Papafox's Daily TSLA Trading Charts

[Papafox]

June 9 posting

June 9 posting

TSLA chart above

For the second day in a row, TSLA rose strongly in the morning and then faded in the afternoon as macros fell and manipulators used the macro falls to pull TSLA down at a rate that gave a desirable closing price. The good news is that TSLA looks like it wants to rally but it needs support from the macros to do so. If CPI numbers are positive Friday morning, the state is set for a strong TSLA day. If the numbers are disappointing, TSLA will fall with everything else. Fingers crossed.

The most likely reason for TSLA's strength was that Shanghai production numbers for May came in slightly above Troy's estimates. Moreover, we saw an upgrade by UBS from hold to buy, with 1100 as the price target. Elon is priming employees for an end of quarter deliveries push. You might say that the May Shanghai numbers was the end of the expected bad news and TSLA's overall trajectory is moving into positive territory. If CPI numbers are positive on Friday morning, the market makers could lose control of TSLA and we could see a rally that doesn't get pushed down in the afternoon.

News:
* CPCA reported China production of 33,544 vehicles by the Shanghai factory in May
* UBS upgraded TSLA to buy and price target of 1100
* Electrek reports that Elon has briefed employees on a "nutty" end of quarter delivery push. Note, Troy commented that the article's reference to an Elon statement about 300,000 deliveries possible was wrong. Troy is correct. Elon's statement was made for additional COVID delays at Shanghai took place.
* Electrek reports that Tesla's secret master plan, part 3 is all about "massive" expansion. When Elon starts quantifying what massive means and the timetables, I suspect Wall Street will respond favorably

QQQ chart above

Percent of selling by shorts rose slightly from Wednesday to 50%

Yields on 10 yr. treasury bonds continue to hover just above 3%

Max pain was 725, up $5 from Wednesday morning's number. There remains lots of puts at 799 strike, and we're seeing a cluster of big call bets between 735 and 750. TSLA closing at 719 keeps it within the big profit zone for the market makers.

Thursday volume included lots of 700 put and 750 call action, with 800-strike lottery cards trading quickly. Two reasons why there is so much activity in the 800 strike calls are: it's a very volatile strike and can be used for quick day-trades, and even though it's more than $80 out of the money, a mega-rally of the NASDAQ could theoretically put it in play for Friday (likely just wishful thinking, however).

What is similar to the trading of the past two days is big rises in the morning, followed by big dips in the afternoon. In both cases the NASDAQ dipped in the afternoon and gave an opportunity for manipulators to pull TSLA down to a desired closing price on both days, which was very near the mid bollinger band.

Conditions:
* Dow down 638 (1.94%)
* NASDAQ down 332 (2.75%)
* SPY down 10 (2.38%)
* TSLA 719.12, down 6.48 (0.89%)
* TSLA volume 31.8M shares
* Oil 121.5
* IV 71.5, 91%
* Max Pain 725
* Percent of TSLA selling tagged to shorts: 50%

 

[Papafox]

TSLA chart above

QQQ chart above

Unfortunately, the CPI numbers on Friday morning disappointed the market (see this post by @The Accountant for an alternate translation) and we saw the NASDAQ drop 3.52%. TSLA's drop was a lesser 3.12%. That doesn't sound like much reason to cheer but consider the performance of other high-growth companies: NVDA -5.95%, AMZN -5.6%, and ARKK -7.15% and you realize TSLA did very well. An optimist would say the relative strength of TSLA came from a change in attitudes of Wall Street regarding Tesla, which more and more individuals are recognizing is absolutely dominating the EV market. The large run higher before 10am on Friday's chart supports this optimistic view.

The pessimistic view would be that TSLA received a one day reprieve from the macro weakness because market makers wished to protect their sold 700-strike Puts that expired on Friday. The climb of TSLA in afternoon hours relative to QQQ supports this view because manipulators prefer to move the stock in the lower volume afternoon hours. At the 4:00pm closing cross we saw 515K shares trade hands in that minute. Market makers are all delta-neutral again with TSLA then, right? Well, look at the third max pain chart and you'll see that max pain for this coming Friday is 660. So, it's also possible that market makers are heavy in TSLA at the moment and would sell it this coming week to get neutral again plus push the stock price lower so as to be closer to the max pain. There may be problem with this market maker plan, though, as I will now speak of.

The "problem" has to do with the TSLA jump up to 711 in after hours. This jump was caused by word that Tesla plans a 3 for 1 stock split sometime after the early August annual shareholders meeting (when additional shares will be approved by the shareholders). The media has been talking about companies which do splits growing in value 16% faster than the S&P500 in the past, over a one year period after the split. Speculators will be jumping into TSLA to take advantage of the expected overperformance, and what we saw was buying on the split news. Notice how quickly that run higher after hours was squashed and the stock returned to just a couple dollars above 700? That was likely the work of the market makers who didn't want the after-hours movement of TSLA messing up their options transactions too badly. The "problem" for the market makers, then, is that there could be some buying pressure on Monday because of the upcoming split and positive TSLA sentiment but futures look really negative for Monday. Market makers are possibly heavy in TSLA at the moment, do they delay selling in the hopes that TSLA gets some lift from the split news (so they can sell more gradually) or sell immediately in the hopes of pushing TSLA closer to next week's 660 max pain number but then taking losses on those shares held over the weekend?

Let me point out to any newbies that a split is typically more consequential at TSLA than elsewhere. Because of the super-high option activity with TSLA, market makers are inclined to do more naked shorting (selling shares you do not actually own or have borrowed) with this stock. Sometimes the naked shorting gets ignored and the stock trades as if it just had more shares added during a sale but without any covering (buying) to close those transactions. The right kind of split forces the issue and market makers who are involved in naked shorting have to cover those naked shorts because the person who bought the shares from them when the naked short was initiated will want the two extra shares (see this @Artful Dodger post). OTOH, the level of naked shorting at the moment is likely quite a bit lower than when the previous split took place. Still, it will generate buying.

News
* Drive Tesla Canada says Fremont hits new daily production record last week
* Tweets suggest that Tesla laid off the 10% of salaried employees last week
* @JusRelax posted a video that suggests Tesla 4680 output is still low, only about enough for 1200 Model Ys/month

Disappointing CPI numbers pushed yields on 10 yr treasury bonds up to 3.15%

It probably took some effort by the option sellers to cushion TSLA's descent on Friday so as to avoid paying too much on those 700 strike puts. With percent of selling by shorts up at a significant 54%, effort was indeed exerted.

Why does the max pain open interest chart for this coming Friday look so strange? It's a quarterly expiration, which means that many of the options were purchased long ago. For example, you can this week purchase a June 2023 option, so these June 2022s have been available for purchase for over a year. Thus, most of those puts at 900 and 950 were purchased long ago when the stock price was above those prices.

Friday volume on option trading gives a pretty good idea of why TSLA landed just below 700 but above the 695 and lower strike puts

Max pain for Friday June 17 is 660. Notice how flat the bottom of the curve is, suggesting that a move either above or below 660 would not immediately have a huge impact upon market maker profitability.

I have added red dots for Fridays where the established max pain could not be reached through manipulations but where there was a logical target for which to head for the market makers. You can say that max pain and stock price haven't been strongly correlated lately, which is true, but the flip side is that the market makers then focus on a Plan B for optimizing the week's gains, and they are pretty good at coming close to this Plan B target. For example, for this past Friday, Plan B was to close slightly above 700 to keep those 700-strike (and lower) Puts out of the money and they came pretty close to this end of week optimization.

Previously, TSLA had been closing near the mid bollinger band but Friday's macro dip pulled it lower

Conditions:
* Dow down 880 (2.73%)
* NASDAQ down 414 (3.52%)
* SPY down 12 (2.90%)
* TSLA 696.69, down 22.43 (3.12%)
* TSLA volume 31.1M shares
* Oil 120.7
* IV 74.3, 94%
* Max Pain 720 for 6/10, 660 for 6/17
* Percent of TSLA selling tagged to shorts: 54%

 

[Papafox]

TSLA chart above

QQQ chart above

The mega-dip of the markets on Monday overpowered any positive sentiment for Tesla. I suspect most traders who hope to take advantage of the split are looking for a turnaround in TSLA's trajectory. It will come. If market makers had purposely held TSLA stock to sell this week, they got spanked for their efforts today. We'll never know. You can see that TSLA rose higher than QQQ from about 11am until 1pm, when it was trading not far above 660, the max pain. It's entirely possible that the market makers propped TSLA up during this time but couldn't hold it when the market again sank.

While the NASDAQ lost 4.68%, TSLA was down 7.10% while NVDA was down 7.82% and ARKK down 8.80%. TSLA dropped 1.5X the NASDAQ's drop, which is less than its usual 2.1X. Compared to other growth stocks, TSLA showed a bit of strength.

On Tuesday the Producer Price Index (PPI) will be released at 8:30am. This release will obviously affect the macros. On Wednesday afternoon, we learn of the Fed's decision to raise interest rates. A 0.5 rise was previously expected but there's talk of a 0.75% rise now.

In my IRA on Monday I bought a Nov 2022 500 strike call a few minutes before market close, to be paid for with a Sep 2022 500 strike call I will sell when it rises enough in value to pay for the other call. Hoping for 2 days vs. 2 months, but we will see.

During all this market craziness, keep in mind that a mild recession just isn't an issue for Tesla. The company can sell every vehicle it can make. Once 2nd quarter is over and Wall Street sees inflation peak, Tesla is well positioned to recover lost territory.

News:
* RBC Capital upgraded TSLA to outperform from sector weight but trimmed the price target from $1175 to $1100

Mercy, yields on 10 year treasury bonds keep climbing. They're just below 3.4% now.

Percent of selling by shorts fell to 49% on Monday. One possible explanation? Market makers were likely buying to apply upward pressure to TSLA for part of the day, which doesn't require shorting and thus isn't seen.

Max pain Monday morning was 660. If you look at the chart above, almost every strike below 660 is dominated by puts. Strike 660, however, is Call dominated.

Puts at 600 and 650 saw the most buying and selling action on Monday in the volume chart

We haven't seen much from Ihor Dusaniwsky lately, but the chart above shows an upward trend in short interest in May and a slight downward trend in June.

Monday's big dip brings TSLA within about $15 of the lower bollinger band. The lower bb should provide some support if we see a slight negative trajectory for TSLA on Tuesday.

Conditions:
* Dow down 876 (2.79%)
* NASDAQ down 531 (4.68%)
* SPY down 15 (3.80%)
* TSLA 647.21, down 49.48 (7.10%)
* TSLA volume 33.9M shares
* Oil 121.1
* IV 82.1, 99%
* Max Pain 660
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

Tesla chart above

QQQ chart above

On Tuesday, the PPI numbers came out before market open. The numbers were pretty much as expected but core inflation numbers were an improvement. The market was mildly happy with the results, but taking a look at the QQQ chart above, you can see most of the gyrations remained within 1% up or down (it's the scale that makes the QQQ chart look so volatile). TSLA outperformed the NASDAQ by a good measure. Without the negativity of a big macro plunge, the good news about Tesla, such as an upcoming split, lifted the stock price.

Let's not forget that the market makers are looking at a max pain number of 655 for Friday. TSLA's close at 662 puts it in the ballpark.

The big announcement on Wednesday around 2pm will be the Fed's change in interest rates. Last week most investors expected a .5% change, but after Monday's CPI numbers, sentiment has changed to expect a .75% rise. Here's one view from CNN. There's some confusion on what Wall Street wants to see. I think a .50% raise would be welcomed, a .75% raise would produce neutral to negative feelings, and a full 1% raise would freak out the market. the Fed discusses its meeting at 2:30pm, so if Powell sneezes in the wrong way you could see some market fallout or enthusiasm if he sneezes in the right way. You see, markets are very rational.

Overall, I think there's positive sentiment for TSLA out there and perhaps after the uncertainty of the June Fed announcement, some buyers on the sidelines might be willing to start buying if the rates are well-accepted by the market.

My free Call option upgrade in my IRA from Sept 2022 to Nov 2022 expiration went through Tuesday afternoon. I needed a $20 rise in the stock price and I'm not used to such big money being needed. In the future, I will move options 1 month at a time to better be able to succeed in short-term trades.

With Wall Street pretty sure that the Fed will raise interest rates .75% on Wednesday, yields on 10 yr. treasury bonds continued to rise to just below 3.5%

Percent of selling tagged to shorts was 44% on Tuesday, suggesting lower manipulations

Max pain was listed as 655 Tuesday morning, which is right between the big put wall at 650 and the tall call wall at 660

Tuesday's option volume

So far TSLA has remained above the lower bollinger band for intra-day trading

Conditions:
* Dow down 152 (0.50%)
* NASDAQ up 19 (0.18%)
* SPY down 1 (0.30%)
* TSLA 662.67, up 15.46 (2.39%)
* TSLA volume 32.4M shares
* Oil 118.9
* IV 80.2, 98%
* Max Pain 655
* Percent of TSLA selling tagged to shorts: 44%

 

[Papafox]

TSLA chart above

QQQ chart above

The Fed did indeed raise rates by .75% Wednesday afternoon, thus meeting expectations of the market. The NASDAQ initially couldn't decide to go up or down but settled on slightly down. When Powell spoke, market confidence improved and set off a climb. For the day, TSLA gained 5.48%, which is 2.2X the NASDAQ's gain of 2.5%. Volume was a hefty 39.5M shares traded.

TSLA's after-hours climb is a positive indication, as is the decline in 10 yr treasury bond yields. I think the market is regaining some trust in the Fed and the dip in yields is an indication that inflation will be brought under control in time.

For the remaining two days of this week, I would expect market makers to try holding TSLA below 700, but with another day of high volumes, they may be overpowered. Since Friday is a quarterly options expiration, the number of options to expire is quite high and we may see above average effort from the market makers and hedge funds to resist a climb. The good news is that the following Friday's max pain will be 750 (at least for now), which should mean less manipulative interference with TSLA's climb up to that number, should the market continue it's upward pressure on the stock.

The difficult Q2 will be over in 2 weeks (plus a few more weeks for the ER), July could be the turnaround month for official inflation numbers and size of interest rate hikes, Shanghai factory staffing is returning to normal after the Covid lockdowns, the market is gaining confidence in the Fed, and TSLA is up 5.5%. It's been a good day, my friends.

News:
* Yahoo says that Elon has appealed the ruling that he must continue his agreement with the SEC regarding Tweets
* Tesmanian says Tesla Driver-Assist Systems Are Much Less Likely to Crash than Waymo, Transdev or GM's Cruise, per NHTSA Data
* This Tweet says Tesla has just increased the price of the long range Model Y by $3000. Also, S&X prices up too (in a different Tweet)

Notice how the Fed numbers and Powell interview Wednesday afternoon caused yields on 10 yr. treasury bonds to fall to nearly 3.3%. Growth stocks such as TSLA do well with such reversals.

Apparently the Market Makers didn't have to do much shorting until TSLA approached 700 and percent of selling by shorts remained at a modest 45%. Tomorrow could be quite a bit different if the MMs try to protect 700 and the macros move higher.

Max pain Wednesday morning was 655. Notice that at 700 strike calls outnumber puts by about 9K. That's a lot of incentive for MMs to try to hold the line. They may not succeed.

Wednesday's volume

Wednesday's climb brings TSLA a couple bucks higher than Friday's close, thereby eclipsing Monday and Tuesday's losses. The NASDAQ is about 2% lower over that time span

Conditions:
* Dow up 304 (1.00%)
* NASDAQ up 271 (2.50%)
* SPY up 5 (1.43%)
* TSLA 699.00, up 36.33 (5.48%)
* TSLA volume 39.5M shares
* Oil 115.3
* IV 74.8, 95%
* Max Pain 655
* Percent of TSLA selling tagged to shorts: 45%

 

[Papafox]

TSLA chart above

QQQ chart above

"Inflation plus recession equals stagflation. It's coming! We're all going to die!"
Ok, please excuse the outburst, I was just trying to see what it feels like to think like this market. It just doesn't suit me, so back to my old self. I'm thinking that with the dot com bust of 2000 and the subprime mortgage meltdown of 2008 as the examples of recession that current investors mostly remember, perhaps those events are the reason why the word "recession" strikes so much fear into them. The truth of the matter is that Q1 had negative GDP growth, Q2 will be through in two weeks and if it has negative GDP growth as well, we already are in a recession. Ho hum.

On Wednesday the market indicated that the Fed had done fine in the plus .75% rate hike and in Powell's explanation of what is to come. We saw a NASDAQ rally of 2.5%. Futures were mildly green. Come Thursday, pre-market TSLA was trading at about 670 by the time the market opened and it went down from there. Although it's possible that the market simply changed it's opinion overnight, it's also possible that the scoundrels who have most to gain from a deeper dip here paved the way with some pre-market selling of many stocks to get the ball rolling downhill and then they profitably shorted the dip. We'll never know. Percent of selling by shorts was a moderate 49%, but for special occasions like this we have seen the shorting move to dark pools.

While the NASDAQ dipped 2.5%, TSLA went down 8.54%, a multiplier of 3.4X, which is wildly excessive, particularly when you realize TSLA has been outperforming the market and similar high growth companies lately. Moreover, Tesla announcing large increases in the cost of many vehicles should be seen within the context of delivery times becoming just too long and a price increase was needed to cut wait times (with the positive side-benefit of more profits). The financial media of course spun the story to suggest Tesla was just scrambling to keep up with high cost increases. Anyway, while TSLA was down about 8.5%, NVDA dipped 5.6%, AMZN down 3.7%, and super-volatile ARKK was only down 6.2%.

Why do I believe that the Wall Street pirates were shorting TSLA on the way down? First, TSLA's 3.4X dip to the NASDAQ and its relative dip to similar stocks was inappropriately deep. Secondly, QQQ closed higher than the 10:51am morning bottom, but TSLA continued downward while the macros were relatively level. Thirdly, TSLA tripped the SEC alternative uptick rule circuit breaker at 2:47pm when it dipped below 629.1. With the uptick rule in effect TSLA could not be pushed further down and bottomed at 2:50pm. QQQ did not bottom out until 2:54pm.

Why was TSLA down so much more than other tech growth stocks? Part of the answer is that TSLA has so much option activity compared to the others, and especially this week with a quarterly expiration and a 660 max pain, there simply is more incentive to manipulate TSLA than the other stocks. Similarly, once TSLA starts to fall, market makers are selling shares to delta-hedge all those options and that selling begets more drop, which begets more selling, rinse and repeat. Trust me, this was a really bad week to have a 660 max pain and TONS of expiring options. Often there's a recovery day following an overblown panic down day such as Thursday, and TSLA at 640ish is positioned very nicely for a close around max pain 660 if Friday brings us macro green.

To put the big picture in context, core inflation (not food and fuel) has been coming down lately. Look at the chart just below and you'll see that over the past two days yields on 10 yr. treasuries have dropped about a quarter percent from 3.5ish to 3.25ish. Tesla continues to kick bumpers and take names in the EV world. Nobody is even close in catching them or matching their manufacturing efficiencies. Tesla has a bump in Q2 to get over and the macro headwinds will fade soon enough.

I bought another Nov 22 500 call today in my IRA and will sell a Sept 22 500 call when it pays for that purchase. Slowly but surely I'm moving 9 calls from Sept 22 expiration to Oct or Nov 22 expiration and then to Jan 23.

For the second day in a row yields for 10 yr. treasury bonds have been falling (from near 3.5% to near 3.25%). This is good news for growth stocks

Percent of selling tagged to short-selling rose to 49%, a moderate number on Thursday. Methinks the market makers and hedge funds did some shorting from dark pools to keep the shorting from catching too much attention. Over 950K shares traded hands in the 4pm closing cross.

Max pain on Thursday morning was 660. See those tall put walls at 640 and 650? Market makers would like to be above 650 to keep them out of the money come Friday close.

Thursday volume

TSLA remained above the lower bollinger band during its downhill run on Thursday.

Conditions:
* Dow down 741 (2.42%)
* NASDAQ down 453 (4.08%)
* SPY down 13 (3.31%)
* TSLA 639.30, down 59.70 (8.54%)
* TSLA volume 35.3M shares
* Oil 116.8
* IV 85.1, 100%
* Max Pain 660
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

TSLA chart above

QQQ chart above,

Sure enough, the macros gave a bounce on Friday after Thursday's overdone dip. TSLA's max pain had changed from 660 to 650 and with a ton of 650 sold puts to protect, the market makers managed to get TSLA to close 28 cents above 650. Coincidence? You know better by now. A day with volatile up and down trading is a perfect day for manipulations. You simply increase or decrease pressure during the up and down moves, and no one is the wiser. The price of TSLA at end of day magically falls where it suits the MMs the best. We saw trading during the 4pm closing cross of over 2 million shares. That's a lot of trading for the end of a day. Much of that trading was related to the huge numbers of puts and calls that expired on Friday. Finally, looks how ruler-flat TSLA trading was after hours. That is the work of market makers preventing any funny business as options are handled.

The good news is that max pain is up to a more reasonable 705 for this coming Friday (had been all the way up to 750). Normally I would be enthusiastic about a light bounce after a double bottom, but I think we need to be careful with expectations because macros are the driving force. Luckily, rates on 10 yr. treasury yields suggest the bond market believes that the fed will get inflation under control soon enough. When some relief for inflation shows, the market will be ready to recover.

I keep trying to understand why the market sold off so deeply to the inflation plus recession fears. One idea is that the very substantial dip in value of equities since the beginning of the year became a negative feedback loop as more price dips created more fear which created more dips. It was fear feeding upon previous fear. There always is a bottom, though, and with record money on the sidelines there could be one heck of a spirited recovery when the time is right. We know it's coming, it's only a matter of time.

As for Tesla specifically, Shanghai is coming back to regular staffing, Berlin is now producing 1,000 vehicles per week, Austin is turning out 4690 Model Ys, and Fremont has hit a new record daily vehicle production rate. Despite prices for Tesla vehicles being way up, the waiting list remains many months long. This is the kind of demand problem that the rest of the world's businesses wished they had. Q2 will be weak because of Shanghai lockdowns, expenses for layoffs, and a large bitcoin impairment. Nonetheless, Tesla will remain quite profitable for the quarter. The big issue at the Q2 ER will be guidance. I think the only obvious issue remaining is 4680 cell production. If Tesla can solve the bottlenecks and get production on track, it'll be willing to create many more machines for cell production and it's off to the races. Fingers crossed the resolution is sooner rather than later.

Edit: 1000/day changed to 1000/wk.

Monday is a holiday (Juneteenth).

10 yr treasury bond yields remain about a quarter percent below rates when Fed announcement was made

Percent of trading tagged to short-sellers came in at 47% for Friday.

Max pain for this coming Friday is 705. There's a 4K high call wall at 700 which the market makers may choose to remain below, if they can. There's also a sizeable 710-strike call wall to be considered.

Volume on Friday shows massive trading with emphasis near 750

Max pain and TSLA's stock price closed within 28 cents of each other on Friday.

Friday's trading was all about giving the market makers their max pain number.

On Friday my dear buddy Iceman, the 50 State Tesla dog, reached the end of his journey at age 17. I cannot image a better canine companion for all of these years. He spent a good portion of his life in the back seat of one of my Teslas, as there was always someplace to go and always air conditioning to protect him. In the signature at the end of every post of mine you can find a link to my blog where I tell the story of our 2015 journey to all 50 states in my Model S 70D (plus a couple later videos). He will forever own the title of first dog to tour all 50 states in an electric vehicle. Michael Fritts and Lita Elbertson claim that first for humans. Fair winds, my faithful friend.

For the week, TSLA closed at 650.28, down 46.41 from the previous Friday's 696.69. I'm ready to be done with the macro dips and Tesla's Q2 issues so that we can look ahead to an otherwise brilliant future for this company. Enjoy your weekend.

Conditions:
* Dow down 38 (0.13%)
* NASDAQ up 152 (1.43%)
* SPY up 1 (0.22%)
* TSLA 650.28, up 10.98 (1.72%)
* TSLA volume 30.9M shares
* Oil 109.6
* IV 79.1, 96%
* Max Pain 650
* Percent of TSLA selling tagged to shorts: 47%

 

[khorton]

Berlin is now producing 1,000 vehicles per day,

If Elon’s tweets are correct, Berlin is at 1,000 per week

 

[TSLAX]

I read your posts everyday. I am sorry about your beloved dog. I know through reading your posts that Iceman was well cared for. And yes! Iceman holds quite the honor of being the first dog to travel all 50 states in an EV.....Congrats on a life well lived Iceman and to you Papafox for keeping him going all those years.

 

[Papafox]

If Elon’s tweets are correct, Berlin is at 1,000 per week

Changed. Thanks for the catch.

 

[rick]

As a Newfoundland owner x 2 and a Tesla fan x 4 (2013 s 85, 16 X90, 19 m3, 20 Myp) I know your pain and feel your joy. Thanks for your good work. ricki

 

[bkp_duke]

So sorry to hear about you furbaby. If humans were as evolved as dogs, the world would be a lot better place.

 

[Papafox]

TSLA chart above

QQQ chart above

After a three day weekend the buyers came out in the market and bid the NASDAQ up more than 3% before it settled at 2.51% at close. At about 1:15pm, TSLA was up over 12% and QQQ was up over 3%, for a 4X multiplier. The high multiplier was made possible by heavy volume with TSLA, some 40.8 million shares traded.

We saw some apparent manipulations with TSLA, first shortly after TSLA crossed above 700, when it leveled into a prolonged plateau even though the NASDAQ was continuing to climb. The NASDAQ's climb, paired with TSLA volume, resulted in the stock price getting away from the market maker manipulators and climbing quite a bit higher. Max pain is at 700, and so the incentive to hold TSLA down. As QQQ dipped slightly in the afternoon, this was an opportunity for a TSLA pushdown, and we saw quite a TSLA dip in the final 45 minutes of TSLA trading, even though the NASDAQ didn't nearly as much. Comparing TSLA's close with the NASDAQ's, we get a 3.7X multiplier. Yep, your pocket was picked on Tuesday, as is common.

Looking at the calls and puts in the max pain chart, market makers would like to see TSLA in the 680 to 700 range for the remainder of the week. Macros will determine the day's direction of movement, and manipulations will affect the magnitude. The reason for TSLA's 4X advantage over the NASDAQ on Tuesday was caused by sufficient volume to defeat the manipulations. After 1:15pm, however, lower volume allowed the pirates to resume their usual tricks.

At the 4pm closing cross, we saw 1.3 million shares trade during that minute. At 4:02pm, we saw another 500K shares trade. Methinks that even with 40M shares of volume the market makers weren't delta-hedged at day's end and they had to do a good amount of buying to cover their shorting and the delta-hedging needed as TSLA rose nearly $61.

Overall, Tuesday's trading highlighted the value of being aware of the max pain number. We knew that TSLA could climb to 700 and maybe higher if macros were strong, and they were. Keeping that number in mind also helped explain TSLA's weakness in the afternoon.

Yields on 10 yr. treasury bonds ran up to 3.3% on Tuesday but the market shrugged it off

Percent of selling by shorts fell to 44% on Tuesday, a number that usually indicates little manipulation. The thing about a low percent of selling by shorts number, though, is that although a high number indicates manipulations are afoot, a low number does not necessarily mean no manipulations. This is because the manipulating parties can get their shares to short from non-FINRA exchanges (which are not counted) or the market makers can simply sell shares and reload so as to eliminate the deficit during the closing cross at 4pm.

Max pain dropped $5 over the weekend and came in at 700. You can see that 680 and below is solid put domination, 690 is light calls and then 700 and above are heavy call volumes. The market makers would really like to keep TSLA below 700 this week, but everything is subject to the whims of the macros.

Volume for Tuesday's trading of options expiring Friday, June 24

So far it looks like we have a double bottom. On both May 24 and June 16 TSLA sunk intra-day to a couple dollars above 620 before recovering. Part of the psychology of a double-bottom is that some buyers say to themselves they're not going to let the next similar opportunity slip through their fingers and so as the stock price approaches this previous low, the buying begins and keeps it from actually hitting a third time. Again, the macros are in charge at the moment and macros will likely set the direction of trading for a day (though the magnitude can be manipulated, as we have seen).

Thank you for the support yesterday.

Conditions:
* Dow up 641 (2.15%)
* NASDAQ up 271 (2.51%)
* SPY up 9 (2.52%)
* TSLA 711.11, up 60.83 (9.35%)
* TSLA volume 40.8M shares
* Oil 110.7
* IV 75.1, 94%
* Max Pain 700
* Percent of TSLA selling tagged to shorts: 44%

 

[Papafox]

TSLA chart above

QQQ chart above

Wednesday's pre-market saw TSLA and the NASDAQ well in the red, but both rose into the green shortly after market open and by 10:38am TSLA had climbed above 740. As long as the volume was high the market makers and hedge funds couldn't stop TSLA's climb. Screens at CNBC showed TSLA as the week's highest climber in the NASDAQ, which only helped stir up more buyers. Alas, as the day progressed Chairman Powell answered questions with Congress, and his hawkish tone caused the morning exuberance of the macros to cool. Stocks picked up in the afternoon again, but TSLA, the hottest stock in the NASDAQ, didn't climb with the NASDAQ but instead traded level at about 720. I bet you a nickel the stock was being capped. If you look at the max pain chart below, you'll see that large accumulations of call options at 710 and 730 were likely affecting the choice to cap at 720. The strike 730 was taken out of the money, and when the macros dipped in the final hour of market trading, TSLA of course dipped (with help) with them and ended the day at 708.26, a couple bucks below the wall of 710 strike calls.

Evidence? The percent of selling by shorts was up to 48%, but I think more mischief was involved (getting short shares from non-FINRA exchanges). Also, look at the trading for the closing cross. We saw 757K shares trade at 4pm and then an additional 465K at 4:01pm. Someone was busy covering their day shorting.

So, Powell's words could be responsible for spooking the market on Wednesday. One reason for the strong opening in the morning could have been the combination of oil falling over the weekend from nearly $120/barrel to $103/barrel Wednesday evening. Another reason could be 10 yr. treasury yields falling to 3.15%

Overall, the market is hearing from doom and gloomers who want to scare investors enough to pick up stocks for blue light special prices and yet we're seeing encouraging developments such as falling oil prices and falling bond yields. Expect continued volatility for a while as a strong climb day sets up worries for a dip the following day. For TSLA, the good news is that investors recognize we're getting toward the end of the scary Q2 and that the stock in the 600s is just too attractive to pass up now. In the short run anything is possible from more fear in the macros to another really strong climb of TSLA. I'm loaded up on shares and leaps and just riding out the turbulence, knowing that better days lie ahead.

News:
* Gene Munster posted this analysis that says lead times to take delivery of 3 or Y have increased since April to 8.5 months and that S & X lead times have risen in the past couple months to a full year's time. Meanwhile, prices on Tesla vehicles have risen on average 18% since October.
* @The Accountant posted a Tweet here in TMC that says Shanghai will close production for the first 4 days in July as it renovates to expand Model Y production to 2,000 vehicles/day. Reuters reported 14 days for the closure, but Gary Black says leaked email references 3 days for closure. The Reuters inaccurate time figure could well have contributed to TSLA's afternoon weakness on Wednesday.
* Reuters reports that in an interview with the Silicon Valley Tesla Owners, Elon said that Tesla is burning billions of dollars because of battery shortages and port delays. Specifically, there are insufficient number of 4680 cells being produced for Austin at the moment and machinery to make its 2170 batteries are stuck in port in China. This report could negatively affect TSLA trading this week. We now have our answer to why Elon is laying off 10% of salaried staff at this time.
* Marketwatch quotes CFRA analyst Garrett Nelson as saying that the TSLA selloff has created a "generational investment opportunity".

Yields on 10 year treasury bonds fell to 3.15% on Wednesday, which should be good news to growth stocks

Percent of selling tagged to shorts rose to 48%

Max pain rose to 710 after Tuesday's big climb. Notice that the 700 strike is now dominated by puts, so the Market Makers will try to keep TSLA above 700 now. 710, 730, and 750 now have growing call walls which will affect the MMs efforts in playing defense.

Wednesday's options volume

For two days in a row, TSLA has closed above the middle bollinger band, which is a positive development. Notice how it has mostly traded between the mid and lower bollinger bands since mid-April.

Conditions:
* Dow down 47 (0.15%)
* NASDAQ down 16 (0.15%)
* SPY down 1 (0.18%)
* TSLA 708.26, down 2.85 (0.40%)
* TSLA volume 32.9M shares
* Oil 106.2
* IV 73.7, 91%
* Max Pain 710
* Percent of TSLA selling tagged to shorts: 48%

 

[Papafox]

TSLA chart above

QQQ chart above

The story of Thursday was that the media flooded investors with apparent bad news for Tesla, much of it having some connection to the truth but distorted in presentation, and the result was inevitable: TSLA underperformed the NASDAQ by about 2%. We had Reuters putting out headlines that "Tesla plans 2-week suspension of most Shanghai production for upgrade" but viewers who could not get beyond the paywall never saw that output would increase to 22,000/wk. We saw that Morgan-Stanley cut Tesla's price target to $1200, but for those investors who couldn't watch the video, they didn't see the cut was a mere $100 and was caused by a WACC problem. Nor did they see that Adam Jonas still has a buy rating on TSLA. Reuters entered the picture yet again with the headline "Musk says Tesla's new car factories 'losing billions of dollars'". Musk's concerns about the rate at which 4680 cells are being produced and tools for making more 2170 batteries are stuck in China with a shipping backlog are indeed serious matters , but Elon said "this is all going to get fixed real fast " and the interview was held 3 weeks ago. So, the headlines give a much worse feel for Tesla's operation than is warranted should the bottlenecks be corrected in a timely fashion. Consequently, I have suggested keeping an eye on Austin output to see when it speeds up. Years ago, when I toured the Reno Gigafactory I learned that there's an aging process for battery cells before they're ready for prime time. Thus, the problem will be fixed before we actually see the improvement in Austin production.

If Friday is a strong day, it'll be interesting to see if Tesla investors have already digested these stories and are ready to move on.

If you look at the max pain chart, you'll see that TSLA is ideally positioned for max pain this week. Lots of puts reside at 700 and lots of calls reside at 710. Market makers really want to land between those two numbers on Friday. Unfortunately for the MMs, Fridays can be wildcards with strong climbs or dips. Thus, we often see TSLA closer to max pain price on Thursdays than on Fridays.

One of the day's mysteries is that NVDA traded almost identically to TSLA. Interesting. ARKK gained 7%

Should TSLA have a strong day, no doubt the MMs will try to hold it back. The strike 730 has lots of calls, as does 740. Then there's a really big call wall at 750. Don't be surprised to see the stock price pause at these numbers for a while if Friday is a strong day for TSLA.

For excitement, watch what happens during Friday's closing cross, when the Russel 1000 index gets reconstituted. TSLA is moving up into the #5 position so there will be some TSLA buying in the close.

We saw an additional drop in yields of 10 yr. treasury bonds to 3.1% on Thursday

Percent of selling tagged to shorts inched higher on Thursday to 49%, which suggests middle of the road manipulation level

Max pain remained at $710 on Thursday morning. With 700 totally dominated by puts now, the MMs want TSLA above 700 on the close, but not too far above. Look at all the 710 calls expiring on Friday. For Friday, July 1, max pain is $705, so not much change unless we see a big run up or down on Friday

Thursday's options volume

On Thursday TSLA managed to close barely above the mid bollinger band, a three day streak

Conditions:
* Dow up 194 (0.64%)
* NASDAQ up 179 (1.62%)
* SPY up 4 (0.98%)
* TSLA 705.21, down 3.05 (0.43%)
* TSLA volume 34.3M shares
* Oil 104.1
* IV 72.8, 90%
* Max Pain 710
* Percent of TSLA selling tagged to shorts: 49%

 

[Papafox]

TSLA chart above

QQQ chart above

Friday the macros continued skyward, with the NASDAQ leading the pack, up 3.34%. If TSLA climbed at its usual 2.1X multiple, that would have been a 7% climb, or roughly a climb to 754. Since market makers were already out of sorts with TSLA climbing above 710, a climb above the 730, 740, and 750 call walls would have been really bad news and so they began the capping effort not long after 10am when TSLA threatened to reach 740. Thus, as the NASDAQ saw a slow climb throughout late morning and afternoon, we saw TSLA stuck around 735. It's a Friday, and the pirates need to maximize their loot, don't you know. In particular, notice the very pronounced zoom upwards in the NASDAQ's final 8 minutes. Tesla increased a bit too, but not nearly the zoom seen elsewhere.

We were curious to see if there would be a Tesla-specific bump upwards during the 4pm closing cross. I didn't see one, but I did notice that 4:00pm volume was over 2 million shares, which is extremely heavy and suggests the Russell 1000 funds were accumulating shares.

For the week, the NASDAQ gained about 7.5% and TSLA about 13.4%.

The past week was important because it stood as a possible turning point in the macro dip. A number of important investors mentioned "generational wealthy opportunity" when discussing the potential rise from here. That kind of talk generates FOMO. We'll see this coming week if the mood continues. On the one hand, the dip has (in my opinion) been far too deep for the level of financial dismay the current economy and inflation rate imply. OTOH, there are Wall Street hedge funds with characters who will work to scare the daylights out of the investing public in order to pick up quality stocks at an even greater bargain, and sentiment can once again change in a New York minute. In the long run the macros climb out of this dip. In the short run, anything is possible.

Regarding investing in TSLA specifically, My feeling is as long as I keep my investing horizon long enough (at least a year or two) I am going to do very well with this stock. Guidance for Q3 and Q4 should be strong, but the status of 4680 production is sure to come up on the ER questions, and the lack of improvement could be a weight on this stock. When faced with a dilemma such as how the market will respond to the Q2 P&D report and ER, I tend to err on the conservative side, which is to hold my stock and leaps, rather than to play a potential dip. If we fall I ride out that dip and then all is well again. Right now, it looks like Wall Street is setting TSLA up for a miss with their 280K estimated deliveries, but I suspect that number will come down in the next week. If the numbers don't come down I might set a small amount of cash aside as "buy the dip money". We'll see. The closer we are to the bottom of a dip, the less likely I am to gamble on an ER.

On a personal note, I now only have 3 of the original 9 Sept 22 call options left (the rest have been rolled to Nov 22 or later). Once all the Sept 22 expiration options have been rolled at little or no cost I will begin moving the Nov 22 calls to Jan 23 expiration. That should give me some breathing room. Let me remind those of you who trade from an IRA (and aren't susceptible to tax consequences in trading) that volatility is your friend when it comes to no-cost rolls of your call options.

News:
* On Sunday, Investing.com came out with an article that suggests it's time to buy TSLA. The technical trader suggested that now since TSLA's SP is once again its 10 and 21 day moving averages, more rise is likely.

10 yr. treasury bond yields ended the week below 3.15%, not bad at all

Percent of TSLA selling tagged to short-selling dipped to 38%, which would normally suggest low manipulations, but in this case I think market makers simply borrowed their shares at non-FINRA exchanges or did some naked shorting and as a result and as a result FINRA exchanges reported an unusually low percentage of selling by shorts.

For this coming Friday we're looking at a max pain of 705. Since 700 is now dominated by puts, and there's a big quantity of calls at 730, the MMs would of course prefer a close below 730. The strike 750 isn't so scary, but 800.

Friday's trading volume

Check out how often max pain and closing price are closer on Thursdays than on Fridays

It's been a good week. Notice that with four days of TSLA closing above the mid-bollinger band the bollinger bands have now turned upward, which is hopefully the beginning of a new trend.

For the week, TSLA closed at 737.12, up 86.84 from the previous Friday's 650.28. It's been a good week, my friends and I hope you enjoyed your weekend.

Conditions:
* Dow up 823 (2.68%)
* NASDAQ up 375 (3.34%)
* SPY up 12 (3.18%)
* TSLA 737.12, up 31.91 (4.52%)
* TSLA volume 31.9M shares
* Oil 107.6
* IV 69.4, 85%
* Max Pain 710
* Percent of TSLA selling tagged to shorts: 38%

 

[WattsHappening]

Let me remind those of you who trade from an IRA (and aren't susceptible to tax consequences in trading) that volatility is your friend when it comes to no-cost rolls of your call options.

Thank you again for your detailed daily explanations; so very informative.

I'm trying to wrap my head around this statement. In order for one to roll calls out at the same strike price, that would mean some combination of stock price decreasing and/or volatility increasing between the time to sell the old call and buy the new call, correct? That has to involve some sort of timing your sells and buys?

I have some DITM Jan 2023 calls which I would love to find a way to roll out to March or June. These are in an IRA. Could you be so kind as to explain how you go about timing the sell and buy?

TIA!

 

[Papafox]

Thank you again for your detailed daily explanations; so very informative.

I'm trying to wrap my head around this statement. In order for one to roll CCs out at the same strike price, that would mean some combination of stock price decreasing and/or volatility increasing between the time to sell the old CC and buy the new CC, correct? That has to involve some sort of timing your sells and buys?

I have some DITM Jan 2023 calls which I would love to find a way to roll out to March or June. These are in an IRA. Could you be so kind as to how you go about timing the sell and buy?

TIA!

There is indeed an art to it but I can give some general guidelines. First, you need the resources. You can roll on an uptrend if you have enough cash in the account to buy the later expiration-date call first and then wait for your existing call to catch up in value. You also want a little extra money in the account in case you guess wrong and feel the need to discontinue that day's effort. The easiest way to roll at no cost in an IRA is to catch a strong down day and sell your existing call option first, then wait for your desired expiration date of that option to come available for purchase, using the funds you generated with the earlier sale. I generally prefer to complete both the purchase and the sale in the same day because news can change the momentum overnight. If I'm just a bit short of a free roll and the day is coming to an end or the momentum is changing, I'm not against adding a little money to close the roll. Similarly, if the trend is strong as I see a free roll possible, I may hold off and let the trend continue for a while, so that I can gain some cash along with the free roll. If the trend is really strong, I may buy/sell to close the first roll and immediately buy or sell (depending upon trend direction) to start a second roll. I seldom roll more than one call at a time because if I guess wrong, I don't want the cost to be excessive for undoing the damage.

Mornings such as Monday give us uncertain signals. Pre-market was clearly signifying that TSLA was hotter than the market and wanted to run higher. They we saw the big pushdown a few minutes after market open, another recover, another pushdown, etc. We had a battle underway between buyers who want to pick up TSLA before it goes higher and market makers who really want to discourage the stock price exceeding 750, especially this early in the week. On uncertain days I pass and wait for a day with more certainty.

June 15 TSLA chart
Often you have to sit out the first hour of trading to see if a strong trend solidifies. Fortunately, on June 15 we had this upward trend looking very solid and one could jump in and ride it up. If I didn't reach my goal by end of day I would likely add money and complete the call roll.

June 16 TSLA chart
Here's the very next day's chart. Notice if I held overnight I would have lost money overnight. In this case, by about 11am the trend was evident and you could sell first and then rebuy later to complete the roll.

As a general rule, when I see TSLA priced too low, one of my favorite buying points is toward a perceived bottom, providing we're not in an overall downtrend. I'd rather buy one of the later expiration dates and then hold to sell my nearer expiration date then try to depend upon a downtrend developing. I strongly believe that later this year TSLA will be higher than it is now, and if I miss my desired roll in the short term, I can simply hold the later expiration date call until the bigger up trend catches up.

You need to be realistic with how much up or down you can see in a single trading day. Generally, I like to shoot for less than a $10 change. Lately I've been looking for $20 changes, which is a lot harder. In the past with really deep in the money calls I only needed $2-$5 change to roll my call forward. This is why I like deep in the money call options, because they generally require less price movement to roll, compared to out of the money call options.

So, right now I'm looking at an overall upward movement of TSLA as the year progresses but in the shorter term we could see downward pressure following the July 2 Production and Delivery Report and the Q2 ER later in July. Unless you see a really strong trend, you might want to hold off until you see a rather easy call roll. For example, if we see a dip following a miss on the July P&D report, you may want to buy your later-expiration call after that dip has reached bottom. You can then use the short-term recovery to roll your call, and if the short-term recovery doesn't work, you can use the longer-term trend of TSLA becoming more valuable with time.

Hopefully, these examples are useful. I occasionally mention my moves on this thread. As you're learning, keep the moves restricted to a single call at a time and keep sufficient funds on hand that you can recover to your previous position if you guess wrong.

 

[WattsHappening]

Thank you very much @Papafox!

Ok, your explanation makes perfect sense and is pretty much what I expected. I do not have sufficient cash available to buy first and then sell. So I will have to look for down days. I agree there are days when trading throughout the day can be predicted after the first hour or so of trading. But as bad as a timer as I am, I have been very reluctant. Deer in headlights. Up to now (and maybe even for a while longer), I have been convincing myself I have time with Jan 2023 calls. But I will pay more close attention as I'm a bit nervous that the macro market is not going to improve before then.

And I will definitely take your advice and only trade/roll one call at a time.

Thanks again!

 

[CHGolferJim]

Thank you very much @Papafox!

Ok, your explanation makes perfect sense and is pretty much what I expected. I do not have sufficient cash available to buy first and then sell. So I will have to look for down days. I agree there are days when trading throughout the day can be predicted after the first hour or so of trading. But as bad as a timer as I am, I have been very reluctant. Deer in headlights. Up to now (and maybe even for a while longer), I have been convincing myself I have time with Jan 2023 calls. But I will pay more close attention as I'm a bit nervous that the macro market is not going to improve before then.

And I will definitely take your advice and only trade/roll one call at a time.

Thanks again!

Most brokers settle trades at the end of the day, I guess after trading hours, so there is the possibility to close the position in the AM and reopen after a recovery in the PM, if that actually happens. There is a clear extra element of risk in that approach.