Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

Papafox's daily trading charts are an effort to keep the TMC community up to date with pertinent data and charts so as to provide a quick reference and an archived source for when you might like to study what happened one trading day in the past. The charts pages began on April 16, 2016, and have been carried on faithfully since then. Another goal of the thread is to give a visitor to TMC a very quick summary of what happened on any particular trading day, as many TMC members do not have the time to daily view all of the posts in the various investor threads.

Q4 2021​

	Production	Deliveries	Subject to operating lease accounting
Model S/X	13,109	11,750	17%
Model 3/Y	292,731	296,850	5%
Total	305,840	308,600	5%

2021

	Production	Deliveries
Model S/X	24,390	24,964
Model 3/Y	906,032	911,208
Total	930,422	936,172

TSLA at 1210, anyone? After Tesla's blowout Q4 delivery numbers of 308,600 deliveries, there was no holding TSLA back on Monday and it ran up to within a hair of 1200 during market hours. Most of those gains came from a gap up, for TSLA was trading at 1139 during the opening minute. Within half an hour of close, TSLA bounced off 1200. Part of the bounce is normal resistance as many investors had set 1200 as their sell/take some profit point. The market had to work through those sell orders. After hours, the market makers needed to keep buying for their delta-hedging and with only limited selling available TSLA was bid up to 1210. Congratulations to all longs!

Implications are substantial going forward:
* Tesla managed an 87.4% year over year increase in deliveries over 2020. That same blowout growth is possible in 2022 with Tesla already producing at a 1.2 million vehicle rate during Q4 and two new factories are set to open in January. Many analysts failed to believe Elon when he stated "over 50%" annual growth for the next few years. Analysts will be reworking their spreadsheets for 2022 estimates and a flurry of price target upgrades will be incoming.
* Monday's huge $143 gain is the catalyst for beginning a new rally for the stock. Expectations for the Q4 Earnings report should push the stock higher. Actual profit numbers delivered in the Q4 earnings report should positively surprise most analysts as they will likely underestimate the effects of the higher production numbers and higher selling prices on gross margins. Further, the price target upgrades that are coming will pave the way for TSLA to run higher. In past rallies we've seen TSLA run out of steam when it had climbed to nearly the top price targets, but that stairway is going to be extending in the coming weeks as analysts change their published expectations.
* Once again Tesla has demonstrated it can outproduce and outmaneuver the competition in a year with supply constraints. It's not just the cars, it's the way the company does business. No other automaker can touch Tesla either in products or in adeptness in adapting to the current business environment.
* Tesla has become the 1000 lb. gorilla in the room with Q4's results. Imagine a trillion dollar company that is growing at over 85% per year? Portfolio managers of benchmark funds who are lacking or low on TSLA will really need to buy TSLA fairly soon to keep from having their fund underperform for yet another year. TSLA is becoming just too big a story to ignore. The conservative approach will be to go equal weight on TSLA, and for the laggard funds to catch up that will require LOTS of buying.
* Troy Teslike has earned new credibility in the Tesla community. His willingness to make a big increase at the very last minute in his delivery estimates based upon a credible Tweet about China production (weighed against existing evidence) allowed him to get closer to the blowout numbers than anyone else.

Pull out your smallest violin possible, please
I increased my TSLA holdings during the weeks leading up to the end of quarter, so that my gains on Monday were wonderful. Nonetheless, I set my alarm here in Hawaii for 3:30am so that I could see if I could buy an additional 100 shares in pre-market trading at a price that made sense. When I looked, TSLA was trading near 1129, about where the upper bollinger band was on Friday. Good enough! Unfortunately, as I entered buy order after buy order, sometimes $1 over the asking price, none of the orders went through. Iceman the 16 year old Tesla dog woke up and gave me stink eye as I fiddled with my computer. After 40 minutes of missing the boat, I gave up and went back to sleep. Lesson learned: when there's ferocious buying pressure you may need to substantially exceed the ask price in pre-market conditions to succeed with your order.

News:
* Deutsche Bank upgraded their price target from $1000 to $1200 following Tesla's Q4 results (they were ahead of Tesla's stock price for nearly a day)
* KGI raises price target from $1000 to $1480
* New Street Research raised their price target to $1580

The only negative of the day was we saw 10 yr. treasury bond yields rise above 1.6%

Max pain for Monday was 1065, which should now be ignored as it is no longer a relevant number going forward. The chart above will be useful, however, starting Tuesday morning as we see how the various call mountains have grown and we understand just how much delta hedge buying the market makers are forced to do. Remember that much of the upward pressure in past rallies has been caused by call option buyers forcing the market makers to buy, and it was that hedging that was so essential to keeping the upward pressure on the price of TSLA. Remember, too that chart from Jan 21 that I posted a few trading days ago. There are LOTS of in range strike price call options already out there that will force market maker delta hedge buying. The delta-hedge buying is needed at time of call option opening, but it is also needed when the stock price is rising rapidly and the deltas of existing call options keep increasing. For example, a call with a delta of .5 when then turns into a delta of .65 as the stock price increases, will require additional market maker hedging when stock price is climbing quickly.

For the above reason, you will likely see the market makers try to draw a line in the sand and tame the climb of the stock price. We may see a Mandatory Morning Dip on Tuesday that serves as a proactive protection of 1200. Chances are that effort will eventually fail, but that's the game that lies before us now.

The upper bollinger band was no match as resistance for the exceptional news that came out over the weekend. On Nov 4, TSLA closed at 1229.91. That was the top closing price before the "Elon is selling" dip began. Climbing to 1230 or above will set a new All Time High and would likely propel the stock price higher.

Conditions:
* Dow up 247 (0.68%)
* NASDAQ up 188 (1.20%)
* SPY up 3 (0.58%)
* TSLA 1199.78, up 143.00 (13.53%)
* TSLA volume 33.61M shares
* Oil 75.93
* IV 66.0, 77%
* Max Pain 1065

 

[Troy]

Troy Teslike has earned new credibility in the Tesla community. His willingness to make a big increase at the very last minute in his delivery estimates based upon a credible Tweet about China production (weighed against existing evidence) allowed him to get closer to the blowout numbers than anyone else.

Here is what happened in detail in case some people find this interesting:

• On 23 Dec, I updated my delivery estimate on Patreon to 289K. I make these estimates public after 7 days so I posted it on Twitter on 30 Dec. At the time, on 23 Dec, I was estimating 59,529 production in Shanghai in Dec.
• On 28 Dec, I increased my delivery estimate to 291K. I was now at 62,684 production in Shanghai in Dec. I was getting news that production was very strong. This 291K update was skipped on Twitter.
• On 30 Dec, I increased my delivery estimate to 293K. This time, I increased China production to 64,480 in December based on news from the supply chain that suggested 65K production. Again, this 293K estimate didn't make it to Twitter.
• On 31 Dec, the rumor about 70,500 deliveries in China came out. I commented about it here saying it made sense if we assume 65K production which was what I was hearing from the supply chain. I had assumed 2,800 exports in Dec. If I dropped that to zero and reduced end-of-quarter China inventory from 6.7 days worth of production to 5 days, I could indeed get to 70,500 deliveries in China. So, I made the change and posted my final estimate on Twitter which was 299,100 deliveries. I was off by -3.1%. My production estimate was more accurate. I posted my error rates here.
  
  In case you are wondering why Tesla would have any inventory left in China at all, it's because not all buyers live right next to the factory. It takes some time to transport the cars to different cities and then they need to be cleaned before delivery and then people make an appointment to pick up the car. The lowest inventory was 6.5 days at the end of Sep and again 6.5 days at the end of Oct meaning cars produced in the last 6.5 days were not delivered within the same quarter. It looks like Tesla managed to drop this to 5 days and potentially to 4 days. We need to wait for the actual numbers from China. Also, it looks like December production was higher than 65K and most likely somewhere between 65-70K.

 

[Papafox]

TSLA chart above

QQQ chart above

The option sellers did indeed choose to defend their 1200-strike call options and we saw a significantly out of proportion dip of TSLA on Tuesday, compared to the NASDAQ and QQQ. When TSLA bottomed out in a dip that looked like an Oklahoma twister (a good indication of manipulations) around 11:30am, it was down about 3.7X QQQ's dip at the time. Volume was high on Tuesday, with 32.2 M shares traded... almost as many as changed hands on Monday. Nonetheless, option sellers were motivated and managed to engineer a nice dip for TSLA.

In many ways, the day's dip was a perfect setup for the hedge funds doing the majority of the dirty work. A strong macro dip while TSLA begins the day near the red/green line is a profitable endeavor in itself for hedge funds who short the stock early then cover at a lower price. When that enhancing of the dip adds profits to one's sold call options, it becomes a particularly attractive manipulation.

After the midwest tornado dip in late morning, investors started bidding TSLA back up, above 1160, but as QQQ started a slight descent in early afternoon, that was the perfect excuse for another TSLA pushdown. Although the likely primary purpose of the dip was to help secure the 1200 strike options that expire on Friday, the afternoon dip took TSLA below 1150 and when QQQ started steadily marching higher after 2pm you can see TSLA did not follow, which suggests the option sellers were working to protect the 1150 calls as well.

An additional indication of manipulations was pointed out by @viridi in the main TMC investor's thread today. He said, "Definitely games being played - massive spoofing going on with very large orders (as large as 17,400) being put in and pulled. "They" are protecting $1,150 at the moment. Every time TSLA dares to go over $1,149, the spoofing starts. Hopefully, buy orders come in that take out the spoofers." A thanks to Viridi who was kind enough to PM me about my inability to buy shares during the pre-market trading on Monday. He said that orders above 100 shares are more likely to be front-run and suggested breaking the buying up so as to keep each purchase below 100 shares. Now you know too.

As you certainly recall, Monday of last week we saw TSLA easily climb above 1100, only to be pushed back down later in the day and held below 1100 for the remainder of the week. Is this our fate with 1200 this week? I suggest we have a considerably different situation this week (although the option sellers seem just as determined to protect their sold call options). Tesla just knocked Q4 deliveries out of the ballpark with their P&D Report, and we're going to see a record-breaking Earnings Report in a few weeks. Analysts are already upgrading their price targets. In this video, we see the first possible sign of European buyers being contacted about delivery of their made-in-Berlin Model Ys. Other strong rumors are that Tesla will announce the beginning of production at Austin sometime this week. Overall, there are far more catalysts this week to send the stock price higher than we saw last week. Once TSLA breaks upward and starts climbing in bulldozer mode, there's nothing the market makers and hedge funds can do to stop it. Fingers crossed.

News:
* Nikola drops lawsuit against Tesla's semi truck design (good timing as we may actually see some deliveries to Pepsi in Q1)
* Tesla price target raised from $950 to $1300 at Mazuho Securities
* CFRA upgraded TSLA from hold to buy and raised its price target from $875 to $1250
* How Tesla weathered the supply chain problems better than the competition. This story is important because it shows that Wall Street and the media are finally noticing how Tesla's deep vertical integration and resources give it a substantial advantage over its competitors.

Fortunately, 10 yr. treasury bond yields barely rose on Tuesday

Max pain is now 1100. Looking at the chart, you can see the more than 17K call options at 1200 strike, which are being protected. If 1200 falls, 1250 is a major threat to the option sellers as well because of the large number of calls there too. Moving to lower strike prices, we see almost even puts and calls at 1150, and then once we get all the way down to 1100 there's a small excess of calls, which just shouldn't be worth the effort for the market makers. Anything above 1150 is dominated by call options, however, and I think that's the incentive for the market makers pushing hard to hold 1150 on Tuesday.

TSLA opened near the upper bollinger band on Tuesday (a safe price at which to start the trading) but downward macro pressure and apparently highly motivated option sellers forced an outsized dip on Tuesday for TSLA.

Conditions:
* Dow up 215 (0.59%)
* NASDAQ down 210 (1.33%)
* SPY down 0 (0.03%)
* TSLA 1149.59, down 50.19 (4.18%)
* TSLA volume 33.2M shares
* Oil 77.05
* IV 66.0, 77%
* Max Pain 1100

 

[Papafox]

TSLA chart above

QQQ chart above

The macros for tech stocks were ugly on Wednesday, with a capital U. Many tech stocks closed down 7%, which is quite a bit more than TSLA. In fact, TSLA was trading pretty well for all but the final two hours of Wednesday. At 2pm both TSLA and QQQ were down about 1.2% and then the sugar hit the fan. Looking at NASDAQ down about 3.5% and TSLA down about 5.5% for the day, TSLA managed less than a 2X relative dip.

What set the market off was the release of notes from the Fed meeting, and the devil lies in the details. The market reacted with a fear of growing inflation, which suggests that growth stocks valued multiple years out will see a hit during computations, and so a big sector sell took place as money flowed toward mundane value stocks. After such an overreaction is completed, smart buyers grab the best stocks (this includes TSLA) at discounted prices and these stocks begin their recoveries much more quickly than the "stinkers". It's that latter group of stock that suffers longer term when such a shift takes place.

Consider that TSLA closed at about 1057 on Friday before we learned about the amazing Q4 Production and Deliveries Report. Come Monday TSLA exceeded 1210 after hours before the brutal trading on Tuesday and Wednesday brought TSLA back down to 1088, a mere $31 above where we were on Friday. Has the good done by the 4Q P&D report been effectively neutralized by the losses of the past two days? Hardly. What we saw in the Q4 report was an indication of just how strong TSLA is going to be in 2022 and going forward. What we saw from Tuesday and Wednesday's trading is mostly noise in the long run. Money will shift back to the tech stocks, sooner rather than later for the gems like TSLA. More analyst upgrades will be forthcoming for TSLA, and during the next big run upward, TSLA will be limited by the upper price targets, as it has been in the past, and the closing price of TSLA on Tuesday and Wednesday will be long forgotten.

The main casualty of Tuesday and Wednesday's dips is the momentum TSLA has lost after it's enormous Monday. Looking for another catalyst to get things going again and a big bounce following the end of the sector redistributing could itself be that catalyst.

If you don't like Wednesday's price for TSLA, simply wait until after the Q4 Earnings Report coming in a few weeks. The ability for TSLA to generate 3 billion dollars a quarter in profits while growing something like 80% in the coming year, won't be lost on the market. Really.

If you have dry powder to deploy, consider doing some cost averaging (and hopefully already having deployed some on Wednesday afternoon). A sector dip like this can last additional days, but when it's over TSLA should be primed to recover quickly.

If you would like to be cheered up and reminded why we are investing in TSLA, please go to @The Accountant 's Q4 earnings estimates starting here (published on Sunday).

Previously when we saw yields on 10 year treasury bonds hitting 1.7% , the market shuddered. We've just gone through a similar reaction on Tuesday.

Official max pain is 1120, but looking at the chart from a market maker's perspective, I don't see too many strikes that need to be kept out of the money until you reach the enormous call wall known as 1200 strike. No doubt they'd like the 1060 and 1080 to close out of the money on Friday, but 1200 is the 1000 lb. gorilla in the room at the moment.

Notice how the last dip in late December bounced off the blue 50 day moving average. There are limits to how much downward force a 50 day moving average can support, but don't be surprised to see a bounce off the 50 DMA (currently at 1072.69) if the downward forces are modest on Thursday.

Conditions:
* Dow down 393 (1.07%)
* NASDAQ down 523 (3.34%)
* SPY down 9 (1.92%)
* TSLA 1088.12, down 61.47 (5.35%)
* TSLA volume 26.3M shares
* Oil 77.85
* IV 66.7, 80%
* Max Pain 1120
* Percent of TSLA selling tagged to shorts: 42%

 

[Papafox]

TSLA chart above

QQQ chart above

Thursday morning's trading left me scratching my head for a while. Why was TSLA doing worse than QQQ and other tech companies. Why did the TSLA daily chart look like someone spent the whole day trying to get TSLA to close below the 50 day moving average (1073.61)? I came up with two contenders for the explanation.

Gary Black offered the first possibility on Wednesday:

So, if analysts are expecting a 1% increase in rates (and treasury yields) and the analyst uses expected performance (like Gary does) 5 years down the road, then there is a change to TSLA's present value in their computations. My argument was that Q4's results were so substantial that they more than compensated for any additional 1% interest growth that may be coming. Apparently Gary Black agreed too because in this Thursday Tweet, he raised his TSLA price target to 1600. By that upgrade he made my point: a slight jump in inflation has a noticeably smaller impact on Tesla's value than the massive expansion in deliveries witnessed in Q4. Scratch possibility number one.

The second possibility I considered because TSLA's rather level bouncing up and down for much of the day looked suspiciously like capping. Why would the hedgies and market makers be capping TSLA when it is already below this week's max pain? My answer is: the Jan 21 options expiration. Let me reproduce the Jan21 max pain chart below for illustration purposes.

Besides the extremely high number of call options expiring on Jan 21, notice that the max pain number is 740. Yep, that's no typo. The reason max pain is so low is that back in 2019 before the big 2019-2020 run higher, you could buy a Jan 21, 2022, leap call. I suspect most all the super-deep-in-the-money calls expiring Jan21 have already effectively reached a delta of 1 or nearly so, and there's no need for additional hedging on them. Each of these calls is already hedged with 100 shares of TSLA. As you move closer toward our current price, however, some of those huge number of calls still could increase their deltas if the stock price runs higher, and out of the money calls would see big delta jumps if a rally brought them into the money. Thus, there's a lot at stake for the option sellers because on top of the stellar news about Q4 production and deliveries, there's a sugarload of call options coming up for expiration in two weeks. A rally would necessitate larger than usual delta-hedging, which would push the price higher, draw in traders, and the gamma squeeze becomes a reality.

I'm going with door number two as my explanation for TSLA's surprising inability to climb on Thursday. Now that we're focused on this motive, let's take a look at the TSLA daily trading chart at page top. A few minutes after 10am QQQ took a fast dip then recovered, and so did TSLA. The difference? QQQ's dip was 1% in depth (compared to previous close) and TSLA's dip was 5.8%. Looks a bit like the pirates shorting the sugar out of TSLA during that dip, doesn't it? Tesla closed slightly lower than QQQ for the day, but not nearly 6X lower. QQQ recovered back into the green, where it spent most of the rest of the day, but TSLA failed to recover and looked glued to around 1060. Remember that it is easier to hold a stock at a certain price than to push it down there, and I submit TSLA's trading on Thursday has all the fingerprints of manipulation. Finally, the strong, (greater than 1%) gain in TSLA during after-hours trading (see top graphic) suggests investors figured out they had been snookered on Thursday and picked up TSLA at the discount price. Such a gain suggests positive sentiment that will likely spill into Friday.

With 10 yr. treasury yields over 1.7% (and likely soon to exceed 1.75%), Wall Street is starting to have kittens over this development

Max pain for Thursday was 1120. A more relevant number to look at would be max pain for January 21, which I talked about above. I think MMs are focused on Jan 21 and how to deal with it, which would explain a full-court press for the next two weeks.

Hmm, the stock price took a dip all the way down to the mid bollinger band on Thursday but opening and closing prices remained near the 50 day moving average. Look at that high volume of nearly 30M shares traded.

Overall, I think the option sellers will try to keep the pressure on TSLA through Jan 21. They may not succeed. Macros will no doubt play a role in good days vs. bad days for TSLA. With the high volumes we've been seeing, a strong recovery would be hard to stop. I continue to believe that Wall Street will be surprised by Tesla's Q4 earnings report. Keep that seat belt snug as we proceed further into January. The trip will be worth it.

Wishing I had been awake for the 10:11am dip so that I could have done some buying with reserve money. Although I love a good night's sleep, I'm setting a price alert so that my phone will wake me. Doing that will pretty much guarantee we don't see a similar dip on Friday.

Conditions:
* Dow down 171 (0.47%)
* NASDAQ down 19 (0.13%)
* SPY down 0 (0.09%)
* TSLA 1064.70, down 23.42 (2.15%)
* TSLA volume 29.3M shares
* Oil 79.60
* IV 66.6, 80%
* Max Pain 1120
* Percent of TSLA selling tagged to shorts: 38%

 

[Papafox]

TSLA chart above

QQQ chart above

What a week. Most of us made our highest ever one day gains of TSLA on Monday and then gave it all back and then some as the week played out. The good news: Tesla's story hasn't changed. There's still more demand than can be met in the near term, Q4 blew the doors off analyst expectations for deliveries and sets the stage for a very strong 2022, the Q4 earnings are likely to be just as stellar as the production and deliveries report, and two new factories are ready to open within weeks (so much for the rumor of an Austin opening last week).

TSLA's 13.5% gain on Monday gave way to a 14.4% dip Tuesday through Friday. The biggest culprit: Wall Street freaked out when it saw the minutes of the Fed meeting (more likely to hike rates than generally thought) and went about punishing high-flying tech stocks in a sector redistribution from high-growth tech stocks to more mundane and less volatile stocks.

Just how reasonable was this readjustment of values between sectors, though? From Tuesday through Friday, the NASDAQ lost 5.7% while TSLA lost 14.4%, for a 2.5X loss. Particularly when TSLA had just announced such excellent news, a 2.5X multiplier seemed too high to me. Even ARKK, which is an ETF of tech high-flyers, lost less than TSLA over the period, 12.9%. I usually expect ARKK to fair poorly during these big dips because, just like Tesla, the fund has riled longstanding interests on Wall Street and there are hedge funds eager to punish stocks contained within the ETF come big dips. A less controversial high flyer, Nvidia, lost 10.6% during the Tuesday through Friday close period. Let's just say that maybe 11% of TSLA's dip, a 2X multiplier on the NASDAQ, could be legitimately due to the sector reallocations. Where did the other 3.4% come from? I continue to believe we saw mischief from option sellers to add fuel to the fire and maximize TSLA's dip most days last week. For example, the deepest dip that TSLA experienced on Friday was that Category 5 tornado looking dip a bit after 2pm. TSLA was down about 5% in that dip while QQQ was down only about 1.3%. Overall, you tend to see TSLA losing more ground in the low volume afternoon hours than QQQ, which is of course a common technique for reducing TSLA's price over time for the least resistance. There was the apparent "spoofing" on Tuesday and many other telltale signs of manipulations this past week.

Before moving off the topic of the sector reallocations, consider how these stocks behaved Tuesday through Friday. Chinese EV maker BYD lost 10.2%, but Lucid, Nikola, Ford, and GM all gained during those 4 days. Typically investors go bargain shopping after a reallocation dip bottoms out, and some bargains remain out there, such as Tesla, while some of the stinkers benefitted from the sector reallocation. My general opinion is that such sector reallocations are not done intelligently and investors need to reassess once the dust settles.

As for the mischief with TSLA (causing it to fall a full 14.4%), I continue to believe that the high number of call options expiring on Friday, Jan 21, is a big concern for the market makers and hedge funds. Although the max pain is at a super-low $740, most of the calls that have long been deep in the money are already hedged sufficiently. Nonetheless, there are enough near the money call options that could require additional hedging should TSLA rally, and I think it's all hands on deck to discourage any rally before Jan 21. Gary Black made an interesting comment captured on this segment of Solving the Money Problem (approx 2:15) that "Normally, Tesla goes up between one day after volumes (deliveries) comes out and the day before earnings comes out it goes up 19%". That number sounds a bit high to me but if true there is lots for option sellers to worry about in this quarter with such a massive delivery beat.

How do I deal with this dip? First I realize that solid execution and record earnings trumps noise and worry every time in the long run. Are we to believe that interest rates going up a quarter of a percent with the possibility of pushing rates up another 1% is sufficient to reduce TSLA's value by over 14%, given sufficient time? Of course not. Goldman's analyst Mark Delaney doesn't believe so either and he has just upped TSLA's price target from 1125 to 1200.

The second thing I do is deploy some of my dry powder. I now live primarily off my TSLA earnings and like to keep at least 2 years of cash on hand, but I keep it in my IRA and I'm willing to spend some of it (but not go below 1 year's cash) if TSLA's price gets too crazy, such as right now. On Friday afternoon I picked up a couple 400 strike June 23 call options. Given enough of an additional dip in the coming week, I'll pick up a couple more. I chose the 400 strike because once you go low enough in strike that a person can't pick up two calls for the price of one share of TSLA, the time value you pay goes way down. I'll need TSLA to climb only to 1050 to recoup my time value. If I was trading from a taxed brokerage account, I'd probably go for an expiration date in 2024, so as to delay the tax bite as long as possible. The sale can end with a big gap higher.

In the meantime, don't expect TSLA to trade reasonably as long as the dip continues. This dip will be over soon enough and the earnings report should open eyes. As long as Wall Street remains uneducated about Tesla's likely trajectory (most analysts simply can't imagine a trillion dollar company growing more than 50% per year for many years to come), there's room for you and I to enjoy nice profits from owning TSLA in the long run.

The steady climb of 10 yr treasury bond yields continues to fuel the pressure on high-growth tech stocks

Max pain is 1095 for the coming week.

Thanks again @JimS for the multiple week version of the max pain chart vs. stock price. What's interesting is that even after TSLA started falling on Tuesday, it wasn't until Friday before the max pain numbers turned lower for the week. Such a situation suggests that weekly call option buyers kept expecting TSLA to reverse the decline right up until the final day of the week.

Coronavirus Update

The South Africa daily new cases chart continues to show a decline, which adds additional credibility to the notion that the Omicron variant yields a very rapid spread but then decreases much quicker than other variants, as well.

By now you'd expect to see substantially more deaths in South Africa from Omicron if it was as lethal as previous variants. Please don't get me wrong. For certain individuals, particularly those who are unvaccinated, Omicron does sometimes prove fatal.

Meanwhile, the Omicron spike is underway in the United States and hasn't topped out yet.

The mid-bollinger band provided support for the closing price of TSLA on Friday. Notice how the blue 50 day moving average has worked as resistance for the past two trading sessions.

For the week, TSLA closed at 1026.96, down 29.82 from the previous Friday's 1056.78. Hoping you all enjoyed a good weekend.

Conditions:
* Dow down 5 (0.01%)
* NASDAQ down 145 (0.96%)
* SPY down 2 (0.40%)
* TSLA 1026.96, down 37.74 (3.54%)
* TSLA volume 27.9M shares
* Oil 78.90
* IV 67.1, 81%
* Max Pain 1095
* Percent of TSLA selling tagged to shorts: 45%

 

[Papafox]

TSLA chart above

QQQ chart above

Anyone ready to see a bottom? On Monday TSLA had been trading at about 1000 in pre-market but we saw numerous deep stabs lower to nearly 980. One explanation is that TSLA investors were worried about a jump higher in 10 yr. treasury yields as the day began. The up and down motion of the stock price suggests someone intentionally pushing the price lower, the market rejecting that push and returning closer the price closer to 1000, and then the process repeating 3 more times. After that fourth dip the bulls took control and TSLA started climbing as QQQ was still descending. I'm thinking this climb was investors picking up shares with renewed confidence after TSLA rejected being pushed down to 980 and it bounced quickly well above 1000. That bounce marked the bottom, in the minds of the buyers, I suspect.

Have we recently seen a similar bounce as TSLA was forced below a big number and then bounced quickly upward again? Yep, look at the tech chart far below and check out December 21. On that day we saw a seemingly forced dip in the morning to about 890 from support at 900 but the stock price bounced back quickly and the day closed well up. In the days that followed, that bounce continued as a rally that went on to exceed 1100. Never underestimate the power of a bounce.

The 10 yr. bond yields could still do something that could lead TSLA lower, but in the absence of a noticeable increase in the 10 yr. treasury bond yields, I suspect TSLA's strength relative to the macros suggests Fear of Falling is now being replaced with Fear of Missing Out and TSLA is ready to recover some lost ground.

QQQ was down for the morning but by 1pm QQQ was definitely climbing in recovery mode (and managed to close in the green). Meanwhile, TSLA hit the red/green line at about 11:30am but it wasn't until about 2:00pm before TSLA started climbing into the green. An hour and a half of whack-the-mole is a good sign that someone really didn't want TSLA climbing and was willing to throw obstacles in its way.

Fortunately for longs, price target increases continue (Morgan Stanley just upgraded TSLA to 1300). With both Goldman-Sachs (recent PT 1200) and Morgan-Stanley (1300) bullish on TSLA after the Q4 delivery numbers, investors have more and more reasons to buy TSLA.

Looking to justify your position in TSLA to someone? Here's a simple list of attributes that should help:
1) Demand is remarkable. In the U.S. where adequate quantities of Teslas are available for delivery and without duties, all 4 current models of Teslas have outsold every other vehicle (ICE or EV) in their class (see this Seeking Alpha article)
2) Tesla has only captured about 1% of its total addressable market in the automotive business and yet it is already a trillion dollar company. What other trillion dollar companies have only captured 1% of their addressable market so far? This point came from Pierre Ferragu in his excellent interview with Dave Lee on Monday.
3) With automotive gross margins over 30% and climbing, Tesla's manufacturing efficiency is the envy of the auto world and it's only getting better (see Q3 earnings report and compare to Q4 ER when it comes out).
4) Non-GAAP profits at TSLA could exceed $3 billion in Q4 (see estimates by @The Accountant ).
5) Elon Musk says greater than 50% growth per year for foreseeable future (over 80% in 2021).
Bottom line: Tesla is already a money-printing machine and has a long way to go before the growth needs to taper.

Also, thanks to @jw934 for posting two important pieces of information in the main investors' thread recently:
* Tesla Facts here on Twitter shows how massive purchasing of put options last week worked to push TSLA down through market maker delta-hedging
* Gary Black laid out on Twitter how he calculated his average 19% gain during the past 8 quarters between Production and Delivery Report and Earnings Report

Yields on 10 yr. treasury bonds bumped upward Monday morning but then diminished as the day progressed.

Max pain for Friday is 1090. The strike 1100 has almost as many puts as calls at present, but that situation will change as the week progresses. It's not until we get to 1150 until we see call options rising well above the puts.

As noted in the top of article discussion, Monday's forced descent through 1000 and bounce near 980 was very similar to the apparently forced descent of TSLA through 900 support and bounce upward again on December 21 (a bounce which ultimately carried TSLA above 1100).

Conditions:
* Dow down 163 (0.45%)
* NASDAQ up 7 (0.05%)
* SPY down 1 (0.12%)
* TSLA 1058.12, up 31.16 (3.03%)
* TSLA volume 29.8M shares
* Oil 78.40
* IV 68.8, 84%
* Max Pain 1090
* Percent of TSLA selling tagged to shorts: 44%

 

[Papafox]

TSLA chart above

QQQ chart above

Looks like the pirates of Wall Street were busy with TSLA today. While the NASDAQ climbed 1.41%, TSLA only managed a climb of 0.59%. Doing my due diligence, I'd like to share with you how I arrived at my conclusion.

* Was it just normal market mechanisms? Not likely. TSLA has been descending at a 2X-2.5X multiple of the NASDAQ. Shouldn't it also rise at a 2-2.5X multiple? 2.5 X 1.41% = 3.5% Tesla gain Tuesday if it went up at same multiple that it goes down.

* Maybe the news for Tesla pulled the stock down. Nope. Two enormous investment banks, Goldman-Sachs and Morgan Stanley just completed giving Tesla nice price target increases. News from China was that December deliveries were surprisingly strong at over 70K and record-setting.

* Perhaps a big institutional investor was trimming their portfolio's TSLA holdings? Not likely, here's why. Big sellers often need multiple days of selling to reach their trimming goals. They sell heavier in the high volume morning hours and then trim their selling as volume falls away in the afternoon. What we saw with TSLA was a jagged line from the noon high to the zero gains line shortly before market close. Notice the jump up in the final minutes of market trading? That jump was most certainly part of the closing cross. Since a portion of the selling was short-selling that needed to be covered by day's end, buyers outnumbered sellers come 4pm and in the minutes approaching the 4pm closing cross the price of TSLA had to rise to bring sellers and buyers into equilibrium. We saw a substantial 369K volume during the 4pm minute as the day-shorts covered much of their manipulative sales for the day.

I would say that the reason the manipulations worked so well last week was because investors were concerned about inflation and the various fed announcements worked to give credibility to dips that are caused partially by manipulative put buying and partially by fear-induced stock selling by investors. Some of that put buying was fear-based as well, but now as the put buying is mostly done to influence the stock price, there likely won't be enough downward pressure to do anything as strong as what happened last week unless we see another big move upward in 10 yr. treasury yields.

What to expect going forward in the near term? The week leading up to the earnings call (likely Jan 24-26) will see buying pressure and likely isn't part of the current full-court press by option sellers. Thus, Friday, Jan 21 should be the end of the full-court press. The Monday of next week, Jan 17, is a federal holiday, so we only have 7 more trading days until Jan21 options close Friday. Don't be surprised if we see dips on down days for the NASDAQ exaggerated 2X for TSLA and climbs on green macro days subdued for TSLA. The exception would be a real break higher, such as Monday's rally, possibly leading to other up days as momentum traders enter the game and call options buying around the 1100 strike pushes the stock price higher. The current game of depressing the TSLA price action by pirates purchasing put options and forcing market makers to delta-hedge by selling would be replaced by delta-hedge buying as a multitude of new call option bids flood in. TSLA is dynamically unstable because of the high options activity and if momentum gets moving up heavily enough it could become too much for the options pirates to counter. They're good at what they do, however, so this week could go either way.

The plot now thickens as we see the put to call ratio of TSLA changing from 1.67 to 1.14. This week we've been seeing call buying outnumber the put buying. If the trend continues, the new options will force the market makers to buy shares and we could get the train picking up some speed uphill. There really is big money betting on both sides this week and the options trades are likely to determine the direction the stock takes (providing news and macros stay fairly neutral).

Effects of Treasury Yield hikes on TSLA valuation
Gary Black recently tweeted that a quarter percent increase in the 10 yr. treasury bond yields would cause him to reduce his TSLA price target by 2.5%. I believe I've seen other analysts who use the same formula. Thankfully, I expect analyst price targets to rise considerably faster than this discounting of value due to inflation that affects the present value of Tesla's profits in a year such as 2025.

News
* @The Accountant just raised his TSLA price target in this TMC post to $1930/share
* Great find: Teslapricetargets.com lists the current TSLA price targets of analysts as well as retail commentators

The slow descent as the day went on of the 10 yr. treasury bond yields likely contributed significantly to the strong day of the NASDAQ on Tuesday.

Official max pain climbed to 1100 after Monday's strong day. Calls to expire Friday at 1100 are much greater in number than puts, and so you should expect an effort to hold TSLA below 1100. The strike 1080 is also heavier with calls than puts. You should not be surprised to see TSLA below 1080 at present. A put to call ratio of 1.67 emphasizes the extent of heavy put buying that is affecting the stock price.

Looks like the mid-bollinger band stopped Tuesday's descent and the blue 50 day moving average worked as resistance on the climb. Keep in mind that the biggest contributor to TSLA's milktoast climb on Tuesday was option sellers who were day-shorting the stock and purchasing puts in order to force the market makers to do some shares selling in order to delta-hedge.

Conditions:
* Dow up 183 (0.51%)
* NASDAQ up 211 (1.41%)
* SPY up 4 (0.91%)
* TSLA 1064.40, up 6.28 (0.59%)
* TSLA volume 21.3M shares
* Oil 81.22
* IV 67.0, 81%
* Max Pain 1060
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

Bulls certainly carried the day on Wednesday. With a combination of continued good news and cooperative macros, TSLA is now in day three of this rally.
Notice how 1100 resisted penetration for much of the day, but an upward boost in the macros after a short dip provided the needed boost to get TSLA over 1100. Once clear of 1100, it climbed above 1114 before losing a few dollars just prior to close.

A Refresher on the Dynamically Unstable Nature of TSLA Price Action
In physics, something is dynamically unstable if displacing in one direction causes it to diverges even more in that direction. With TSLA stock, the high percentage of options traded every day is a setup for large price swings. For example, if a few big investors buy tons of out of the money call options, the market makers will buy shares to delta-hedge and that share buying in turn causes the price of TSLA to increase. A rising price draws both traders of the stock as well as call option buyers, and the call option buying requires more hedging, which pushes the stock even higher. Rinse and repeat, rinse and repeat. Rapidly rising stock price changes the delta of outstanding call options, which requires market makers to buy even more shares. With TSLA we've seen times in huge rallies where this "gamma squeeze" and influx of options traders becomes very overheated and hard to stop. Similarly, all of the factors mentioned for a rising TSLA price happen with falling Tesla prices, only the effects are reversed and lead to further falling of the price.

How Dynamic Instability Benefitted the Pushdown Effort after the Jan 3 Production and Delivery Report
When TSLA climbed nearly 14% on Jan 3, most hedge funds were caught unprepared for a such a stunningly positive result. They didn't profit from TSLA's gains that day and were poorly positioned for the likely climb ahead. The one sign of weakness on Jan 3 was a big jump upward in 10 yr. bond yields to 1.62%. The next trading day was a negative one for the macros as bond yields climbed to 6.5% and the NASDAQ lost 1.33%. This was a perfect opportunity for shorting the dip because TSLA began at nearly the previous day's high and could have a long way to fall for the day. TSLA lost over 4% that day as day-shorting of the stock helped push it lower and as we later learned from Tesla Facts, huge purchases of Puts helped accelerate that dip. Some investors reacted to the dip and the news of sector rebalancing by buying their own Puts and exacerbating the problem. My point is that an honest catalyst for a dip can be exaggerated to such an extent that investor behavior is changed (as investors bought Puts and added to the dip).

With such dynamics, imagine how profitable it would be to day-short a big multi-day dip, and buy Puts that not only pull the stock price lower but also allow those Puts to become more valuable. If a big enough hedge fund or a number of hedge funds working together were aggressive enough in playing the streak of bad macros for TSLA, they could actually reset the stock price of TSLA to what it was before the great Q4 P&D Report news came out, profit by the dip, and then be in a position (with the low stock price) to profit from TSLA's price recovery (see @Sudre 's TMC-posted graphic of TSLA puts falling while TSLA calls are growing).

Let's watch TSLA for the next few days. If TSLA climbs with wild abandon, then perhaps the hedge funds that had been partially responsible for the big dip since Jan 3 have actually changed their positions and are now actually benefitting from the climb. They just wanted to control the reversal date. Tuesday's weakness on a strong macro day is consistent with this theory. That scenario would mean that my thoughts about huge numbers of expiring Jan 21 options had been overplayed as an explanation for the deep dip. OTOH, if we see continued resistance to a big climb, then perhaps my original idea of concern about Jan 21 huge number of expiring options is more correct. One way or the other, however, I think there's climbing in TSLA's future between now and Earnings Report day.

News:
* As expected, Tesla's Q4 2021 Earnings Call will be on Wednesday, Jan. 26
* Trip Chowdhry of Global Equities Research just raised his TSLA price target from 1200 to 1500
* TMC member @Cult Member posted this video from Germany. Apparently the allowed 2000 vehicles produced at Berlin while awaiting final approval are restricted from sale until the final approval comes, which strongly suggests they could be sold after that date.

Thankfully for high growth stocks, the 10 year treasury bond yields were pretty much flat after the recent slow dip.

Stated maximum pain was 1060 on Wednesday morning. Looking at the chart, you can see a clear domination of puts below 1050 and clear domination of calls above 1050 strike. Put to call ratio is a near even 1.097

On Wednesday TSLA gapped up to open above the 50 day moving average and closed slightly above the resistance level of 1100. Looking at the various tops over the past three months, looks like 1200 will be the next challenge.

Conditions:
* Dow up 38 (0.11%)
* NASDAQ up 35 (0.23%)
* SPY up 1 (0.27%)
* TSLA up 1106.22, up 41.82 (3.93%)
* TSLA volume 27.1M shares
* Oil 82.65
* IV 65.8, 77%
* Max Pain 1060
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

The craziness returned on Thursday when TSLA and other tech stocks were caught in a NASDAQ dip that hit 2.51%. ARKK was down 5.42%, NVIDIA down 5.09% but TSLA topped them with a 6.75% dip. Here's what's going on.

The stated reason for the dip was renewed inflation fears. The problem is that nobody seems to be able to point a finger at what specifically triggered that fear on Thursday. Ten year treasury yields actually fell on Thursday and the news cycle offered little to help other than pointing out that money was flowing out of growth tech stocks and into value stocks. That was a huge dip of QQQ right around noon. Algos respond to dips and accelerate them, but this dip was bizarre in its intensity for not having an identifiable genesis. My best guess is that some hedge funds had taken the view that they were going to move toward cash while the recent inflation fears were warming up since Jan 3. You may have seen rapid selling of some remaining shares by these hedge funds on Thursday to trigger the dip and further benefit their strategy. Once the value of quality tech stocks drop, these same hedge funds, now cash rich, can waltz in and buy quality tech stocks before the earnings season at discount prices or perhaps they just bought Put positions in the stocks and are benefiting that way. Maybe we'll find out otherwise, but that strikes me as the most believable cause of the sudden selling right around noon. In fact, as we'll see, it's not just hedge funds selling fear this week.

Rising interest rates adversely affects growth tech stocks because their valuations are based upon future years and then each year is discounted as an analyst works backwards to achieve a present value in 2022. Gary Black is basing his $1600 TSLA valuation on year 2025 earnings. He figures he needs to reduce his price target 10% for every 1% increase in interest rates. Gene Munster appeared on CNBC to talk about inflation's effects on tech stocks. His fund is 50% cash now and so he will look very smart if tech stocks continue to fall. For this reason you have to realize he has a bias toward generating fear in the market right now because if there's a big dip in tech stocks he will have lots of cash to buy at a discount. I like Gene and think he's a straight shooter, but realize he has a dog in this fight and cannot be considered a neutral source. Nonetheless, starting at the 5:00 minute mark in the interview, Munster says, "Every 1% change in the fed funds rates typically impacts the valuations 10-20% for these companies and so there's a projected percent and a half to two percent move, it is a measurable impact." Using his numbers, that works out to be a 15%-40% change in the valuation of a tech company with a 1 1/2-2% change in interest rates. You can see how such numbers would create fear, but I suggest these numbers are just too high for a company such as Tesla, which has strong cashflow and can be priced strongly five years out.

For TSLA, I would go with Gary Black's computations of 10% decrease in stock price for each 1% increase in interest rates. So far, we've seen 0.25% or about a 2.5% reduction would be appropriate for TSLA's $1600 valuation. Should rates instead climb 1.5%, that's a 15% reduction (brings $1600 target down to $1360 or brings the Jan 3 $1200 price down to $1020. Since we've already seen a 14% dip in TSLA since Jan3, almost all of the dip using Black's method has already been priced into TSLA for a 1.5% increase in rates. The sky is not falling, my friends. Consider, too, that the flow of money from tech stocks to value stocks has been ongoing from far before Jan 3. What the market likely is forgetting is that much of the hit to tech stocks has already taken place.

Of course the market can do crazy things and the hedgies can and will exacerbate any TSLA dips (because it's profitable to do so), but TSLA should grow quickly enough to overpower the effects of higher rates through continuing growth of profits in the not so distant future. Further, inflation should retreat somewhat once addressed by the Fed and as shortages caused by coronavirus and overall supply chain interruptions diminish. Oil prices are a unique inflationary problem caused by reduced U.S. production. The greenest way to deal with this source of inflation would be to expedite the transition to renewable energy sources such as wind and solar to reduce demand for oil products.

In summary, if fed funds rise 1.5%, most of the dip for TSLA has already occurred if you go with Gary Black's methodology. I'd rather see all this craziness of inflation fears take place now, rather than after the Earnings Report, however. The ER should be able to retrieve some of the lost ground by showing considerably better than expected profits for Q4.

A Forbes article suggested that a 5% dip in TSLA's price was the result of Cybertruck production being delayed until 2023. Not only is that old news, but Tesla's current models are selling so well that the company will be battery constrained through 2023 (so no lost production). Any article suggesting that Tesla's dip on Thursday was caused by Cybertruck is ignoring the 1000 lb. gorilla called Macros. A Reuters article on the subject was likely timed to place downward pressure on TSLA.

There was one piece of good news that came out of Thursday. The market has answered the question I pondered on Wednesday, which is "Might the hedge funds have switched strategies and have started buying and supporting Tesla going into the ER?" The market's answer was a resounding No!

With that massive afternoon dip in tech stock prices, I was expecting to see some type of mega climb in the 10 yr. treasury yields. Instead I see a gentle downslope, which should have had the opposite effect.

Stated max pain was 1075 Thursday morning.

Normally the mid bollinger band would stand a descent chance of catching the falling stock price, but the macro forces were just too strong on Thursday.

Conditions:
* Dow down 177 (0.49%)
* NASDAQ down 382 (2.51%)
* SPY down 6 (1.38%)
* TSLA 1031.56, down 74.66 (6.75%)
* TSLA volume 32.2M shares
* Oil 81.79
* IV 69.8, 86%
* Max Pain 1075
* Percent of TSLA selling tagged to shorts: 46%

 

[Beyond]

"Besides the extremely high number of call options expiring on Jan 21, notice that the max pain number is 740. Yep, that's no typo. "

Could you give us some insight on the 1/21 max pain of 740 that you mentioned in the January 7th post? What effect do you think this will have next week, if any? Thanks!

 

[Papafox]

"Besides the extremely high number of call options expiring on Jan 21, notice that the max pain number is 740. Yep, that's no typo. "

Could you give us some insight on the 1/21 max pain of 740 that you mentioned in the January 7th post? What effect do you think this will have next week, if any? Thanks!

As I mentioned here and in the main investor's thread, the great quantity of deep in the money call options that will be expiring Jan 21 have already been completely delta-hedged and they're so deep in the money that their delta won't be changing as TSLA moves up or down. For this reason the low max pain number by itself is not a concern.

On the other hand, take a look at the 10/27/22 max pain chart below. There are already LOTS of bets near the money for Jan 21 expirations, and if you add the usual weekly volume to this you have an especially large number of calls that will be demanding delta-hedging if the stock price starts rising. It's that large quantity of near the money calls that concerns the market makers. A big break upwards next week could be very expensive for them, and so you can expect efforts from them to nip breakouts in the bud. With enough good news, TSLA could break free of the shackles, and then it really could be a positive for investors as market makers are forced to buy shares to keep the delta-hedge operation going.

Bottom line: next week could be boring (every TSLA break high nipped in the bud), interspersed with red ink market inflation panic days, or even explosive growth if TSLA breaks free and begins a real rally (even with MMs doing their best to stop it).

 

[Papafox]

TSLA chart above

QQQ chart above

Friday we saw continued volatility with TSLA as the deep morning pre-market dip to closing price range reached 5%. Overall, TSLA bounced up and down with the broader market but generally traded somewhat better. What was particularly notable was the close in which we see probably the clearest example of capping I've ever seen. While QQQ climbed steadily from 3:10pm until close, TSLA reached 1050 at 3:22pm and then flat-lined. I mean the trading chart of TSLA from that moment through the end of after-hours trading could almost be used as a straight-edge. Someone clearly didn't want TSLA exceeding 1050 for Friday's close.

The upward bump of 10 yr. treasury yields was pretty significant on Friday and took out the declines of the previous three days. Fortunately, the market remained positive, nonetheless.

Max pain for this coming Friday, Jan 21, is listed as 810, coming into the week. Tons of deep in the money calls are already fully delta-hedged and so the low max pain number is not as concerning as it appears. The coming week's call and put mountains are typically $50 apart from each other and so the market makers will likely be choosing which price below as the week unfolds.

This past week showed TSLA climbing every day except for the big pushdown Thursday. Friday was a manipulated close to keep TSLA below 1050.



Coronavirus Update

The rapid ascent and descent of the Omicron variant in South Africa continues to be striking when compared to earlier versions of the virus

Meanwhile, the deaths in South Africa remain far below those of previous outbreaks. It's important to note that each country has unique characteristics and one country's experience will vary from another's due to vaccine availability and use, percent of population that already has had the virus, etc.

The past two days have seen noticeable declines in U.S. new cases. Let's just hope the declines are mostly real and not primarily artifacts of the three day weekend.

Here we are just 7 trading sessions away from Q4 earnings report and TSLA is actually trading lower than before the grand slam production and delivery numbers were released. Macros have been a big factor in that dip, but the 0.15% increase in 10 yr treasury yields since Jan 3 doesn't justify a 12% decrease in TSLA's value since the results of the P&D Report were released.

For the coming week, we really have a guessing game. The week's huge number of expiring calls will exaggerate any moves up or down. More concerns about interest rates and overreaction by tech stock prices is indeed possible as a negative catalyst. OTOH, TSLA is at an attractive price at the moment, considering that big price target increases have been coming in and only 7 trading days remain before the soon-to-be-record 4Q Earnings Report. My best guess would be that hedge funds wanting to see TSLA dip (and profiting from the dip) might use the high number of expiring options to amplify their efforts to push lower this week. Certainly by next week, TSLA would feel the pressure to climb because the Q4 Earnings Report on Wednesday, Jan 26 should be epic. I'm not playing any short term games because they are too unpredictable and the money is best made on long-term bets with TSLA. Troy is predicting 333K deliveries in Q1, which is nearly 50K above analyst consensus right now. We're seeing photos of test vehicles produced at both Berlin and Austin. Tesla is executing well.

For the week, TSLA closed at 1049.61, up 22.65 from the previous week's 1026.96. Hoping you enjoyed a good weekend.

Conditions:
* Dow down 202 (0.56%)
* NASDAQ up 87 (0.59%)
* SPY up 0 (0.04%)
* TSLA 1049.61, up 18.05 (1.75%)
* TSLA volume 24.0M shares
* Oil 84.27
* IV 66.0, 78%
* Max Pain 1065
* Percent of TSLA selling tagged to shorts: 45%

 

[Papafox]

TSLA chart above

QQQ chart above

I'm going to dive into Tuesday trading shortly, but I wanted to lead off with an overview of how TSLA trades, to put things in perspective. TSLA has had a history of trading within somewhat restricted trading ranges, sometimes for years at a time, only to break free at last and make very large upward movements. The 2013 and 2019/2020 rallies are cases in point.

Looking at the chart above, you can see the October 2021 rally topping out a bit above 1200 and you can see the December low a bit below 900. For now, that's our defined trading range, and both market makers and hedge funds can make lots of money as the stock runs up and down within the range. Inevitably, TSLA will sooner or later find a positive enough catalyst to lift the price above 1200 and another rally above the trading range results. How high does that rally go? If history serves us, the rally can go as high as the higher end price targets. Right now we're seeing more and more analysts giving 1400-1500 price targets, but after an eye popping Q4 Earnings Report, we could see even higher price targets. It's the combination of Tesla executing well and analysts setting higher price targets that sets the stage for the breakout rally.

It is possible that the Q4 earnings report could be the catalyst for the breakout rally. The Wall Street hedge funds and market makers know it too, and so I think a big part of the downward pressure (above and beyond the macro pressures) to push TSLA lower since the Q4 Production and Deliveries Report has come from option sellers who want to keep TSLA within the current trading range. It's not the end of the world if TSLA kisses 1200 after the ER, but the option sellers don't want a rally going beyond there into All Time High territory and so TSLA has been pushed artificially lower on a daily basis to make exceeding 1200 more difficult. Often the daily push lower comes at the end of the day because covering short-selling in the pushdown can often be relatively easy in the closing cross at 4pm and because there's less chance of seeing a reversal of the pushdown, which then becomes a catalyst for a climb. On Friday, TSLA was capped right below 1050 into the close even though the market rose well beyond the beginning of that capping.

When TSLA does in fact break into new All Time High territory a couple of important changes take place. First, we see lots of out of the money call options being bought. Secondly, we see traders coming into TSLA for the momentum play. Sometimes we see short-sellers trimming their holdings. All of these activities push the stock price higher. As the stock price climbs, those out of the money call options come into the money (or at least closer to the money) and market makers need to buy TSLA to stay neutral on their delta-hedging. You then have a system that is somewhat self-sustaining: more call options bought, more market maker buying of shares to delta-hedge, more outside traders drawn in by the rising price, rinse and repeat. Eventually TSLA reaches a point where it is near the highest analyst price targets and some traders start taking profits. You may even see a preemptive strike by the market makers as an odd amount of selling appears as a jolt out of nowhere and stops the climb. More traders and some investors take profits. The stock eventually takes a dip, recovers a bit, and then begins the process of wandering around and defining the bottom of the new trading range. For a HODL investor what you need to watch for is Tesla's execution. As long as Tesla keeps beating expectations with deliveries and profits, everything else will take care of itself, sooner or later.

What's complicating the scenario at the moment has been the past and continuing downward pressure on tech stocks as the market realizes that interest rates will rise. Fortunately, TSLA's value is climbing fast enough so that temporary adjustments to its price due to higher interest rates should not be too painful. What is frustrating to us investors is when the market loses track of its math and pushes TSLA farther down than is justified by macro forces. After all, the dip in tech stocks as money flows into value stocks is in reality a readjustment of tech stock values in anticipation of higher interest rates. I believe we're in such a situation now.

Let's look at Tuesday's trading now. TSLA took a big pre-market dip along with QQQ, but when efforts to force TSLA significantly lower than QQQ and the NASDAQ dip failed right after market open, that bounce created a rally that took TSLA up to 1070. For almost all of the rest of the day, TSLA traded higher than QQQ even though tech stocks such as ARKK and NVIDIA traded well below the NASDAQ. I think TSLA's strength could be because a) investors are realizing it may have been pushed down too far already on a relative scale and b) the Q4 earnings report is coming after 7 (now 6) more trading sessions. It doesn't take a rocket scientist to enter the delivery numbers into a spreadsheet, make some assumptions about continued movement of margins in the direction they've been going in recent reports, and guess the general neighborhood for profits (which should be ginormous). Many current investors realize that even with continued question marks about interest rates, selling TSLA this close to the Earnings Report likely doesn't make sense, and so fewer are selling, which means lower volumes. Meanwhile, as the stock price rises, investors waiting out the dip on the sidelines are itching to get back in before the ER and a pre-ER price pop. Finally, let's talk about that big TSLA dip at the end of the day. QQQ dipped 0.5% between 3pm and 4pm. In that same period, TSLA (which was trading in the green at the time) lost 1.7% of its value. That's about a 3.5X multiple of QQQ, which is nuts when you consider how strong TSLA had been trading relative to QQQ all day. Looking at the two charts one below the other, however, the dip looks pretty reasonable. It's this use of a macro dip to disguise a TSLA pushdown into the close that works so well time and again for trimming value from TSLA because nobody sees anything that looks strange. I do, though.

With TSLA outperforming the NASDAQ for the past two trading sessions, I hope what we're seeing is the beginning of investors and traders starting to nibble at positioning themselves for the Jan 26 Q4 Earnings Report.

Yikes, another big jump in 10 year treasury bond yields on Tuesday. Keep in mind that a climb from 1.5% to 2.0% represents about a 5% reduction in present value of TSLA when working backwards from 4 or 5 years out for valuation, according to Gary Black's model. That reduction would bring his $1600 price target all the way down to $1520. I understand that the market is pricing in a bigger rate move, but my point is that TSLA's valuation has been ridiculously lessened already for potential rate climbs that could come in the next year. With the last two days of rising yields, the market is assuming that a Fed rate hike is coming soon. The moves are pro-active, not reactive.

Max pain nudged up to 830 as the week began. 1000 strike calls are definitely dominated by puts but 1050 and 1100 strikes dominate the landscape with smaller strike prices strangely neutralized by puts. As long as market makers can hold below one of these big call mountains on Friday, they'll do ok.

We've seen apparent manipulations the past two trading days. Check out the volumes and you'll see they've been down the past two sessions. Hmm. Looks like the job of "readjusting" the stock price has become easier recently.

Conditions:
* Dow down 543 (1.51%)
* NASDAQ down 387 (2.60%)
* SPY down 8 (1.77%)
* TSLA 1030.51, down 19.10 (1.82%)
* TSLA volume 22.2M shares
* Oil 86.82
* IV 65.7, 77%
* Max Pain 830
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

So, the plot thickens. In this Tweet by Tesla Facts, we learn that the active funds (I believe they're the same as "benchmark" funds) are nowhere near equal weight on TSLA and have even been shorting. I don't understand Tesla Facts' statement about 100 million shares shorted because Ihor Dusaniwsky estimates 21.5M total shares of TSLA shorted (If you understand how Tesla Facts arrived at his number, please PM me). If we have active managers placing their bets that TSLA will go down, not up and shorting has been used, then some of the very active manipulations we've been seeing recently make total sense.

No doubt a major thesis of these fund managers is that rising interest rates will overrule gains by TSLA in the near term, especially with "a little help". They likely are underestimating just how good the Q4 Earnings Report numbers may be. I also suspect they were heavily involved in the over the top pushdown of TSLA on Jan 4, 5, and 6. By heavily shorting during the macro dips, they managed to artificially depress TSLA's stock. Now that we know what we're up against, let the games continue.

The good news is that time is working in TSLA's favor. Tesla is executing like no company the market has ever seen, and in time the analyst projections will need to become more bullish as Tesla shows quarter after quarter that it is growing faster than analysts planned and delivering margins that other manufacturing companies can only dream about. The sector redistribution from tech to value stocks cannot continue for long as it becomes ridiculous past a certain point. When sector redistribution reverses its flow and when inflation is checked by various Fed efforts, the headwinds Tesla has been flying against become tailwinds that will aid the stock price. In the meantime, If active funds actually are far short of equal weight plus they've been shorting, we will see a very nice tailwind as those short positions are undone and the firms accept the reality that an equal weight position on TSLA is a bare minimum if they wish to look good compared to the S&P500. Meanwhile, keep that seatbelt snug.

Looking at Wednesday's trading, the late morning dip of QQQ was about 0.6% but we saw TSLA dip nearly 3% (about 5X). At market close, TSLA's 3.38% loss was nearly 3X the NASDAQ's 1.15% dip. In contrast ARKK was down only 1.51%. I see some gamesmanship likely employed as well. Normally, when TSLA is pushed down below 1000 or 900 (a big even number), TSLA will bounce once sufficiently below, then climb. Pushing TSLA below 1000 just prior to market close did not give the usual Tesla bounce a chance to happen.

Although Elon is normally ambivalent about the stock price, he doesn't like short-sellers jacking the price around, and I suspect he has a good feel for what's going on right now. His appearing on the earnings conference call on Jan 26 and having input into the Q4 earnings report allows him to have some effect upon the stock's performance, depending upon what information he is willing to share. As Elon polled Twitter for selling 10% of his shares and as Zach sold shares as well, I suspect both those gentlemen suspected Tesla's Q4 performance would elevate the stock price and would take away any criticism that they were selling with knowledge that the stock price would go down. I would not be surprised if Elon makes a bit extra effort to be openly optimistic about the future so as to unravel some of the efforts of the shorts. We will see.

10 yr. treasury yields were unchanged today and can therefore not be blamed for the market's poor performance

Max pain price keeps drifting higher, to 850 on Wednesday. By Friday the market makers will likely choose the nearest strike price which ends in 00 or 50 and aim for that. I see no real advantage to going lower than 1000 for the market makers if the deep in the money calls are already hedged, but the downward pressure TSLA is feeling lately is coming for elsewhere. I'm guessing market makers would like to see a close as close to 1000 as possible on Friday.

In this crazy week, it's encouraging to see the lower bollinger band heading upward quickly to provide support if needed. It's currently at 956.57.

Conditions:
* Dow down 340 (0.96%)
* NASDAQ down 167 (1.15%)
* SPY down 5 (1.04%)
* TSLA 995.65, down 34.86 (3.38%)
* TSLA volume 25.0M shares
* Oil 86.96
* IV 67.3, 84%
* Max Pain 850

 

[Papafox]

I received personal messages from knowledgeable TMC members. We all agree that Tesla Facts must have been using the word "short" to mean "underweight", as in underweight TSLA compared to the S&P500. One message suggested that since some funds are based in other countries, not all funds are comparing themselves to the S&P500. Another comment suggested that these funds are long-only funds, so that they wouldn't actually be shorting a stock by selling borrowed shares. Yet another comment pointed out that some funds are constrained (such as only being able to buy shares in companies whose debt is deemed "investment-grade"). Many thanks for the comments! I'll have to return my scrutiny back to the hedge funds for some of the apparent manipulative shorting I suspect has been underway. Still, as Tesla continues to grow at greater than 50% annually and margins tend upward, at some point most of these funds will want to acquire the missing 100 million TSLA shares if they wish to avoid underperforming.

 

[Papafox]

TSLA chart above

QQQ chart above

Thursday we saw the market awakening to the realization that it perhaps had overdone the fear response to interest rates. About 11am QQQ was up about 2% while TSLA was up about 4.5%. From there, QQQ and the NASDAQ began a slow descent that accelerated as the day progressed. QQQ dipped into the red a little past 3pm but TSLA, once it hit 1000, bounced several times before closing below 1000 but still in the green and barely above the previous day's close of 995.65.

It's evident that the vast majority of TSLA's trading on Thursday was influenced by the macros. What I'd like to point out is how the TSLA stock price can be manipulated significantly in a long slow dip. One significantly negative result would be for TSLA to cross the red/green line and close 2.25X below QQQ's loss of 1.3%, or a loss of 2.92%. Fortunately it didn't do that. OTOH, since TSLA was 2.5% above QQQ at 11am, one of the more positive outcomes would be for TSLA to close 2.5% above -1.3 or up 1.2%. Either of these outcomes (and many more) would look perfectly reasonable if you compared the TSLA and QQQ charts. That's a range of over 4% in outcomes. What we ended up with was TSLA closing very near 1000, which would be a highly desirable finish on Friday for the Market Makers. Coincidence? I think not.

Don't get me wrong, I'm not saying that TSLA will close at 1000 on Friday. Macros will likely carry it up or down. What I am saying is how a stock like TSLA trades relative to the appropriate macro indicator is a movement that can be easily influenced by big players (up or down) without the results looking fishy.

Looks like the market makers will get their wish and we won't see any big TSLA rallies on Friday (and therefore none this week with a boatload of expiring options). Next week is another kettle of fish, however, and I suspect we'll see money moving into TSLA prior to the Q4 Earnings Report. The closer we get to ER Wednesday, the less time there is for macros to push TSLA lower and the safer the bet of buying at this low price (lower than before the Q4 Production and Deliveries Report came out) and yet we very strongly suspect the results are going to be best ER ever seen.

Regarding Friday's trading, I would normally expect a bit of upward pressure on the stock as we approach market close because of traders picking up shares and call options prior to Friday's close, realizing that there's a chance that Monday's trading could open with a significant gap up. This is a huge options expiration week, however, and so if a rise close to close doesn't help the market makers, we likely won't see one.

Thanks @willow_hiller for posting this chart in the main TMC investor's thread on Thursday. It does a great job of showing how the spring gets coiled. Data that would normally drive the stock price higher keeps piling up, and yet the stock remains mired in the same old trading range. Tick, tick, tick.

Yet another day with benign 10 year treasury bond yields

Max pain remains at 850 Thursday morning. Meanwhile, at 1000 strike, call options are climbing relative to puts. A close near 1000 still looks attractive for market makers on Friday.

The lower bollinger band is just $26 below the Thursday closing price, so it is possible that it could be called upon for support if macros get really ugly on Friday.


Conditions:
* Dow down 313 (0.89%)
* NASDAQ down 186 (1.30%)
* SPY down 5 (1.11%)
* TSLA 996.27, up 0.61 (0.06%)
* TSLA volume 22.7M shares
* Oil 86.90
* IV 66.4, 80%
* Max Pain 850
* Percent of TSLA selling tagged to shorts: 48%

 

[Papafox]

TSLA chart above

QQQ chart above

Hmm, anyone else feel like they just got a haircut? Let's look at Friday's trading and then take a forward look. The market decided to be fearful on Friday, despite a dip in treasury bond yields. Whereas the Dow did fine when we were seeing sector redistribution from growth tech stocks to value stocks taking place, the Dow lost 1.3% on Friday by joining in on the fearfest. This is about the time when the doomsday economists are speaking of the coming market crash and scaring otherwise reasonable people out of their shares. Sigh. For a TSLA perspective on the recent dip, I suggest viewing this post by @The Accountant where he compares the size of dips we've seen during the past 4 years, the cause, and the resolution event.

Overall, we saw TSLA trading about 2X on QQQ's and NASDAQ's dip this past Friday. The NASDAQ closed down 2.72% while TSLA lost 5.26%. I see macros as the reason for TSLA's intensity of dip on Friday. When we see 2.5X or 3.0X TSLA to NASDAQ dips, I get suspicious, but 2X is pretty ordinary for this stock.

I did buy a $500 strike leap toward day's end as I think we're close enough to a bottom that I'll be happy with the purchase in good time. Next week, whether it is a climbing or a descending day, I will be using strong climbs or strong dips to move some DITM leaps to later expiration dates within my IRA (taxes get in the way in a regular brokerage account). In some cases the difference is a mere $8, in others it can be noticeably higher. I simply sell one leap with earlier expiration date during a strong dip and when I reach a price where I can buy that same strike leap with the desired expiration date, I do so. When the stock is rising quickly, I buy first and then sell the original, shorter term leap when it is sufficiently high enough to pay for the purchase of the first leap with the desired expiration date. Sometimes the market turns around and you have to be willing to settle for a lesser expiration date.

Because of the strength of the Friday dip, I'm not holding my breath for TSLA buying to resume on Monday in preparations for Wednesday's Earnings Report. At some point I expect traders to jump in prior to Wednesday's close, but I suspect most traders are in wait and see mode. Such a situation can lead to a spirited climb if it happens on Wednesday and the macros are smiling.

Looking forward, I'm grateful that Tesla has turned into such an absolute powerhouse of a company by the time we've had to deal with one of these big market dips. The strong profits and continued strong growth of Tesla will make its stock one of the most attractive choices to pick up once the fear subsides and investors start picking up stocks they've always wanted to own, but at a good discount. Such stocks tend to be some of the first to turn around. Value stocks can be a trap when inflation is high because the low returns they typically provide looks dismal compared to the inflation. OTOH, a strong growth stock like TSLA which is turning out strong profits as well should look like an attractive stock to hold during uncertain times, once the initial dip is over.

Let me remind you that one of the reasons for TSLA's 2X dip compared to NASDAQ is that TSLA has a HUGE number of options associated with it. Consequently, market makers are doing lots of delta-hedging on the way down. New shorts are jumping in. When the dip turns around, all of those factors reverse and give new strength to the stock.

For the week, TSLA closed at 943.90, down 83.06 from the previous Friday's 1026.96. Don't fret the week's dip, you own an excellent stock for weathering this storm. We have Wednesday to look forward to. Wishing all of you an enjoyable weekend.

Friday saw a nice dip in 10 yr treasury bond yields (Hello market, yes you market, didn't you see this?)

Friday's max pain was 850. Here is the max pain chart for this past Friday, the 21st. My expectation was that market makers would try to get TSLA to settle on the nearest $X50 or $X00 strike price. A close at $950 looked more advantageous to MMs than the 943.xx close we saw (because of large mountain of puts at 950), but I suspect with volume of 34M shares the MMs weren't going to try swimming against the current. Who knows what the true max pain really was, because we don't know the level of delta-hedging for those calls that were somewhat near the money (Deep In The Money calls should have been fully hedged, though).

For the coming Friday, max pain is listed as 1070. This will not be a stressful Tesla Earnings Report for the market makers because all they have to do is hold TSLA below 1100 and they do very well. Even if TSLA exceeds 1100, the number of call options placed at higher strikes is light. Without the macro dip, we could have been looking at quite a lot of pain for the market makers if Tesla does as well in the ER as many of us expect.

The big dip in max pain coming into this past week was caused by the large number of call options that have been purchased months or years before. That number didn't change much during the week's very substantial dip of the stock price. In next week's chart, we'll see the max pain number jump way up to 1070 and the cause is simply that the week isn't a big yearly option expiration date. Chart courtesy of @JimS

Coronavirus Update

I did not include a South Africa chart this week because numbers have dropped so low that the Omicron surge is now almost over. With the South African summer underway, climate is aiding the ending of the surge, so instead I found another country in the Northern Hemisphere that began the surge ahead of the United States: the UK. As with the U.S., they're in the midst of flu season.

You see lots of big spikes with the UK numbers, as you do with U.S. numbers. Let's check back next week.

The U.S. omicron surge continues to look at though it has peaked

Meanwhile, daily deaths from Omicron are substantial compared to some of the other surges and they haven't maxed out yet. There's a chance of a market reaction to the omicron deaths in the U.S. this week.

In a TSLA-specific dip, I would have expected the lower bollinger band to be strong enough support to hold TSLA up. With the amount of fear in the market and with a big macro dip, support points and technicals take a back seat to the stock responding to the macro environment.

Conditions:
* Dow down 450 (1.30%)
* NASDAQ down 385 (2.72%)
* SPY down 9 (1.96%)
* TSLA 943.90, down 52.37 (5.26%)
* TSLA volume 34.0M shares
* Oil 85.14
* IV 74.4, 95%
* Max Pain 840
* Percent of TSLA selling tagged to shorts: 46%

 

[Papafox]

TSLA chart above

QQQ chart above

Remember our recent discussion about how manipulators can play a macro dip? Monday was an excellent example of playing TSLA on the down side. A rather neutral response to QQQ's dip would have been a TSLA dip at a multiple followed by TSLA crossing the red/green line about the same time as QQQ and then climbing above QQQ at the same multiple. As typically happens with TSLA manipulations, the most apparent manipulations took place in the afternoon, shortly before market close. Such timing helps prevent a bounce off the manipulated dip and also aids quick covering of the daily shorting in the closing cross. Comparing TSLA's chart to QQQ's do you see that funnel cloud descending from the price line about 15 minutes prior to close? That was the mega push to keep TSLA from entering the green and giving investors hope for the next day. The funnel cloud was not so surprisingly followed by a steeply vertical climb, but about 5 minutes before close someone capped TSLA and prevented further climbing. Do you really believe that a stock climbing that steeply would just suddenly on its own flatline while macros are still enjoying their climb into the green? I hope not.

Another sign of manipulations during the day was the observations of @viridi who has access to level 2 trading info and reports in this main-thread post that he observed significant spoofing throughout the day plus huge selling volume to push TSLA below the 900 level.

Regarding TSLA's abruptly stopping its descent about $3 above the 10% decline point (and thus tripping the SEC circuit breaker) I show both TSLA and QQQ bottoming out at 12:18pm, so I will withhold judgement on that issue.

One personal observation on manipulations was that as TSLA dipped in its funnel cloud and then leveled off 5 minutes prior to market close, action in call options suggested a buying frenzy going into close. On Monday I changed the expiration date on 4 calls, each from March 2022 to January 2023. I did so one call at a time. I started by buying a Jan23 call shortly after TSLA established an up trend around 12:45pm. I then had to wait considerably for my Mar22 call to sell at the same price. I rinsed and repeated and the wait was noticeable on call #2 because I had to ride out the 3pm dip. It finally sold and I bought another Jan23 then offered a same strike Mar22 for sale at the same price. Bam! It was like I was fishing and a big trout took the fly the moment it touched the water. The price difference between the two same-strike calls had been higher but had shrunk to about $8 at day's end. Only a few minutes remained until close, but the fishing was excellent and after buying a 4th Jan23 call and then offering my Mar23 for sale that sale went through even faster than the previous one. I'm thinking if March 2022 DITM calls were selling that well just prior to close, the funnel cloud dip and the leveling off in the red 5 mins before close strike me as manufactured events because I doubt the buying would have been so lively if the market was actually turning wary of TSLA.

Looking forward, the Fed meets on Wednesday, and both Gary Black and I suspect the Fed will dial back some of its strongly hawkish language after watching the turmoil taking place in the market at present. A great setup for TSLA's Q4 ER would be for the Fed to give some comfort to the market and see the NASDAQ end Wednesday in the green. TSLA would then buiild upon that momentum with a positive earnings report and conference call, which could influence the market on Thursday.

Microsoft reports Q4 on Tuesday, Tesla on Wednesday, and Apple on Thursday. Good reports from all three could go a long way to relief from this dip. I believe Dan Ives made this suggestion.

For a good discussion on macros...
Check out the first part of this YouTube video with Dave Lee and guest Justin Oh.
Some takeaways:
* Our current correction is not like the 2000 dip because in 2000 the big money was betting on immature dot.com companies that had yet to show a viable business model and turn a profit. Today, Microsoft, Google, and the rest of the FANG gang have established business models and are turning significant profits.
* Our current correction is not like the 2008 dip because in 2008 the whole banking establishment melted down under the weight of toxic subprime mortgage derivatives.
* How significant the 2022 dip will be depends to a large extent upon how well the basic causes for the inflation can be addressed without having to resort to significant interest rate increases and other economy-hurting measures by the government.

News:
* Moody's upgrades Tesla to Ba1 grade, an increase of two levels but remaining just below investment grade.

Another level day for the 10 yr treasury bond yields, which should have been somewhat calming to the market (but obviously wasn't)

Max pain on Monday morning was 1050, which makes perfect sense according to the chart above. The 1000 strike is dominated by puts, the 1100 strike and above is call territory, and a closing price on Friday of 1050 would keep both the puts and calls at that round number from paying off. Clearly the betting is suggesting an upward move by Friday.

Overall, I see different parties betting big on the outcome of this week's trading. Some believe the results of the ER will propel TSLA higher because the results will be amazing. Others (perhaps hedge funds) are betting on fear of attack and inflation carrying the week and they're likely thinking these manipulations will help position themselves for a win on Friday. Market makers don't mind the setup right now, I suspect, but they'd benefit most if we see a close right at 1050 on Friday.

Take a good look at that tech chart. TSLA did indeed journey all the way down to nearly 850 and then back to 930 on Monday.

Conditions:
* Dow up 99 (0.29%)
* NASDAQ up 86 (0.63%)
* SPY up 2 (0.42%)
* TSLA 930.00, down 13.90 (1.47%)
* TSLA volume 50.3M shares
* Oil 84.17
* IV 82.2, 100%
* Max Pain 1050
* Percent of TSLA selling tagged to shorts: 29%

 

[Papafox]

TSLA chart above

QQQ chart above

On Tuesday it became clear that TSLA was trading stronger than QQQ and the NASDAQ throughout the day. What's with all the "teeth" on the TSLA daily chart, $10 runs up and down that makes the chart look like one of those giant lumberjack saws? Methinks someone was selling in volume and the market kept rejecting the price changes. Remember that there's lots of money riding on the options for Friday. Some big money is betting that inflation fears carry the days despite what TSLA can produce in the Earnings Report, and others are betting that TSLA's ER will dazzle the market and send the stock higher by Friday. Upward price pressure and volume of 28 million shares suggests to me that buying for the ER has begun in earnest. Notice that around 10:50am TSLA dared stick its cute little head above the gopher hole and into the green and was immediately bopped so hard it didn't return to the green for over 3 more hours. Someone really didn't want TSLA to rally on Tuesday.

Another abnormal price movement took place at 3:50pm when TSLA did a $10 vertical dive within a couple minutes. I believe that was too early for the closing cross to cause such a dip and I suspect manipulations here too.

On a broader scale, consider the ups and downs of the NASDAQ these last couple weeks. We've seen tremendous intraday volatility in the NASDAQ (as viewed with QQQ chart) and I see some repeating patterns. For example, why did the QQQ dip start nearly exactly at 3pm? These big dips all too often start at the top of an hour or at the :30 minute mark. A way of synchronizing the efforts of various hedge funds? Perhaps. Certainly one of the explanations of regular dips into close within the NASDAQ could be that day traders are worried about news and a gap down the following morning, so they make a point of exiting their positions before close. That would partially explain strong mornings and weak closings. Another more sinister explanation might be that when we see artificially enhanced dips with TSLA, often that dip will hit a support number, bounce, and then we see a rally grow out of that bounce. A macro dip that begins at 3:00pm stands a chance of continuing down through close without a reversal. What if various hedge funds concentrated on a favorite important tech company? One could take TSLA for the pushdown, others could take Microsoft, Apple, Amazon, Nvidia, Alphabet, etc. If enough big name tech companies started down at the same time, others would join in and the whole index could be pulled down. Just food for thought. I do think the hedge funds are exaggerating the volatility in tech stocks because they know how to make money by being quick to start shorting a macro dip and buying when the bottom has been reached. Poor day traders are typically slower to respond and their bailing out of stocks near day's end rewards the hedge fund shorting by continuing the dip. Algos join in and so do some weak longs. The dips can be deep and easily enhanced because of the fearful mood of investors these days.

To emphasize how investors can be hoodwinked in this time of fear, I attach above a graphic that @Artful Dodger shared in the main investor thread earlier on Tuesday. Microsoft beat on both top and bottom lines and yet we saw an immediate plunge of nearly 5%. While it's possible that the vast majority of shareholders watching the ER all saw something worthy of a 5% plunge, I sincerely doubt it. Remember, the plunge was immediate. I suggest that some organization that had something to be gained by holding Microsoft back from climbing this week orchestrated that plunge and then managed to do enough selling to hold it until sentiment changed during the conference call when the speaker emphasized good growth ahead, and Microsoft was quickly repriced closer to where it belonged. While it's possible such a plunge and reset is purely caused by investor sentiment that was cleared up during the conference call, I doubt it. Rather, I suspect we had a bad player seeking to take advantage of that fearful attitude and the executive on the call was smart enough to figure out the antidote. Keep the Microsoft example in mind when Tesla's report comes out. Fortunately, I think chances are excellent that Tesla's report will leave little for interpretation and it will be regarded as a beat, but if the bears try to nitpick one small detail of the report, we'll better understand what's going on.

Here are a couple reminders why we stay invested in TSLA. Gordon Johnson was acting as the straight man when he set up a question that annihilated his intended result and gave Hertz great free and positive press. If Hertz has already acquired 100K Teslas and they're booked at LaGuardia all the way through October, what does this say about demand for EV rentals? I suggest we will see more big purchases by Hertz and their competitors as well, and these rentals will work as seeds to sell many, many Teslas. Bullish. Also, I include Gary Black's comments with the ARK chart which shows both the amazing growth of EVs in the past year as well as emphasizing the substantial amount of growth still ahead.

Newjs:
* Electrek reports Panasonic to invest $700 million to produce 4680 cells for Tesla in Japan

Max pain dropped to 1005 by Tuesday morning. I also noticed that the put to call ratio from Monday to Tuesday changed from .98 to .92. Usually this number is greater than 1, indicating more puts than calls. The growing percentage of calls suggests that traders are starting to load up for the Earnings Report and the call buying should lead to some delta-hedge buying by the market makers.

Though we saw a climb to 950 during the day, opening and closing prices of TSLA stayed right about on the lower bollinger band. It took that $10 plunge in two minutes near market close to keep TSLA close to the lower bb and its opening price.

Best wishes to us all on Wednesday. Chairman Powell's remarks during market hours on Wednesday will affect market moods heading into the Earnings Report. With TSLA trading well below the prices where Elon sold his stock, I suggest Elon doesn't want to look like he and Zach sold "just in time" and Elon will have a bias toward seeing the ER bring some price recovery to TSLA stock. I'll also be watching QQQ and see what effect a positive response to the Tesla Earnings Report might have on QQQ during after hours trading.

Conditions:
* Dow down 67 (0.19%)
* NASDAQ down 316 (2.28%)
* SPY down 5 (1.22%)
* TSLA 918.40, down 11.60 (1.25%)
* TSLA volume 28.5M shares
* Oil 85.60
* IV 81.6, 99%
* Max Pain 1005
* Percent of TSLA selling tagged to shorts: 44%