position by moving funds into bonds. One problem with this scenario, however, is that with inflation at about 2% and treasury bonds yielding about 1.5%, such bonds are losing real value every year. They are not a reasonable investment alternative to stocks IMO, and I don't see a a continued migration out of stocks and into bonds. For this reason, I see money coming back into the high flying tech stocks in good time. Fed Chairman Powell said this week that he's not worried about inflation this year but Wall Street is in knee-jerk reaction mode, which is leading to the tech selloff. We saw bargain hunting for good tech stocks on Wednesday, and it'll happen again.

One way to judge TSLA investor sentiment is by comparing NASDAQ vs. TSLA multiples on a day or day basis. On Monday's big dip, TSLA was trading down nearly 3.5X the NASDAQ's dip. On Tuesday, TSLA traded about even with the NASDAQ on a neutral day, and on Wednesday, TSLA traded up about 6X the NASDAQ's climb. What we needed to see was another big dip day, and we got one on Thursday. TSLA traded down about 2.3X compared to the NASDAQ, which was a significant improvement from Monday's dip. Thus, when the NASDAQ is moving higher, TSLA wants to run higher at a high multiple because the potential investors don't want to be left behind (FOMO). When the NASDAQ is moving lower, TSLA is showing smaller multiples in its moves as buyers are becoming more willing at these prices to buy perceived bottoms of dips.

Papafox's Trade Today
A couple years ago, near the bottom of one of TSLA's dramatic swan dives, I bought a sugarload of Jun2021 200-strike leaps which are now 40-strike leaps after the split. They cost less than $15 a share apiece, so it has been an extremely profitable trade. In recent months I sold all but two of these leaps. Now the final two are going to expire in not much more than 3 months and it's time to get rid of them. Today I bought 200 shares of TSLA at about 690. I will feel pretty silly if this correction continues for much longer, but my plan right now is to sell those two 40-strike leaps when TSLA climbs back above 730. The sale will cover the cost of the 200 shares, and thus I will eventually return to the same exposure in my TSLA holdings but the 200 shares will be worth 200x$40= $8000 more than if I had simply converted my leaps to shares on the same day. The big risk of a trade such as this, of course, is misjudging the bottom and carrying more exposure into any further dip.

ARK Invest's TSLA price targets
On January 31, 2020 (year has been corrected), ARK Invest produced their new TSLA price targets for the year 2024. Here are the targets:

It's useful to keep the potential of this stock in mind during bad times. It's also helpful in finding the disciple to not gamble your money on short-term bets when you realize that 2024 is not that far away and you could reach your financial targets through more reliable investing strategies.

Electrek says that demand for refreshed S & X is high and a second shift will be needed to meet demand once the retooling for the new vehicles is complete.

@StealthP3D 's post here has words of wisdom about taking the long view of an investment.

Since Wednesday, the puts at 700-strike and the calls at 750 strike have only grown in number, giving market makers just that much more incentive to close between 700 and 750. What the market makers want takes a back seat to strong macro forces, however.

Looking at the lower bollinger band, it is chasing the stock price rather than controlling it, and when a bollinger band, either upper or lower, is substantially vertical and chasing the stock price it isn't really functioning as either support or resistance.


Conditions:
* Dow down 560 (1.75%)
* NASDAQ down 479 (3.52%)
* SPY down 9 (2.41%)
* TSLA 682.22, down 59.80 (8.06%)
* TSLA volume 37.7M shares
* Oil 63.39
* Percent of TSLA selling tagged to shorts: 56%
* IV 76.5, 50%

 

[st_lopes]

ARK Invest's TSLA price targets
On January 31, 2021, ARK Invest produced their new TSLA price targets for the year 2024. Here are the targets

I believe this should be 2020. You got me excited for a second thinking I somehow missed Ark’s updated price targets.

 

[mikevbf]

And it should be noted that January 31 2020 was pre split so all these targets need to be split adjusted.

 

[Papafox]

Thanks @st_lopes and @mikevbf for setting the record straight on this January 2020 price target by ARK Invest. What I find so incredible about past price targets by ARK is how they were the most accurate targets of all and came pretty close, even though Wall Street found them laughable at the time they were released.

BusinessInsider reported here that Cathie's 2018 call for TSLA to hit $4000/share came through in January 2021 on a split-adjusted basis.

Now her Jan 30, 2020, "expected value" $7000/share estimate by 2024 when adjusted for the split is $1400, which looks entirely reasonable and her split adjusted $3000/share estimate bull case looks reasonable, too, if Full Self Driving generates a useable autonomous driving platform. Note that bull case is a 25% probability in their model, so don't take this price as a sure bet.

These are old estimates and ARK has become only more bullish in the past year. Looking forward to seeing ARK's new targets when they come out.

 

[st_lopes]

Thanks @st_lopes and @mikevbf for setting the record straight on this January 2020 price target by ARK Invest. What I find so incredible about past price targets by ARK is how they were the most accurate targets of all and came pretty close, even though Wall Street found them laughable at the time they were released.

BusinessInsider reported here that Cathie's 2018 call for TSLA to hit $4000/share came through in January 2021 on a split-adjusted basis.

Now her Jan 30, 2020, "expected value" $7000/share estimate by 2024 when adjusted for the split is $1400, which looks entirely reasonable and her split adjusted $3000/share estimate bull case looks reasonable, too, if Full Self Driving generates a useable autonomous driving platform. Note that bull case is a 25% probability in their model, so don't take this price as a sure bet.

These are old estimates and ARK has become only more bullish in the past year. Looking forward to seeing ARK's new targets when they come out.

Thank you for the consistent, thoughtful content!

Between Potter’s 100 page bible and ARK’s models (both 2020 and soon to publish update), the Tesla growth potential has been extremely well documented. What I love is that you can pick many of their assumptions and make a reasonable case that several are quite conservative and often well under Tesla’s own publicly stated targets. Just highlights the magnitude of upside that Tesla has ahead of it.

With that, I’ll stop clogging your thread!

 

[Papafox]

TSLA chart above

QQQ chart above

Although Friday's TSLA trading opened up along with QQQ's, it didn't take long for options expiration forces to pull TSLA down to nearly 660 in a deep Mandatory Morning Dip that took place around the usual MMD time of 10:30am. This dip was almost certainly a manipulation as it took on the quick up and down "tornado" look of a pushdown being heavily bought back to near the starting point and then a second dip did the same thing. TSLA recovered into the green and then spent the rest of the day in a game of whack the mole, being pushed down every time it dares stick its head up into the green.

TSLA was still green 7 minutes before market close, but then a combination of a macro dip in those final minutes and a strong pushdown ensued that caused TSLA to lose 1% in those final minutes when there was no TSLA news of consequence. A hefty volume of nearly 1.5 million shares took place in the 4:00pm minute.

So, what happened? The problem wasn't the usual sector rebalancing away from high growth tech-like stocks on Friday because other stocks of this type did well. Nvidia closed up 3%, and other tech stocks closed in the green. That last minute dip into close was widespread with high growth companies and even DOW stocks and wasn't TSLA-specific.

Here's a piecing together of elements that could have affected Friday's trading but it is such a long string of events that you should consider it a guess rather than something I feel high confidence in.

Let's start with this story on Reuters entitled Analysis: Hedge funds worry about market fallout from Tesla, ARK and spiking yields. What you need to understand from the get-go is that hedge funds are not worried. In fact the funds quoted in the article tended to bet in a fashion where they'd profit from Tesla and ARK running into problems. Moreover, the article itself is classic FUD, designed to scare investors away from Tesla and ARK. The funds were hoping that enough investors could be scared out of the ARK ETF so that ARK would be forced to sell shares of TSLA and thereby aid their efforts to make money by shorting TSLA or benefitting from purchased Puts that expired Friday.

One rumor is that the buying of TSLA by ARK Invest was of sufficient quantity that it turned one of the week's deep dips into a climb. Such a move would in fact really piss off the pirates trying to sink TSLA this week, and judging from TSLA's performance vs. other high-flying tech-like stocks, the pirates succeeded to a moderate extent in their efforts.

FUD typically depends upon facts that have some truth to them but which are then twisted way out of proportion. For example, consider the statement by the hedge funds, "Cathie Wood runs a very high-risk, high-beta tech portfolio, and to load up on Tesla right off its highs seems a little premature,” said Peter Bortel, general partner at Bortel Investment Management, who said he put a short position on Tesla on Wednesday." In other words, this hedge fund manager is trying to both scare investors out of ARK funds (with the aim of forcing ARK funds to sell TSLA) as well as put pressure on Cathie Woods for buying, rather than selling, TSLA last week.

Then there's "rapidly growing companies that are being priced on cash flows 10-20 years in the future are vulnerable to rising yields.” True, rising interest rates put pressure on stocks that are valued at 10 to 20 years out, but TSLA is growing at over 50% per year and can justify its valuation in just a few years. A 1% rise in interest rates is not going to gork TSLA's valuations, as those quoted imply.

So, looking at this FUD as actually a blueprint for the tactics of the pirates who pushed TSLA lower than it should have been pushed this week, I'd say that the hedge funds first made money in the usual way, which is day-shorting TSLA on dips to exaggerate those dips and profit from covering at lower prices than what they sold in on. Secondly, I suspect the unusually high number of Puts in the 700-strike area that expired this Friday may have included bets placed by those same hedge funds, which paid off well this week.

What didn't work for the hedge funds was efforts to get ARK to sell TSLA as investors were scared out of the ARK ETFs. Overall, I think the hedge funds have been trying to profit from the dip in the high-flyers this past week and as a possible bottoming out of the interest rate-induced dip appears on the horizon, they're trying to stir up more fear by articles such as this Reuters piece of FUD. Don't get me wrong, some of the dynamics of rising interest rates affecting valuations of stocks based upon expectations of performance many years from now are true, as is high-flyers being more severely affected by market dips than value stocks and more conservative investments. The problem is that Tesla's valuation model doesn't well fit the scenarios this article outlines, and the effort of the writer to generate fear about investments in TSLA and ARK is very apparently a major goal of the article.

All together, I suspect that the hedge fund pirates who assaulted TSLA this week expected even better booty, but ARK ended up buying, rather than selling, TSLA when the sugar hit the fan. Thank you Cathie Wood.

What then happened to the market makers, who presumably sold many of those 700-strike puts and would have benefitted from a close above 700? I suspect they put some effort into raising TSLA toward 700, but that persistent Whack-the-Mole effort that sank TSLA every time it turned green convinced the market makers that whoever wanted TSLA to close lower had plenty of firepower and inspiration to work with. Rather than buying to raise TSLA stock price on Friday afternoon, the market makers instead opted for traditional delta-hedging, which involved selling TSLA as it dipped into the close.

Notice that with the exception of Tuesday's trading, the descent from 850 to the present stock price has been more-or-less linear.

For the week, TSLA closed at 675.50, down 105.80 from last Friday's 781.30. By now you know the drill: don't sell your shares to the pirates on an exaggerated dip. Better days lay ahead. Hoping you enjoyed a good weekend.


Conditions:
* Dow down 470 (1.50%)
* NASDAQ up 73 (0.56%)
* SPY down 2 (0.52%)
* TSLA 675.50, down 6.72 (0.99%)
* TSLA volume 38.8M shares
* Oil 61.50
* Percent of TSLA selling tagged to shorts: 54%
* IV 69.9, 32%

 

[Papafox]

TSLA chart above

QQQ chart above

A nearly $43 climb, anyone? Marvelous Monday is back.

Refined view of why the big high flyer selloff of last week
Chamath Palihapitiya, among others, has pointed out that some hedge funds are leveraging their money up to 10X in order to generate more profits than the competition. This huge leverage has its consequences, such as last spring when the coronavirus dip began and hedge funds were selling madly in order to deleverage. Thus, the high leverage of the hedge funds leads to huge volatility when they need to unload, which makes life unpleasant for buy and hold investors. Interest rates creeping up 1% isn't nearly as frightening, but the result, I believe, is similar. With interest rates rising, hedge funds decided to derisk their holdings with the highest flying stocks. My guess is that Gary Black heard rumors of what was possibly coming and took the opportunity to sell his TSLA holdings. In any event, high flying stocks such as TSLA, many tech stocks, and those top-performing ARK Invest ETFs all dropped dramatically.

My guess is that as long as hedge funds were whispering among themselves that trimming the high flyers was coming, some decided to make a few extra bucks from the trimming. Perhaps this is why we saw the remarkably high number of 700ish-strike TSLA Puts expiring last Friday and we saw (to my eyes) robust efforts to enhance TSLA's slide last week with day-shorting. The big failure was assuming Cathie Wood would sell shares in TSLA as her various ARK ETFs experienced lots of selling, and instead ARK bought TSLA in substantial quantities.

Why was TSLA's climb so strong on Monday?
* Friday's TSLA trading included obvious manipulations to keep TSLA from climbing and a strong Monday following a manipulated Friday is common
* The NASDAQ closed up 3% and TSLA's 6+% climb would only be about a 2X multiple
* At Monday's close of trading, QQQ was down about 3.8% from its February high and TSLA was down nearly 18%. TSLA has some catching up to do.
* Many investors have been waiting on the sidelines for TSLA to bottom out at an attractive buy in price. Many of them decided today was that day
* Even though TSLA rose nearly $43, volume was a light 27 million shares. It's hard for market makers to keep up with the delta-hedging when the stock price is climbing so quickly on light volume, and TSLA likely needed to climb into close and then higher in after-hours trading in order to complete the day's delta-hedging. We even saw 1.1 million shares trade hands during the 4:00pm minute, suggesting that market makers were scooping up shares during the closing cross.

Friday's max pain chart shows a 6K spike of call options at 750-strike, which would suggest the option sellers would like to keep TSLA below 750 this week.

Looking at the tech chart, Monday's strong climb breaks the pattern of a consistent downward trajectory from the 850s.

Going forward, much depends upon macros. Today's robust NASDAQ climb did much to generate FOMO and dispel fear of falling (FOF). TSLA has much ground to regain. Don't hold your breath for it to pop back to the 850s, but further climbing is likely to be bought as FOMO reignites.

Conditions:
* Dow up 603 (1.95%)
* NASDAQ up 396 (3.01%)
* SPY up 9 (2.42%)
* TSLA 718.43, up 42.93 (6.36%)
* TSLA volume 27.1M shares
* Oil 60.34
* Percent of TSLA selling tagged to shorts: 42%
* IV 61.3, 13%

 

[Papafox]

TSLA chart above

QQQ chart above

On Tuesday the macros turned lower with the NASDAQ more than 3X lower than the Dow. Yep, it was time for the market to have another shot of high flyer stock fever. With the NASDAQ down 1.7%, other high flyers such as NVIDIA were down 3%Apple down 2%, and Amazon down 1.6%. Most of TSLA's 4.45% loss could be attributed to being a high flyer on a bad day for this sector. Not all of the losses in the dip fit into this category, however, since TSLA has been falling noticeably steeper than its contemporaries, with no specific news to justify the dip.

Was a big holder of TSLA selling? If so it would have made way more sense to sell Monday when the market couldn't find enough shares to buy without raising the price by nearly $43. Perhaps news today prompted TSLA's weakness. The only story I can think of is the Samsung chip factory in Austin which will be down for perhaps a couple months, due to water damage. If so, the selling is likely an overreaction because Tesla has a way of detouring around supply chain shortages. Besides, volume was a mere 23 million shares today.

I am more inclined to believe that we had a perfect setup for a big dog hedge fund manipulation. Think about the ingredients:
* TSLA shareholders were jumpy after last weeks plunge and more easily primed for a dose of fear
* Volume was low
* TSLA's short term share price situation is uncertain with refreshed Models S&X yet to run off the assembly line in volume and the Fremont factory recently shut down for a few days
* The day began not with a gap down but rather with a small loss that continued to get worse as the day went on, allowing a manipulator max profit for shorting the dips to add steroids to the descent and then covering lower to realize a profit.

So... a big dog hedge fund, or a group of hedge funds could have seen the potential for a successful manipulation and moved ahead with it. First step would be to buy a bunch of 600-strike puts that could be sold throughout the day at a profit. Then would come the shorting when referencing the order book so that maximum lowering of stock price would occur for the shorting effort. Cover lower for a profit, then rinse and repeat. Sell those 600 puts throughout the day as the stock continues to sink. As long as a hedge fund has enough firepower for the volume that day, it's an easy way to make money as long as the macros stay negative. Notice from the charts above how QQQ was rising from about 11:15am until about 2:00pm, but TSLA continued its descent. The 4:00pm minute trading exceeded 400K shares, suggesting lots of covering.

The max pain chart shows a tremendous number of 550 and 600-strike puts expiring on Friday. Hmm, I wonder how many of these puts were bought by the same hedge funds working the TSLA stock price down today? Remember, the stock price need not reach 600 to be profitable. All you have to do is sell them toward the end of a deep dip day as 600 looks more possible.

Looking at the tech chart, notice how low volume has been the past two days, especially Tuesday. Notice how Tuesday's dip almost exactly unwound Monday's gains.

When the short term trading becomes crazy it's time to take stock of just how bad things are for the economy and how good things are for Tesla. Yields on 10 year treasury bonds were pretty flat on Tuesday at an annual rate of about 1.4%. This really isn't a sky is falling scenario.

As for Tesla, Elon reports that the redesigned S&X lines are nearly complete and that there's sufficient demand to add a second shift, something we haven't seen with these high margin vehicles for a while. This demand is for the 400 mile S and a bit less X. When the 4680 cells are integrated into the new S and X, expect a further reason for buyers to sign up. For Q1, there's some uncertainty about delivery numbers. For 2021, especially as Berlin and Austin come online, Elon's goal of at least 50% annual increase in deliveries should easily be met. The big issue to watch for 2021 is how well the dry battery electrode 4680 cells can be spun up. With recent stories about LG Chem challenging Panasonic in gearing up pilot lines for producing 4680 cells, my guess is that Tesla is feeling optimistic about the form factor and the DBE process of creating electrodes. Keep an eye on this technology because it is essential for Tesla's expansion plans.

Monday reminded us of what this stock can do on a good day. Tighten up that seatbelt, it's time to get the loose change out of the sofa if you plan to add to your TSLA holdings, and hang on!

Conditions:
* Dow down 144 (0.46%)
* NASDAQ down 230 (1.69%)
* SPY down 3 (0.78%)
* TSLA 686.44, down 31.99 (4.45%)
* TSLA volume 23.3M shares
* Oil 59.75
* Percent of TSLA selling tagged to shorts: 39%
* IV 63.9, 21%

 

[Papafox]

TSLA chart above

QQQ chart above

Please, step into my office, we have something to discuss. On Tuesday the big question was, "Did negative news about TSLA exist that hadn't hit the wires yet but prompted the afternoon selloff of TSLA that brought it 2.6X lower than the NASDAQ's dip?" This question was pertinent because on Monday TSLA climbed more than 2X the NASDAQ's 3% climb (thus no bad news then). We wondering if TSLA would show a similarly deep dip on Wednesday morning as it did on Tuesday because of any news. The answer was No. In fact, up until about 1:20pm, TSLA was trading significantly stronger than the NASDAQ, even trading well in the green at times when QQQ and the NASDAQ were mired in red. Thus, Wednesday mornings strong performance by TSLA clearly let us know that bad news about TSLA, even news that hadn't yet hit the wire, was not the reason for Tuesday's TSLA weakness. Something else was afoot.

If yet to be revealed negative news about Tesla wasn't the reason for Tuesday's weakness, what was? We got the answer during Wednesday's trading session at about 1:20pm when the dip of the NASDAQ resumed. All of a sudden, it was like someone flipped a switch and TSLA was diving much faster than the NASDAQ. Why? Again, there was no apparent news behind TSLA's change in price trajectory, and big institutional owners simply don't suddenly start selling in the low volume afternoon if there's no reason for the selling.

I suggest that some big dog hedge fund that had been working TSLA on Tuesday afternoon saw the Wednesday1:20pm resumed dip of the NASDAQ as an opportunity and turned on its profitable pushdown algos that including picking up some puts and then selling them as the red deepened on Wednesday afternoon. That pushdown effort included short-selling to accelerate TSLA's afternoon descent and then covering at lower price levels to reap the sell high/buy low profits. I believe that up until about 1:20pm, the hedge fund was laying low, allowing TSLA to recover for a day for so before resuming the pushdown routine. Over 560,000 shares traded in the 4:00pm minute suggests plenty of end-of-day covering on Wednesday.

The outlook
On Wednesday morning, 10 year treasury rate yields increase by about a half a percent on an annualized basis, and that small increase led to today's additional weakness in tech/high flyer stocks. I don't know when these rate climbs and overreactions by the market will subside, so there's certainly an element of the unknown. I strongly believe we have a big hedge fund working TSLA stock lower on these dips and profiting from the manipulations. Thus, TSLA is being pushed artificially low. This is at a time when confidence in Q1 deliveries is rather low on Wall Street, likely inappropriately low. At some point these downward forces will turn around but for now we have a setup for an unjustified low dip.

My response
I'll likely pick up a couple long term, deep in the money call options (leaps) to profit from an unjustified overexuberant dip. The time I buy options is when the price of TSLA is inappropriately depressed in a major way. Right now I'm looking at March2023 300-strike calls. They're selling for about $410 per share or $41,000 for the call option. Add the strike price of $300 to $410 and you get $710. As long as TSLA closes above $710 when the options expire in 2023, I make money. The tricky part is I don't really know how low TSLA will go with the market punishing tech stocks for small interest rate increases and hedge funds manipulating TSLA lower than the rest. I suspect if TSLA ever got down to 600 the buying would be intense enough to bring it back above 600 pretty quickly. I understand that TSLA will likely bounce back quickly at some point, but I'd rather miss the bottom than buy too soon, especially since I already bought shares at 690. At my stage of the game, capital retention is more important than max gains, which is a big reason why I buy deep in the money calls with years of time ahead rather than more speculative plays with my trading money. I also do my option buying in an IRA, so I am not penalized with taxes when I convert the options back into shares.

News: The news continues to suggest TSLA has a bright future
* Electrek says India offers Tesla large incentives to establish EV factory in their country
* Marketwatch says TSLA price target more than doubled by UBS
* Benzinga says ARK's Cathie Wood more convinced of Tesla's autonomy strategy and new price target is coming soon

Conditions:
* Dow down 121 (0.39%)
* NASDAQ down 361 (2.70%)
* SPY down 5 (1.32%)
* TSLA 653.20, down 33.24 (4.84%)
* TSLA volume 30.2M shares
* Oil 61.28
* Percent of TSLA selling tagged to shorts: 43%
* IV 72.9, 43%