Papafox's Daily TSLA Trading Charts

[Papafox]

TSLA chart above

QQQ chart above

On Tuesday, 1Q24 delivery numbers came in lower than expected at 386,810, and noticeably below 1Q23's deliveries of 422,875. The day got off to a rocky start with the macros well in the red. Even after the sizable recovery shown by QQQ above, Nasdaq closed down 0.95%. In contrast, TSLA closed down 4.90%. If you consider TSLA's beta of over 2 and Nasdaq dropping 1%, then about 2% of TSLA's drop could be considered macro related and the other 3% was news related. For delivery numbers falling well below forecasts, that's an amazingly minor dip. I have a few thoughts about why.

Most importantly, you have buyers who see FSD on track to become reality, which will lead to Tesla entering the insanely lucrative robotaxi market. Cathy Woods' ARK funds were buying TSLA with abandon. Volume was up, at 116M shares, but the buyers balanced out the sellers at about $165/share and a little higher as the day came to an end.

Perhaps the normal effort to push TSLA lower following a P&D report or ER was missing this time, you might think. Well... percent of selling by shorts leaped up to 60% on Tuesday, with a hearty 6.8 million shares trading during the 4pm closing cross. Looks pretty evident that the effort to push TSLA lower was indeed there but buyers kept materializing in the mid 160s. Despite the mainstream media being tight-lipped as possible about the implications of FSD v12.3, word got out and I believe a large percentage of Monday's buyers were scooping up shares with FSD success on their minds. The strength that we saw in the previous two weeks continued into Tuesday.

As for 1Q24 vs. 1Q23, we've already mentioned the hits to 1Q24 (China weakness for all vehicle sales, Fremont M3 production, Berlin domestic terrorists, Houtis attacking Red Sea shipping, U.S. interest rates, etc.). What has gone mostly unsaid has been that 1Q of any year is typically tough (people don't like buying their new car in winter) but 2023's Q1 had a unique positive catalyst that pushed demand higher than otherwise: an enormous cut in prices of the vehicles. If you look at this spreadsheet from a Reddit post, you'll see that on Jan12, 2023, prices of a LR Model Y dropped from $65,990 to $52,990. Subtract another $7500 for IRA incentives and you're looking at a near $20K more affordable vehicle. Thus, 1Q23 benefitted tremendously from the big Tesla price drop and also from the IRA incentives. While Jan of 2024 saw some improvements in the IRA credits being placed up front for Model Y buyers, Model 3 buyers lost the credit in 1Q24. Considering all the forces working on 1Q23 and 1Q24, a 9% drop in deliveries in 2024 is not so terrible after all. It really wasn't caused by people not liking Elon, as Fudsters in the main investing forum suggested throughout the day.

The bad news about an effective 3% drop on news is that between now and the post-ER period, there's room for more drop. OTOH, the serious buying on Tuesday in the mid-160s after this low delivery P&D report is very encouraging. I suppose where we go from here depends on what we run out of first: investors willing to sell in the mid 160s or investors willing to buy there. Ultimately, as sellers focused on Tesla as a carmaker get out and long-term investors focused on the coming FSD and robotaxi revenues come in, I think you will see TSLA shares held more and more by investors who are in for the long run and for the big gains. These investors are less likely to sell on small gains, which will make the next rally very interesting if such a transition is deep. Hoping so.

According to the Tesla IR Press Release, the 1Q24 Earnings report will be Tuesday, April 23.

Percent of selling tagged to shorts rose to 60% on Tuesday. I guess that answers the question, "was anyone trying to give TSLA a bigger push downward on Monday?"

Yields on 10 year treasury bonds closed higher at about 4.35% on Tuesday

Max pain Tuesday morning was 175. The tallest put wall is at 160 and the market makers would prefer for TSLA to remain above 160 this week. If the stock were to climb, the MMs would enjoy seeing it run above the 170 and 172.50 put walls.

Tuesday's TSLA options volumes

Looks like the lower bollinger band did the trick on Tuesday and produced the bounce needed to keep TSLA within the bands. Unfortunately, bounces off the lower BB with TSLA usually are good for a day and then definitely more vulnerable after that.

Conditions:
* Dow down 397 (1.00%)
* NASDAQ down 156 (0.95%)
* SPY down 3 (0.64%)
* TSLA 166.63, down 8.59 (4.90%)
* TSLA volume 116M shares
* Oil 85.49
* IV 53.0, 80%
* Max Pain 175
* Percent of TSLA selling tagged to shorts: 60%
* Volume at 4pm closing cross: 6.8M shares

 

[Papafox]

TSLA chart above

QQQ chart above

If Tuesday was the day when TSLA's low Q1 deliveries dip was cushioned by investors buying for the FSD play at TSLA, Wednesday was the day when TSLA outperformed the macros and gave added proof that the new buyers are willing to forgive a weak quarter to get TSLA shares at a discount prior to FSD reaching maturity.

TSLA began the day with a foreboding pre-market dip to below 164. Buyers scooped up shares in early market trading but a pair of mandatory morning dips were used to check just how serious these buyers were. Apparently the answer was "plenty" because TSLA gained 1.05% for the day, compared to Nasdaq's 0.23% gain. Percent of selling by shorts was a relatively high 49% and volume at the 4pm closing cross came in at 4.4M shares. Apparently efforts were made to discourage a TSLA rise but they failed to produce the desired results.

Volume was a rather low 82.4M shares and TSLA ran up and down with macro movements. You'd hardly think the P&D report occurred the previous day. Most interesting of all was an after-hours gain of nearly 1%, which suggests that Thursday's open could be positive for TSLA. What a difference a day makes.

One observation of mine is that mainstream media is doing its best to hide any word of a FSD breakthrough at TSLA. One business news story mentioned increased FSD revenue as a reason the market might have been seeing Tesla in a favorable light on Wednesday, but it attributed that potential increase in FSD revenue to Tesla's providing a month of free FSD to all Tesla owners with applicable hardware and an edict for mandatory FSD demo on picking up any new Tesla, rather than on any progress in actually making FSD work.

News:
* TSLA Chan on X.com says that Tesla is now offering 0% interest for three years on China Teslas

Yields on 10 yr. treasury bonds closed near 4.35% on Wednesday

With pressure on bond yields the past few days, I was curious to see what truflation.com is seeing as U.S. inflation rate. Interestingly, inflation rate as they measure it continues to fall and is now below 2% (compared to 3.2% CPI rate).

Max pain Wednesday morning was 172.50, down from 180 as we entered the week. As the stock price inches higher and the max pain drops, the two are looking to converge at week's end and give the option sellers a nice profit. The 160-strike put wall is something to be avoided, as is the 180 call wall. Notice how the 172.50 and 175-strike calls are not much threat to the options sellers because of the growing number of puts at each strike.

Wednesday's TSLA options volumes

For the second day in a row the lower bollinger band marked the lower range of TSLA trading.

Conditions:
* Dow down 43 (0.11%)
* NASDAQ up 37 (0.23%)
* SPY up 1 (0.11%)
* TSLA 168.38, up 1.75 (1.05%)
* TSLA volume 82.4M shares
* Oil 85.70
* IV 52.1, 77%
* Max Pain 172.50
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 4.4M shares

 

[Papafox]

TSLA chart above

QQQ chart above

I must admit to nearly laughing out loud when I checked my iphone at 7am Hawaii time, noon Eastern time. TSLA was up more than 5% but my Apple news feed for TSLA yet again didn't mention a word about some breakthrough in full self driving. Other news sources are just as bad. If you want to understand why Elon felt it was necessary to buy Twitter, use this example to understand how biased and self-serving mainstream media has become. You'll then appreciate Elon's motivations.

Unfortunately, the macros encountered major worries when the UAE cut off diplomatic relations with Israel and as a consequence Oil spiked higher (above $86/barrel), according to oilprice.com. While this rise in oil prices is bad for inflation, it's good for Tesla's sales as consumers wonder whether they want to buy an ICE that will be drinking $5/gallon fuel. Another negative to the market was word from Mineapolis Fed Chairman Neel Kashkar in this CNBC post that he wondered if the Fed would cut rates at all if inflation remained sticky.

As QQQ and Nasdaq did a swan dive into the red (Nasdaq gave up its gains and then closed down 1.4%) TSLA managed to hold onto enough of its gains to close up 1.62%. Thus, it was an impressive day for TSLA as it performed more than 3% better than Nasdaq on Thursday. Higher volume on Thursday showed TSLA buying accelerating. So, in recap, on Tuesday TSLA lost less than expected, on Wednesday it outperformed the Nasdaq, and on Thursday it zoomed up more than 5% before the macros swooned. Does interest in FSD matter to the stock price? The past three days of TSLA selling says yes.

A recent Brighter with Herbert episode highlighted big developments with Tesla FSD:
* Tesla's Director of Autopilots Ashok Elluswamy said that they've trained FSD to assess whether an area is drivable or not (more AI incorporated in FSD)
* Elon said it's obvious the future will be both electric and self driving and then he suggested Tesla was open to licensing to other automakers
* Tesla is soliciting for videos that show v12.3 in action. The episode shows various impressive moves by FSD that you wouldn't think possible

For Friday's trading, keep in mind that TSLA is being influenced (not driven) by the macros in recent days and so what happens with the macros will be a primary component of TSLA trading. The U.S. jobs report will be released at 8:30am on Friday and will likely set the tone for the macro's behavior on Friday. Stronger than expected job creation (lower unemployment numbers) would be considered inflationary and contrary to the market's wishes for a June rate cut by the Fed. If the jobs report is encouraging to the market, however, TSLA certainly could run higher on Friday, as suggested by Thursday's big run higher before macro dip, Thursday's additional climb after hours, and no huge motivations for the MMs to intervene until TSLA rises into the higher 170s.

News:
* Investing.com says Morgan-Stanley sees Tesla numbers bottoming by summer
* Walter Bloomberg says Tesla starts right-hand drive vehicle production in Berlin for India sales

Yields on 10 yr treasury bonds dipped to about 4.31% on Thursday

Max pain Thursday morning was 170. Call peaks at 170 and 175 probably don't scare the market makers too much because of high put peaks at these strikes as well. The call wall at 180 will be defended heavily, if needed, however.

Thursday's TSLA options volumes

TSLA managed to climb through the mid bollinger band before the market reversed and fell Thursday afternoon. Still, TSLA's performance compared to the macros was strong and bodes well for Friday's trading (should the macros cooperate).

Conditions:
* Dow down 530 (1.35%)
* NASDAQ down 228 (1.40%)
* SPY down 6 (1.22%)
* TSLA 171.11, up 2.73 (1.62%)
* TSLA volume 121.9M shares
* Oil 86.76
* IV 53.8, 82%
* Max Pain 170
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 6.4M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Friday morning began with news at 8:30am that jobs were stronger in the U.S. according to CNBC. QQQ remained relatively unfazed by the news but TSLA took a noticeable drop. Again, we saw an exaggerated MMD for TSLA compared to QQQ, likely due to above average selling tagged to shorts (see chart below). As QQQ started climbing well into the green, TSLA was held back, again likely involving some strategic shorting.

In mid-morning Reuters released an article entitled "Exclusive: Tesla scraps low-cost car plans amid fierce Chinese EV competition". The headline makes no mention about FSD version of M2 preferred, it implies that the Gen3 program had been scrapped due to tough Chinese competition on the low-end. TSLA immediately lost more than 6%. It recovered much of that loss within an hour when Elon Tweeted "Reuters is lying (again)". It didn't recover all the loss though. One theory is that investors were unconvinced with Elon's reply or that they were just a bit shellshocked from the bomb Reuters dropped. Another theory is that some big dog wanted to see a close very close to 165 and was manipulating for that effect. A third theory is that with a tall call wall at 170 next week, the options sellers wanted a little headroom below it. After hours, Elon Tweeted "Robotaxi unveil on 8/8". We saw TSLA recover to 171.80 on that news.

So, what's the reality of the situation? First, realize it's really easy to make $10s of millions if you know that such a powerful FUD message is incoming. It's entirely possible for the article's author or someone else at Reuters to tip off a contact at a hedge fund and then receive big under the table payments for this information. That's a potential big incentive for someone at Reuters. Another incentive is that Reuters is part of the mainstream media that is fading as social media news such as X.com takes more eyeballs away from it. Elon Musk is thus a real threat to such legacy media outlets and the move could be retaliation. After all, Reuters' headline was worded in a way to create maximum worry (Gen 3 is canceled).

My take is that there's likely some kernel of information that could have been exploited to get this stinker of a headline, but the headline is obviously designed to be a stinker. That kernel could have been a statement at a meeting that the robotaxi might be prioritized over M2 if FSD becomes ready to deploy in the near future. Think about it: a robotaxi could pay for itself in 3 to 4 months on the job and then becomes a money-printing machine after that. If FSD truly is close to being ready to deploy, then it makes sense to concentrate on the highest return vehicles (robotaxi) rather than M2. The cost of production falls as the volume rises, and similarities in design could allow robotaxi to work the design problems out with the new assembly methods before M2 is assembled this same way. Also, in the U.S., batteries that qualify for the full government subsidies may not be plentiful for a year or two, and putting non-compliant batteries in robotaxi would be a no brainer because then you have a machine that still pays for itself in 4-5 months of robotaxi service and the compliant batteries could instead be installed in Tesla's various consumer vehicles. What I do know is that Elon is likely to build the most lucrative Gen 3 vehicles first, and that may well be robotaxi. It all depends on the state of FSD development at the time the production decision is made. We as investors should be onboard with this decision. It's not that M2 would be unprofitable because of Chinese vehicles (that vehicle would sell very well), it's more a case of if FSD is viable by production date then you really don't want to sell your first Gen3 vehicles as M2s for around $25K apiece. The alternative vehicles would be worth far more, and even if you were producing M2s once FSD is viable, they couldn't sell for $25K because fleet operators would be buying them by the thousands to deploy on TSLA network (and wait times would become ridiculous unless the price was much higher). Elon made it clear that M2 is indeed coming. It's only a question about which vehicle comes first. The Tesla board is under too much scrutiny right now to sign off on M2 to the back burner unless the robotaxi business is just around the corner. Take a deep breath. It's going to work out.

We saw major shorting on Tuesday and Friday in attempts to influence the TSLA price. Percent of TSLA selling tagged to shorts rose all the way to 60% on Tuesday in an effort by shorts to maximize the TSLA dip after the P&D report was released. It rose again to 54% on Friday in an effort to restrict TSLA's weekly climb to 165.

Yields on 10 yr. treasury bonds rose to 4.4% on Friday after a strong jobs report came in hotter than expected

Although the bond market is leaning towards higher inflation in the short term, truflation.com offers a contradictory view, with its perceived U.S. inflation rate down to 1.82% now.

Max pain Friday morning was 172.50. Looking at the puts and calls it looks like a close at least a penny above 170 would have served the options sellers the most. I'm not sure why we saw the focus on 165 Friday's afternoon, but you could see TSLA recovering towards 170 in early afternoon and then it reversed itself out of proportion to a macro move. TSLA then leveled near 165 for the duration until close.

Friday's TSLA options volumes

Considering how significant the TSLA news and numbers have been lately, the past four weeks have been surprisingly self-correcting. If you took TSLA's after hours close of 171.8, That's less than $1 of change per week.

For this upcoming week, max pain is 170, which also happens to be the location of a tall call wall. If 170 is breached Monday morning, then 182.50 is the next level that the MMs would try to defend.

If you excuse a few excursions then TSLA is still trading in the 165-175 range since early March.

For the week, TSLA closed at 164.90, down 10.89 from the previous week's 175.79. With the Gen 3 vehicle debate drawing more attention to the FSD debate, and with Reuters on the warpath, the coming week promises to be special. Don't miss it. Here's hoping you spend quality time with those who matter to you this weekend.

Conditions:
* Dow up 307 (0.80%)
* NASDAQ up 199 (1.24%)
* SPY up 5 (1.04%)
* TSLA 164.90, down 6.21 (3.63%)
* TSLA volume 137.8M shares
* Oil 86.91
* IV 57.9, 92%
* Max Pain 172.50 for Apr5, 170 for Apr12
* Percent of TSLA selling tagged to shorts: 54%
* Volume at 4pm closing cross: 5.9M shares

 

[Papafox]

TSLA chart above

QQQ chart above

With the exception of some pre-market and mid morning exuberance, QQQ stayed pretty level for most the day. In contrast, TSLA managed to climb above 174 in late morning trading and then spent much of the rest of the day near 173. My guess is that some capping was underway to keep TSLA below the 172.50 call wall. Percent of selling tagged to shorts was a somewhat elevated 48% and volume at the 4pm closing cross was 5 million shares.

We're still a couple weeks away from the ER, which is going to be less than stellar, but we could also receive encouraging guidance so one cannot simply expect a dip. In this somewhat gloomy short-term setup, we have FSD V12.3 showing massive improvements over V11 and Elon says the robotaxi will be revealed on 8/8. Thus, there's a tug of war of sorts raging, with traditional Wall Street "Tesla is a car company" investors selling and robotaxi-believers and long-term-focused investors buying. Nobody else is going to be able to compete on price in robotaxi with Tesla for quite some time, and so achieving successful robotaxi status could indeed lead to a 10X or more of the current stock price. It's the possibility of achieving such returns that keeps many of us TSLA investors onboard. If you truly believe Tesla is going to achieve FSD/robotaxi and earn a 10X or 20X return, then the short term issues with a weak quarter take a back seat just as long as Tesla stays focused on the job and the cash on hand remains sufficient to achieve the next big breakthrough.

Let me say a few quick words about emotional trading. One of the easiest ways to lose money in investing is to allow emotions to dictate your moves. There are emotional reasons to buy TSLA when it is zooming higher and approaching an apparent local high and emotional reasons for selling when TSLA is near a yearly low. The reason there are so many trolls both on TMC and in the media bashing Tesla at the moment is to induce emotional selling by longs. Making money is all about buy low and sell high. One way to help avoid such emotional selling is to not count on TSLA to fund projects of yours that are just a few years away. Another strategy (if you are retired) is to maintain enough funding in cash and other securities so that you could weather a TSLA dip that lasts several years.

Interestingly, short-sellers are even worse than longs when it comes to emotional investing. In the most recent Nasdaq summary of short interest, we saw short interest increase even though TSLA may be near a local low. Shorts are thinking Tesla is on the ropes at the moment and ignoring the fuss over FSD. Invariably, most shorts are forced to cover when the stock price rockets higher, as it typically does when reaching a positive inflection point such as profitable Model 3 sales. Their "sell low, buy high" behavior is uncomfortable for longs when TSLA is in the dumps but the covering of shorts when TSLA zooms higher is one of those catalysts that leads to the kind of big gains that TSLA is capable of.

Yields on 10 yr. treasury bonds rose higher to about 4.42% on Monday

Max pain Monday morning was 170, which was not far below 172.50, the tallest call wall. The next high call wall is at 182.50 and if TSLA makes it that high this week you could expect plenty of resistance from the option sellers.

Monday's TSLA options volumes

TSLA has mostly been trading in a relatively narrow range for the past month and so the upper and lower bollinger bands have really squeezed tighter. Fortunately, Monday's close put TSLA above the mid-BB. You have both the upper BB at 181.65 and the big call wall at 182.50 as resistance to TSLA's climb, should it make it that high this week.

Conditions:
* Dow down 11 (0.03%)
* NASDAQ up 5 (0.03%)
* SPY up 0 (0.06%)
* TSLA 172.98, up 8.08 (4.90%)
* TSLA volume 104.0M shares
* Oil 86.49
* IV 55.1, 86%
* Max Pain 170
* Percent of TSLA selling tagged to shorts: 48%
* Volume at 4pm closing cross: 5.0M shares

 

[Papafox]

TSLA chart above

QQQ chart above

So, FSD/robotaxi fever is still alive and well with TSLA investors as TSLA gained 2.25% on Tuesday, compared to Nasdaq's gain of 0.32%. We saw one of the recurring themes this morning when TSLA performed a half-hearted mandatory morning dip shortly after market open. That dip was quickly bought up and then the market reaction was to rally up to 179 shortly thereafter. A failed dip often leads to buying. At about 10:30am QQQ took a big dip, which trimmed some of TSLA's gains but TSLA held onto the vast majority of those gains nonetheless. A surge in the macros going into close gave TSLA an excuse to rise as well and it closed up nearly $4 at 176.88.

We saw 49% of selling tagged to shorts on Tuesday and 4pm closing cross volume at a very strong 6.6M shares. The two numbers suggests that some manipulations may have been underway to reduce TSLA's gains for the day.

It's important to note what's been happening with options this week. If you compare the Monday and Tuesday open interest charts (max pain charts), you can see that various put strikes gained substantial numbers of puts between Monday and Tuesday morning. This put buying would typically have a negative effect on the stock price as market makers sell TSLA to delta hedge those put sales, but instead we've seen strong TSLA trading on both days. Who was buying those puts? One idea would be Wall Street types who are relatively clueless about recent improvements in FSD that started this fire in the first place. They simply can't understand why TSLA keeps going up. Another explanation would be a darker one in which certain investors are expecting CPI news Wednesday morning (at 8:30am) to be negative and for certain hedge funds to go to work selling TSLA to create a TSLA overreaction. We did see TSLA dip upon the jobs data release a few days ago and QQQ failed to react to the same news. A warmer than expected CPI could give the manipulation a start. Reasons why that type of dip might not happen include TSLA's response to the MMD on Tuesday morning (it yawned and then buyers rushed in). Consider, too, the Truflation.com chart below. Inflation is at a 12 month low, which suggests things aren't going too badly. This CPI will be based on March, and the big dip in inflation happened around the transition from March to April, so we may not see the full effect for another month.

News:
* Teslarati says that Tesla Shanghai opened the quarter with a massive export push. This would explain the low Week 1 China insurance numbers

Truflation.com shows U.S. inflation at a yearly low, 1.78%

Yields on 10 yr. treasury bonds dipped to around 4.36% on Tuesday

Max pain Tuesday morning was again 170. Normally, we see puts at only about 75-80% the open interest as calls, but on Tuesday we're seeing .999 put/call ratio, so the puts have been growing relative to calls. Normally, such put buying would put downward pressure on the stock price as market makers hedge their sold p;uts, but instead we saw strength in TSLA despite the put buying. Just compare the 160, 165, and 160 put walls to Monday's and you can see the rapid growth.

Tuesday's TSLA options volumes

With the upper BB at 181.51 and a tall call wall at 182.50, we'll see if TSLA can reach then top these numbers during the week. As the week gets closer to the end, market makers are likely to get mor involved if 182.50 is threatened.

Conditions:
* Dow down 9 (0.02%)
* NASDAQ up 53 (0.32%)
* SPY up 1 (0.12%)
* TSLA 176.88, up 3.90 (2.25%)
* TSLA volume 102.6M shares
* Oil 85.20
* IV 54.2, 84%
* Max Pain 170
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 6.6M shares

 

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TSLA chart above

QQQ chart above

Both QQQ and TSLA were green until 8:30am when the CPI numbers came in 0.1% higher than expected. Mr. Market was disappointed and the immediate pre-market dip receded slightly as the day went on and Nasdaq closed down 0.84%. Meanwhile, TSLA also dipped at 8:30pm, but instead of the stock price rising as the day progressed, it fell further. At the end of market trading, Nasdaq's 0.84% dip multiplied by TSLA's current beta of 2.41 meant that TSLA should have seen about a 2.02% dip. The problem with a 2.02% dip, however, is that it didn't pull TSLA down far enough to bring it below the tall 172.50 call wall. A little help with shorting (percent of TSLA selling tagged to shorts was 50% on Wednesday, with 3.8M shares trading at 4pm), and TSLA ended the day comfortably between the tall put wall at 170 and the tall call wall at 172.50. Perhaps this is just coincidence, but these coincidences happen so regularly, I don't think so.

Yields on 10 year treasury bonds jumped above 4.5% on Wednesday after the increase in CPI inflation.

Meanwhile, truflation.com's inflation gauge showed an addition dip of 0.03% on Wednesday. I think what's going on is that the CPI was measuring March inflation, and that was the month when oil prices rose to above $83/barrel. Truflation, OTOH, is showing current inflation and it's 1.74% is half of the CPI's 3.5% March inflation. I'm guessing there's room for a CPI improvement in inflation in May as April inflation comes into focus. We'll have to see how the rest of April plays out, but so far so good.

So, Mr. Market's knickers are in a knot over a warm CPI number. Take a look at the truflation number above, though, and it is less than half the CPI inflation number, as of today. Who do you believe? If you haven't already, view Sasha's youtube video on U.S. inflation. For a contrary viewpoint, consider this post by TMC's @unk45 . I'm not prepared to accept all of Sasha's conclusions without a deeper dive into the numbers, but there's one part of his presentation that resonates with me. Sasha points out how fuel, shelter, and transportation services are the three areas where we see the most upward pressure on inflation in the CPI model. I've already spoken out about shelter and how rent is under control but the cost of buying a house is elevated because of higher interest rates. Thus, cutting interest rates actually improves the shelter number. Then there's transportation services, with a major component being insurance, which is up heavily. If you accept @unk45 's statement that reinsurance costs are up because of major losses recently (think Lahaina fire, the bridge in Baltimore, etc.) then keeping interest rates high will have no reasonably positive effect on bringing insurance rates back down. Finally, there's fuel, and once again, when you look at the recent causes of oil price rises, those causes don't go away by raising interest rates. It's only when people drive less because of less money to spend do interest rates impact the cost of fuel. Consider these three top inflation causers, keeping rates high is not going to bring them down, and the rest of the inflation index is already under control. This is the reason why I include the truflation.com inflation rate because I think it's likely a more honest measure of actual inflation in the U.S. at this time. The good news? The truflation chart shows that the March inflation numbers jumped with the rise in oil prices. Now we see in April the truflation index well below March's numbers. Looking forward to the next CPI reveal because I think the truflation data suggests we could see a decline in CPI inflation just when the markets are thinking inflation is starting to run away again. Bottom line: don't fear next month's CPI report and don't count out rate cuts this year.

News:
* Sawyer Merritt Tweets that FSD v12.3.4 is now being distributed to both employees and non-employees. The pace of these updates is encouraging.
* In this TMC post by @Musskiah , we see that short interest rose another 5 million shares at the end of March. Like I said before, shorts tend to do a lot of emotional trading (selling low, only to be forced to buy high to cover) and that growing short interest will be useful to us longs when the next mega-rally takes place.
* Elon Musk announced he will be meeting with the Prime Minister of India soon. Another gigafactory is coming if all goes well.

Maximum pain Wednesday morning was 172.50. More importantly, the market makers would like to stay above the big 170 put wall and below the nearly as tall 172.50 call wall. Surprise, surprise, TSLA ended the day at 171.76, comfortably between the two. Coincidence? That's always a possibility but not likely.

TSLA's Wednesday options volumes

TSLA is once again comfortably within the high sixties, low seventies trading range where it's been pretty much stuck for over 5 weeks.

Conditions:
* Dow down 422 (1.09%)
* NASDAQ down 136 (0.84%)
* SPY down 5 (1.00%)
* TSLA 171.76, down 5.12 (2.89%)
* TSLA volume 83.9M shares
* Oil 86.21
* IV 55.0, 85%
* Max Pain 172.50
* Percent of TSLA selling tagged to shorts: 50%
* Volume at 4pm closing cross: 3.8M shares

 

[Papafox]

TSLA chart above

QQQ chart above

On Thursday we saw what looked like some real effort to keep TSLA from climbing out of the market makers' sweet spot. Overnight, the threatening put wall shifted from 170 to 165, which allowed the mandatory morning dip to extend below 170 off and on for over an hour. By noon the MMD was over and TSLA looked to be capped around 172 until about 1pm when QQQ started climbing heavily and TSLA was swept along with it. TSLA's close at 174.50 put the stock above the 172.50 call wall but just a bit below the 175 call wall. The last minute dip below 175 was no coincidence.

As usual, we have some buying pressure, but the option sellers will leverage whatever opportunities come their way to get TSLA below the 172.50 call wall or the 175 call wall, whichever is achievable. That may not happen.

Yields on 10 year treasury bonds rose to about 4.58% on Thursday

Max pain Thursday morning was 172.50. The sweet spot for the market makers was between the 165 put wall and 172.50 call wall. TSLA traded within this sweet spot for most of the day but about 1pm the macro rise was just too great and the capping broke to allow TSLA to rise to 174.60. Note that the 175 call wall is even higher than the 172.50 so 175 looks like the new battleground for this week.

TSLA's Thursday options volumes

With the upper bollinger band at 181.15 and the tallest TSLA call wall at 180, don't hold your breath for TSLA closing in the 180s on Friday.

Conditions:
* Dow down 2 (0.01%)
* NASDAQ up 272 (1.68%)
* SPY up 4 (0.75%)
* TSLA 174.60, up 2.84 (1.65%)
* TSLA volume 93.7M shares
* Oil 85.50
* IV 54.2, 84%
* Max Pain 172.50
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 4.4M shares

 

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TSLA chart above

QQQ chart above

Let's get the Friday trading out of the way quickly so as to move onto bigger topics. The market began with lots of macro red and that situation got worse as the day progressed. TSLA largely followed the course set by QQQ and Nasdaq. With a put wall at 170 and call wall at 172.50 (plus max pain at 172.50) the option sellers would most benefit from a close above the put wall but below the call wall. They hit that narrow mark squarely.

I say it was a super-easy manipulation for the market makers because TSLA volume on Friday was an incredibly low 64.7M shares. We see days with double that volume. Consequently, moving TSLA's closing price was easy because any manipulations went just that much further. With percent of selling tagged to shorts up at 49% (moderate elevation) and an extremely heavy volume during the 4pm closing cross 6.6M shares, chances are there was plenty of effort to get TSLA to close right where they wanted. Think about it: that 6.6M shares traded at 4pm constituted over 10% of TSLA's total volume for the day. Mercy! When Nasdaq loses 1.62%, TSLA could outperform the Nasdaq dip with a mere 1% dip or it could lose that 1.62% multiplied by TSLA's beta of 2.4X for a dip of 3.88%. As you can see, there was LOTS of latitude to maneuver TSLA without raising eyebrows. The stock's loss of 2.03% was easy-peasy.

Let me just say that really low volume on a day when macros were falling hard is a good sign. It means that TSLA investors weren't inspired to sell much on the dip. I do believe we're slowly transitioning to investors who are more focused on long-term gains and more ready to just ride out the short term bumps. We'll likely see just how strong this tendency is with the 1Q ER, which should give a good challenge to the current optimistic shareholder emotions.

The big news going into Monday is Tesla's decision to lower the cost of FSD monthly fees to $99. I support this move and here's why. People who want a long-term FSD solution are likely to buy the software, not rent, since we absolutely know there'll be a big increase in monthly fees when FSD is approved for robotaxi ops and unsupervised FSD. People using FSD right now are sometimes curiosity seekers (just how good is FSD now?), or they have discovered that driving is just that much more pleasant with FSD backing them up and allowing the driver to spread his or her attention over the big picture. I myself enjoy the safety benefits. Now Tesla has introduced tons of new users to the impressive version 12. We may be surprised by just how big a percentage of test users decide to pony up and pay $99/mo. to continue FSD. Let's face it, FSD's progress is addictive to follow. A casual use of FSD makes sense at $99/mo. for a large number of Tesla owners, far more than a $199/mo. can inspire people to retain the software after their month is up. Actual unsupervised FSD and its costs is another kettle of fish entirely. Until then, $99/mo. more closely matches the use case of those who subscribe. Tesla is not giving up long-term revenue (such as selling FSD at a lower price) but they are now going to reap financial benefits from the leap between V11 and V12, and that's good for us investors.

We are now more than 2 weeks into FSD v12 reveal to users, and the mainstream media has closely guarded the secret that some "Chat GPT" moment may have occurred here. Revenues from large numbers of new users may force the issue of FSD progress and let the cat out of the bag.

Negatives of more users and new users means, of course, more chance of accidents, with its associated short-term risk to investors. Watching this April 14 video from Chuck Cook, I see that unprotected left turns at busy and fast 4 lane roads are not yet where they need to be. Various smaller planning issues such as getting into the correct lane for what's needed still exist. Do I think that unprotected left turns will be solved by August 8? Yep, because a better solution existed with one flavor of V11 and with enough careful training the neural nets should be able to meet or exceed that behavior. I feel the same for the smaller planning issues. Still, v12.3.3 and more recently v12.3.4 have reliably taken me on 30 mile drives through dense traffic and back on nearly a daily basis with no (knock on wood) safety interventions needed yet.

Positives include an increase in Tesla vehicle sales if the FSD trial and subsequent improvements go well. If people are raving about FSD to their friends, expect some of those friends to become Tesla buyers. Baby boomers are getting older, and a snazzy vehicle that could allow you to retain your independence after a serious medical issue will have growing appeal to this large block of potential buyers, just as long as the completion of unsupervised FSD looks highly likely in the next couple of years.

The short-term negative (as well as opportunity) for investors will be Tesla's shift in focus from an EV manufacturer to a soon-to-be robotaxi operator. Expect Wall Street to be plenty skeptical of this shift in priorities. Once Wall Street understands the profit potential and the reality of Tesla's approaching robotaxi network, the game changes. When this Wall Street opinion change happens is anyone's guess.

What happens on Monday? One possibility is that if the FSD $99/mo. pricing offer is well-received by investors TSLA could move upwards on Monday without market maker intervention. The option sellers might prefer to let some upward pressure on the stock get realized early in the week so that options adjustments can be made before Friday to better align price with maximum pain. Possibility #2: With the current Israel/Iran hostilities, there's always the possibility of a new development that could cause the macros to fall (and TSLA along with them).

Tesla's 1Q24 ER will be Tuesday, April 23. Expect the naysayers to see the sky falling on Q1 performance and the FSD believers seeing a very positive future. Keep that seatbelt snug.

Yields on 10 year treasury bonds closed at 4.55% on Friday

Not everyone thinks inflation is on the rise. While the truflation estimate increased in March, it has decreased even more in April, so far.

Percent of selling tagged to shorts was 49% on Friday. Looking at the chart above, you can see the big spike to 60% on Apr2 when the 1Q24 P&D Report came out and the shorts were trying like the mischief to get the type of deep dip they expected. Since then, percent of selling by shorts has hovered near 50%, which is noticeably higher than the previous few weeks, suggesting continued pressure to keep TSLA from rising.

Max pain Friday morning was 172.50. You can see The 170-strike put wall that MMs wanted TSLA to close above and both the 172.50 and 175 call walls that they wanted TSLA closing below. TSLA's close at 171.05 was squarely in the sweet spot for maximizing option seller profits.

Friday's TSLA options volumes

Notice a trend? TSLA goes up, it goes down, but it typically always manages to close just about at the max pain number.

For this coming Friday, we have a longer-term expiration to deal with. Normally you see put walls to the left and call walls to the right, but expectations have changed since many of the longer-term bets were placed, and now you have are area between 165 and 185 when there's a whole lot of overlaps between puts and calls. This overlap reduces some of the risk for option sellers. More definite put side and call side will develop as the week progresses.

TSLA continues trading in the high 160s/low 1270s range where it's mostly been stuck since early March. Notice how upper and lower bollinger bands continue to close in, resulting in some buffering to large excursions.

For the week, TSLA closed at 171.05, up 6.15 from the previous Friday's 164.90. It's been an exciting week. Hoping you enjoyed your weekend with those who most matter to you!

Conditions:
* Dow down 476 (1.24%)
* NASDAQ down 267 (1.62%)
* SPY down 7 (1.38%)
* TSLA 171.05, down 3.55 (2.03%)
* TSLA volume 64.7M shares
* Oil 85.44
* IV 55.1, 87%
* Max Pain 172.50 for Apr12, 175 for Apr19
* Percent of TSLA selling tagged to shorts: 49%
* Volume at 4pm closing cross: 6.6M shares

 

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TSLA chart above

QQQ chart above

Constrained time post
Monday got off to a tough beginning with not only an announcement of a 10% reduction in personnel but also the loss the Drew Baglino and Rohan Patel. Initially, during the heavy morning trading, TSLA mostly remained above 165 but when the macros started a big fall TSLA resumed it's descent. I thought that the stock would remain above the lower bollinger band, which it did through 1pm, but a very steep dip of QQQ brought TSLA closer to 160 by day's end. Interestingly, with such negatively-perceived news TSLA volume barely scratched 100M shares. Despite "only" 49% of TSLA selling being tagged to shorts on Monday, we saw 11 million shares trade hands during the closing cross.

The rumor mill was heavy on Monday, speculating on firings and protest resignations. I'll pass, thank you. Instead, consider the 10% reduction in force makes sense after a quarter when EV sales were negatively affected in the U.S. Every few years Tesla does a big house cleaning (though typically less than 10%), employees who are regarded as weak are let go, and later in the year we see hiring resume as Tesla prepares for the next growth phase. We are likely seeing a continued pivot in the direction of autonomous driving. Keep in mind that the Tesla Board of Directors must be on board for these changes to be made. We have a good trajectory with FSD improvements, let's see how those improvements work out before fretting that Elon is betting the company on FSD.

That said, Wall Street is a strong sceptic on FSD, to a large extent because of how long it has taken to develop with Elon suggesting it's just around the corner. If not for v12, I'd be a sceptic too. On the other side of the fence are those buyers who were picking up TSLA shares immediately following the 1Q24 P&D report. All the same, expect turbulence in the short run.

Yields on 10 yr. treasury bonds rose to 4.61% on Monday

Max pain Monday morning was 175. A put wall at 160 may be of help to TSLA on Tuesday

Monday's TSLA options volumes

Through about 1pm TSLA looked on track to stay above the lower bollinger band, but then the macros fell hard and TSLA descended further.

Conditions:
* Dow down 248 (0.65%)
* NASDAQ down 290 (1.79%)
* SPY down 6 (1.25%)
* TSLA 161.48, down 9.57 (5.59%)
* TSLA volume 98.6M shares
* Oil 85.69
* IV 57.6, 94%
* Max Pain 275
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 11M shares

 

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TSLA chart above

QQQ chart above

Tuesday was a second down day from Tesla's layoff news, but it was a much lighter reaction than Monday. TSLA dipped nearly to 154 during the mandatory morning dip shortly after market open but entered a recovery mode for the remainder of the day.

Analyzing the news dip this week, there's both an irrational and a rational component to the selling The irrational component is a strong tendency to try too hard connecting the dots and making assumptions such as:
* If Tesla is laying off 10% of its workforce, this dip in deliveries must be a long-term problem, not a problem of just a quarter or two
* If Baglino and Patel quit on the same day, it must be a protest against the recent news suggested by Reuters that Tesla has cancelled the Model 2 and is going down a "bet everything on FSD" rabbithole that Elon is insisting on. May I suggest that even if Tesla has made plans to give priority to a robotaxi design, if challenges of FSD turning into viable robotaxi operation are too great then Tesla always retains the option of moving M2 back to the priority position. To my knowledge, there has been no party on the roof of a gigafactory where Elon burned the plans for M2 and used the dies for target practice.
* the opportunities are endless

The rational component of investor worry is that most of us know that Wall Street doesn't take Tesla's FSD efforts nearly seriously enough. Consequently, any pivot away from the existing business model and towards robotaxi is bound to create a dip in the stock price.

We have seen that investors who started buying after FSD v12 strength became known quickly stopped the post-Q1 P&D Report dip and managed to turn the stock around for a while. Hoping some jump in on Wednesday and/or later this week to pick up shares that are at a great discount. The flip side to this argument is that with Elon cutting jobs massively at Tesla a week before the Q1 ER, one can surmise that Tesla's quarterly earnings aren't going to look good and the recent buyers may be holding off until after the ER with hopes of a better discount.

Consider Tesla's likely India gigafactory. Almost all of us believe it will be used to build Gen 3 vehicles. Would India with its crazy traffic be a good fit for a robotaxi-only vehicle, though? Not until it has a long, long time to be trained on these challenges. For this reason, I see Model 2 as a more likely production of GigaIndia.

Thanks to @Discoducky for posting this Tweet in the main investors' forum. Elon's emphasis is apparent.

Keep in mind that Tesla will most likely choose the most profitable path forward, and right now that most profitable path appears to be robotaxi. You and I don't have the ability to test the upcoming versions of FSD like Elon has. Overall, the possibility of a successful robotaxi network not too many years in the future is a good thing, not a bad thing for this company. Since no other company as yet can do robotaxi at scale for the economies that Tesla can achieve, this business would be incredibly profitable until serious competition arrives. Solid FSD would of course affect the ease of selling Tesla's existing vehicles. For myself, I will continue to test v12 on my Model 3 and especially watch for new Chuck Cook videos once the next version of FSD is released.

Yields on 10 yr. treasury bonds closed around 4.67% on Tuesday

Max pain was 170 Tuesday morning. The open interest chart shows the lowest call wall at 165 and the highest put-dominated strike at 160. Thus, at this time the market makers would like to see TSLA migrate to the 160-165 sweet spot. The main problem is that the MMs are much more inclined to pushdowns of the stock price than pushes upward.

Tuesday's TSLA options volumes

Tuesday was day 2 of the market's pessemistic reaction to word of Tesla layoffs and loss of two executives. Unlike Monday, which involved a gap down followed by a long red candle, on Tuesday we had a gap down but a close very close to the opening price, which suggests the reaction to Tesla's news may well have run its course.

Conditions:
* Dow up 64 (%)
* NASDAQ down 20 (%)
* SPY down 0 (%)
* TSLA 157.11, down 4.37 (%)
* TSLA volume 96.5M shares
* Oil 84.75
* IV 57.6, 94%
* Max Pain 170
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 4.2M shares

 

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TSLA chart above

QQQ chart above

The big Tesla news came out well before market open when Tesla's Board of Directors announced their decision to not only move incorporation from Delaware to Texas but also to seek shareholder approval of a compensation package for Elon Musk that is a duplicate of the package agreed to in 2018 but recently voided by a Delaware judge. Both proposals will be voted upon at the June 13th annual meeting. The Board is asking shareholders to ratify both proposals at the meeting and to created in information website at: https://www.supportteslavalue.com/.

On this episode of Brighter with Herbert, Alexandra Mertz and Richard of Knot Legal Advice joined Herbert in the discussion of ramifications. They do a great job of covering the topic. The overall feeling is that the 400+ page filing to the SEC was extremely thorough and should hold up under court scrutiny. What will be necessary to make these two proposals pass will be a majority "yes" vote to each when the votes are tallied on June 13. Please vote.

My personal feelings is that by submitting for ratification the same exact compensation package as before, and having that package approved by shareholders yet again, Tesla's shareholders will effectively be telling the Delaware court that it was wrong and when all the relationships between directors and Elon are well covered in documentation, the shareholders will approve the compensation package yet again. This is an important step in neutralizing claims by attorneys for billions of dollars worth of compensation for their effort in "helping" Tesla's shareholders. Tesla's Board will be pressing forward with an appeal to the Delaware judge's ruling.

Overall, the macros and TSLA both started in the green but Nasdaq lost 1.15% on fears of interest rates remaining high into 2025 following some general comments on Tuesday by Jerome Powell. Tesla's dip turned into a climb in mid-afternoon but reverted to a dip of 1.06% at close. Thus, TSLA managed to outperform Nasdaq on Wednesday.

News:
* Sawyer Merritt Tweets that monthly lease cost for Model 3 has now dipped to $299. Apparently, Tesla would love to gain control (for robotaxi) of those leased vehicles in 3 years time. The low lease rate is possible because Tesla would receive a $7500 IRA payment.
* German Tesla buyers are now going to be offered a 0% financing option, according to Drive Tesla

Yields on 10 year treasury bonds closed near 4.59% on Wednesday

Max pain Wednesday morning was 167.50. Because this Friday's expiration is a big one covering a longer time period, the max pain is not readjusting as quickly as in a week with fewer options.

Wednesday's TSLA options volumes

The most noteworthy data on the tech chart above is the low volume of 82M shares. There's no rush to buy or sell shares at the moment.

Conditions:
* Dow down 46 ( 0.12%)
* NASDAQ down 182 (1.15%)
* SPY down 3 (0.59%)
* TSLA 155.45, down 1.66 (1.06%)
* TSLA volume 82.0M shares
* Oil 82.70
* IV 57.0, 93%
* Max Pain 167.50
* Percent of TSLA selling tagged to shorts: 46%
* Volume at 4pm closing cross: 4.5M shares

 

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TSLA chart above

QQQ chart above

TSLA got off to a bad start on Thursday when Deutsche Bank downgraded TSLA with the assumption that Model 2 might be delayed. Nasdaq closed lower due to continued worries about inflation. This has been a tough week of sledding for both Nasdaq and TSLA. In after hours trading, you can see a dip of both TSLA and QQQ when word came out of a limited Israeli strike on some Iranian targets. Nasdaq futures are down about 1% Thursday night.

In a video by Solving the Money Problem, Stephen Mark Ryan focused on comments by Gene Munster in an interview that interest in EVs is down, you just have to check Google trends. Ryan did just that and found plenty of interest in Teslas but not so much in EVs of other manufacturers. For Lightning F-150 and one of the Rivian vehicles did worst.

By end of day, yields on 10 yr. treasury bonds dipped to about 4.54%. The dip could very likely have been caused by geopolitical issues later in the day that caused investors to shift some money into bonds from equities. More demand for bonds equates to high bond prices, which equates to lower bond yields.

Max pain Thursday morning dropped all the way down to 160. You can see that big put wall at 150. Normally, the market makers would put in some effort on a Friday to keep TSLA above such a put wall, but macro futures are down Thursday night and keeping TSLA above 150 might be more effort than they're willing to put forward. We'll see.

Thursday's TSLA options volumes

This has been a bad week for the macros and a worse week for TSLA. The lower bollinger band is trying to keep up with the price declines.

Conditions:
* Dow up 22 (0.06%)
* NASDAQ down 82 (0.52%)
* SPY down 1 (0.21%)
* TSLA 149.93, down 5.52 (3.55%)
* TSLA volume 93.9M shares
* Oil 85.90
* IV 60.1, 98%
* Max Pain 160
* Percent of TSLA selling tagged to shorts: 41%
* Volume at 4pm closing cross: 4.9M shares

 

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TSLA chart above

QQQ chart above

Friday's trading was all about a big macro dip, which is a shame because TSLA's loss of 1.92% managed to outperform Nasdaq's loss of 2.05%. Market makers would likely put in some effort to defend the 150 put wall and up until about 1pm it looked like they might have been able to do so, but an afternoon dip in QQQ and Nasdaq pulled TSLA lower and was too much to overcome.

Overall, the sentiment going into Tuesday's ER is fearful, and so don't expect much to cheer about until the fear is worked out either in the conference call or in a future quarterly earnings where profits show some rebound.

Looking at the tech chart at the bottom of this post, you can see that most of March and April were characterized by trading in the low 170s and high 160s. When the Q1 Production and Deliveries report came out, TSLA dropped, but not as much as many expected, because the of enthusiastic reports of FSD v12. I drove FSD v12.3.X and share that enthusiasm. There emerged a segment of the investing community (likely led by well-informed retail investors) who bought sufficiently to bring TSLA back up toward the top of the 6 week trading range.

Unfortunately, on Friday, April 5, Reuters ran a story about Tesla canceling Model 2 because of inability to compete with low-cost Chinese EVs. TSLA took a hit that day but recovered that week. Then before the market opened Monday, April 14, Tesla announced layoffs of over 10% of workers. Such announcements happen every few years, but this one was accompanied by resignations of Drew Baglino and Rohan Patel, which sent a chill up the backs of investors as they (likely incorrectly) connected the dots and envisioned a Tesla with Model 2 canceled and a 5 to 6 year wait for robotaxi service to begin. TSLA fell every day last week. This weekend's announcements of Model Y $2K price cuts in the U.S., general Tesla 4-6% price cuts in China, and a FSD price reduction from $12K to $8K isn't going to give the market the warm and fuzzies on Monday. Fortunately, the FSD price cut should move some FSD revenue into Q2 that wouldn't otherwise be there (just as cut to $99/mo. for FSD will do the same), and Jeff Lutz Tweets that the combined elimination of inventory discounts plus the decrease of Model Y prices in the U.S., should be a net positive in terms of average selling price. We'll see.

Clearly, what Tesla investors are looking for is confirmation that the company is not going to cut Model 2 and then be unable to bring robotaxi into existence for another 5 to 6 years (Wall Street types are mostly oblivious to the improvements in FSD since V12 because the media won't talk about it). I for one will be happy to get the Q1 ER over with so that we can get more clarity on Tesla's plans going forward. I personally believe robotaxi will be real within a year to 18 months (possibly sooner) and it'll become a highly-profitable business that will increase demand for Tesla's vehicles in a win-win scenario.

News:
* Sawyer Merritt Tweets FSD v 12.3.5 is being release to Tesla employees at this time and regular customers should follow not long afterwards. Elon says that v12.4 is a really big release and could arguably be called v13.

Treasury yields close around 4.62% on Friday

Max pain was 157.50 Friday morning.

Friday's TSLA options volumes

After weeks of TSLA trading in the high 160s and low 170s, the Reuters article about an alleged cancellation of model 2 (with the bogus reason that it couldn't compete against low cost Chinese EVs) sunk the stock. Chart courtesy of @JimS

For this Friday, April 26, max pain is 160 and we have a super-big put wall at 150.

As the week progressed, TSLA drifted lower and remained below the lower bollinger band.

Conditions:
* Dow up 211 (0.56%)
* NASDAQ down 319 (2.05%)
* SPY down 4 (0.87%)
* TSLA 147.05, down 2.88 (1.92%)
* TSLA volume 85.9M shares
* Oil 83.44
* IV 60.8, 98%
* Max Pain 157.50 for Apr19, 160 for Apr26
* Percent of TSLA selling tagged to shorts: 36%
* Volume at 4pm closing cross: 5.7M shares

 

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TSLA chart above

QQQ chart above

Time-constrained post
The price cut news impacted the stock on Monday. TSLA closed down 3.40% vs. the Nasdaq's gain of 1.11%.

Looking forward to actually hearing Tesla's plans going forward. The Earnings Report will be Tuesday after market close. Elon has already made clear that Tesla is moving strongly forward with autonomy. One speculation is that Elon has tested future versions of FSD and has a better idea than us regarding its current capabilities. Here's his comments pretty much agreeing with a Tweet involving James Douma, who stated that Elon gets access to FSD versions 3 to 6 months before we see them.

We can already expect that 1Q24 earnings will be negatively impacted by factors that reduced deliveries in the quarter. Huge purchases of Nvidia chips for AI training (FSD and Optimus) will impact cash flow. We already know these things Rest assured that Elon will be asked about the future of Model 2. This could be a big sigh of relief, a gasp, or something in between. Time to let the cat out of the bag.

News:
* Tesla was named the automaker with the lowest maintenance costs in a recent Consumer Reports study

Yields on 10 yr treasury bonds closed near 4.61% on Monday

Max pain is 160 at present, which is far enough away from the stock price to not exert much influence. If sentiment after the ER and CC is actually positive, market makers would like to see TSLA rise above the tall put wall at 150.

Monday's TSLA options volumes

What the daily dips of the past five trading sessions have in common is fairly low movement of stock price from open to close. The majority of losses have been with the gap down to open.

Conditions:
* Dow up 254 (0.67%)
* NASDAQ up 169 (1.11%)
* SPY up 5 (0.92%)
* TSLA 142.05, down 5.00 (3.40%)
* TSLA volume 106.2M shares
* Oil 82.14
* IV 62.7, 99%
* Max Pain 160
* Percent of TSLA selling tagged to shorts: 38%
* Volume at 4pm closing cross: 5.3M shares

 

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TSLA chart above

QQQ chart above

Congrats, longs, including after hour trading TSLA is up more than 15% on Tuesday.

The 1Q24 ER showed somewhat better numbers than expected. Automotive margins declined from 18.9% to a still respectable 18.5% (excluding cybertruck). Download the ER pdf here.

The big deal was to announce a plan for moving forward some lower-cost vehicles to be produced in first half of 2025 (versus last half) and perhaps even see something produced before the end of 2024. Wall Street types are notorious about not taking FSD and robotaxis seriously enough and to hear that lower cost Teslas moved up in timetable is something to make even the most cynical Wall Street types smile. Add in the possibility of another car maker licensing FSD from Tesla for their vehicles and you have the makings of a strong ER.

Elon was clearly focused on giving a good ER. He avoided too much rambling and never gave long answers when such a response could stir up conjecture. When Tony Sacconaghi asked to elaborate on whether the new vehicles will be just tweaks on existing vehicles, Elon basically said we're not talking details on the vehicles yet. When Tony followed up with a question about Elon's commitment to stay at Tesla, Elon carefully worded his reply so that he wasn't giving ammunition to those who wished to say he's going to leave if he doesn't get his way with the voting rights for AI projects. Bottom line, put $56 billion of Elon's wealth on the line for making Wall Street happy with the ER (due to the upcoming compensation vote) and you're definitely more likely to get Elon concentrating on his presentation.

What impressed me with this new plan is how nimble Tesla can be. With China flooded with more EVs than demand and other location buyers feeling the pinch of higher interest rates (plus the media hypnotizing with claims people just don't want to buy EVs any more), the market for selling EVs is currently tough. Thus, Tesla pivoted and decided to not only pursue FSD as aggressively as possible but to also move up manufacturing dates for cheaper vehicles. Those vehicles will be built partly with the unboxed method and partially with existing production lines. Elon says that Tesla will have a production capability of some 3 million vehicles/yr. when some existing production lines are reconfigured for the new vehicles. Execution will be important because this is a new way of doing things.

What to expect for Wednesday and the remainder of the week? In the TSLA chart you can see after hours that TSLA leveled at 160 for quite some time before heading higher. That leveloff at 160 was most certainly a capping effort by market makers. It failed. They may try again on Wednesday but it'll likely fail again and a failed manipulation is a good sign that the stock price has more rise to go. Keep in mind that in this dip from the high 200s, various investors lightened their TSLA load or got out entirely. Now with this new plan revealed at the ER, we may see quite a few investors in a hurry to get back in. Meanwhile, volume was rather light these past two weeks as TSLA plummeted, suggesting that the current shareholders are in no big hurry to sell. That combination leads to the possibility of a lively rise this week. Fingers crossed.

Yields on 10 yr. treasury bonds closed around 4.62% on Monday

Max pain fell to 150 on Tuesday morning. For this week, the market makers will be trying to keep TSLA from galloping across too many tall call walls. You can see that 160, 162.50, and 165 is a big clump of call walls, with two of the three already breached in after-hours trading. It's going to be a fun week ahead.

Tuesday's TSLA options volumes

TSLA finally found a green day after 7 red days in a row. In after hours trading TSLA has already risen from just above the lower BB to just below the mid BB. I'm thinking the upper BB may not come into play this week as the market makers go to work defending the call walls. We could see a big battle for 175, which is the tallest call wall of all.

Conditions:
* Dow up 264 (0.69%)
* NASDAQ up 245 (1.59%)
* SPY up 6 (1.19%)
* TSLA 144.68, up 2.63 (1.85%)
* TSLA volume 111.7M shares
* Oil 83.52
* IV 61.3, 98%
* Max Pain 150
* Percent of TSLA selling tagged to shorts: 39%
* Volume at 4pm closing cross: 2.1M shares

 

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TSLA chart above
(note that Nasdaq has changed TSLA chart colors to match the new QQQ color scheme)

QQQ chart above

On Wednesday morning the pre-market trading of TSLA was somewhat subdued from the Tuesday after-hours close near 164. TSLA traded near 160. After the briefest of Mandatory Morning Dips shortly after market open, TSLA climbed to tag 165 before being pushed down below 160 again. In the afternoon it crept closer to 162 with the help of macro strength, but the market makers appeared to having their A team manning the sledge-o-matic. Percent of selling tagged to shorts was 53%, but of course the MMs can borrow from non-FINRA exchanges when they want to hide their efforts. More telling was the 11 million shares trading hands in the 4pm closing cross minute.

At stake for the market makers are the very near tall call walls at 160, 162.50, and 165. Additionally, 170, 175, and 180 call walls could be in play if TSLA starts climbing in breakout mode. Thus, the capping to keep TSLA below 162 on Wednesday.

Although a 12% climb the day after the ER is nice, keep in mind for March and the first half of April TSLA was trading in the 165-175ish range. This trading range remained as disappointing Q1 deliveries were compensated for by FSD v12 breakthroughs. The ER turned out to be less bad than expected, and we learned that lower cost Gen 2.5 vehicles will be built within about a year, possibly before this year's end. Word from the ER definitely strengthened our beliefs that unsupervised FSD may be obtainable sooner than expected. For these reasons, TSLA should be above the 165-175 trading range going forward if it can bust through the market maker capping. This ER addressed short-term concerns (Tesla will deliver more vehicles in 2024 than 2023, Tesla Energy is thriving and growing), medium-term (lower cost Teslas that are hybrids between Gen2 and Gen3 are coming in about a year), and long term (FSD, Robotaxi, and Optimus are on shorter timelines). Tick, tick, tick.

Food for thought: the completion of a trip is still a somewhat missing link in the Tesla FSD solution so far. Pulling over to an open curb is great, but the AI side of Tesla will come into use for the drop-off, I suspect. You will be able to say, "Tesla, pull over behind the yellow car and drop me off there," or "Hawaiian Airlines departure level please," and the Grok built into your Tesla will work as the intermediary between your words and the vehicle's new drop-off goal. Elon really wants to keep all his companies working together because that idea occurred to him long ago.

There is much for a Tesla investor to unpack from the Earnings Report. I suggest taking the time to read the transcript, available from Motley Fool. Incorrectly, Motley Fool said that transfer of FSD will be allowed going forward and Elon made it clear that the answer is No to any longstanding policy for FSD transfer.

Very interested to see if TSLA blasts much past 160-162 and holds it on Thursday. Remember that a failed manipulation is a bullish sign. MMs pushing TSLA back below 160 and holding it there would have the opposite effect.

Shorts were tagged with 53% of TSLA selling, a big jump up from earlier in the week

Yields on 10 yr treasury bonds closed at 4.64% on Wednesday

Max pain was 150 Wednesday morning. The max pain had little effect on TSLA trading on Wednesday, but market maker manipulations to keep TSLA from rising too far into the 160, 162.50, and 165 tall call walls appeared intense.

Wednesday's TSLA options volumes

With the upper bollinger band at 186.94, the BBs presented no obstacle to TSLA's climb on Wednesday. Instead, market makers were likely shorting the "sugar" out of TSLA to keep the price from rising much above 160. With average volume now about 100M shares, TSLA's volume of 160M revealed the extent of the optimism expressed by TSLA buyers and also suggests the extent of the manipulations by option sellers to keep the TSLA breakout in the low 160s through Friday. There's a good chance they fail at this effort if we see volume remain high.

Conditions:
* Dow down 43 (0.11%)
* NASDAQ up 16 (0.10%)
* SPY down 0 (0.05%)
* TSLA 162.13, up 17.45 (12.06%)
* TSLA volume 160.4M shares
* Oil 82.76
* IV 45.9, 39%
* Max Pain 150
* Percent of TSLA selling tagged to shorts: 53%
* Volume at 4pm closing cross: 11M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Congrats longs, TSLA had another strong day on Thursday. We gained nearly 5% during market hours and then tacked on an additional 1.75% after hours. In contrast, Nasdaq was down 0.64% during regular trading. The strength of TSLA after hours was influenced by the Nasdaq, which reversed strongly from the red into the green when Alphabet beat strongly on its ER. Because of the Nasdaq strength after hours, I expect that strength to carry into pre-market trading on Friday. As for TSLA, you could see one of the typical games, such as a pre-market open pushdown, but I suspect the buyers will prevail in pushing TSLA higher, all the same.

The Nasdaq was red and dipped further approaching market trading as economic data showed growth slowing but persistent inflation. That scenario might be bad news for most companies, but at present Tesla has taken on a business plan that doesn't depend upon economic strength for the next year or so. Instead, it is going balls to the wall on adding compute and solving FSD while taking on a capital-efficient plan to deliver lower-cost vehicles within about a year. Slowing U.S. economic growth improves the chance for a rate cut, which is something that would benefit TSLA. It's hard to believe investors regarding Tesla as a safe haven, but circumstances and the current stock price suggest relative attractiveness of TSLA.

I watch for failed manipulations as a bullish signal. Notice that nearing market close the usual suspects were busy giving TSLA the whack-a-mole treatment to keep it below 170. That effort failed in the final minutes as buyers grabbed shares, hoping for a strong opening on Friday. The failure to hold TSLA below 170 allowed the stock to drift above 173 after hours (with help from the macros).

It's likely that TSLA got a boost on Thursday from Ron Baron appearing on CNBC. Baron basically said TSLA has bottomed out and it's going up strongly from here. Because of his success in investing, Baron carries a lot of credibility on Wall Street.

For Friday, things could get lively. At 8:30am the PCE inflation rates are released. That could set the tone one way or the other. Market makers typically give their most ferocious defense of call walls on Fridays, and 175 is a big one, stretching 50K contracts high. Playing in favor of long investors are strong Nasdaq futures, as a result of the unexpectedly good Alphabet ER after hours. I'm rooting for team Longs to take 175 if PCE inflation doesn't gork the day. Trading could be volatile. In the world of Papafox, this type of conflict is more interesting to watch than the NCAA final four tournaments.

Yields on 10 year treasury bonds zoomed up to 4.7% on Thursday

Max pain Thursday morning was 155. Max pain has been largely irrelevant this week as first the tall 150 put wall and then the many tall call walls have dominated the reactions of the market makers. The tall 175 call wall will be the focus for Friday.

Thursday's TSLA options volumes

Volume dipped on Thursday but not enthusiasm. We'll probably have to wait until next week for the upper bollinger band to become a factor.

Conditions:
* Dow down 375 (0.98%)
* NASDAQ down 101 (0.64%)
* SPY down 2 (0.38%)
* TSLA 170.18, up 8.05 (4.97%)
* TSLA volume 124.3M shares
* Oil 83.57
* IV 46.3, 42%
* Max Pain 155
* Percent of TSLA selling tagged to shorts: 47%
* Volume at 4pm closing cross: 7.9M shares

 

[Papafox]

TSLA chart above

QQQ chart above

Friday began with TSLA and QQQ both elevated in pre-market, but around 7:30am Reuters released this story which was pretty much a nothingburger about NHTSA taking a look at the FSD nags. The bots picked up on the story, and TSLA fell. It bounced back but then an hour later started sinking again as either the Reuters story saw more eyeballs or the market makers were manipulating early for their day of pushing TSLA lower. You can see a small uptick into the green for TSLA around 8:30am as the PCE inflation numbers came out only 0.1% higher than expected. After that, the dip machine was turned on to scare away traders, and it worked. Why would someone want to day trade on TSLA showing weakness pre-market when the Nasdaq was already hot and would close more than 2% higher?

You can see TSLA rising and falling throughout the day. Notice how linear the dip was from 1pm until about 3pm? I believe these linear descents are an artifact of having some big dog market maker(s) running the sledge-o-matic. I believe the goal was to take TSLA down to 165, where calls outnumbered puts (and it would give a safe buffer to keep TSLA below the 170 call wall. TSLA reversed around 166, though, but closed safely below 170. When you consider how significantly TSLA climbed this past week and how well it was shepherded downward to a closing price on Friday that was exceptionally profitable for the option sellers, you get an idea of just how powerful the option seller manipulations can be on a Friday with lots of marbles on the table.

I have little doubt that TSLA could have reached 175 on Friday without the FUD and manipulations, but fortunately Mondays are the days when the option sellers loosen their grip on the stock price, let it run with market pressures a bit, and then they go to work re-optimizing for that Friday's close. Looking forward to Monday's trading.

Backing off to the big picture, the plans of Tesla to accelerate Gen 2.5 vehicle production has erased the FUD that Reuters started with their Model 2 being canceled because of better choices from China for lost-cost EVs. I don't know if we'll see a true M2 anytime soon, but significantly lower-cost Teslas coming out perhaps as early as the end of this year is music that Wall Street likes to hear. There's room for Tesla to run higher as the real 1000 lb. gorilla, full self driving, evolves toward unsupervised abilities. TSLA is rising because concerns for the automotive business have lessened and are allowing the incredible potential of FSD to resume an important role in investor decisions.

Regarding FSD, we've heard that v 12.3.6 is now being shipped to regular customers in North America. Chuck Cook has a copy and he discovered that although the autopark feature works pretty well, it is apparently not looking for moving traffic, so user beware until a better version comes out. Meanwhile, Elon is in China meeting with the government's #2 man, and we've learned that several automakers have received the go-ahead for collecting data from the cars (Tesla was one of them). Elon also announced that FSD will work well in left-hand drive countries in Europe, and so we can look forward to the release (in good time) of FSD in both China and Europe, which would greatly increase revenues from FSD.

News:
* An official from the Swedish Transport Administration just test drove FSD and spoke well of the experience
* Tesla just raised the price of Model 3 Performance by $1,000, according to Sawyer Merritt

Yields on 10 yr. treasury bonds closed at about 4.67% on Friday

Meanwhile, truflation.com is still showing considerably lower inflation rate at the end of April compared to end of March. If these declines carry over into the CPI report on May 15, the market will approve. It's time to let go of the bad news from March and look forward to hearing the better news from April.

Max pain Friday morning was 160. The neutral point between put walls and call walls was right around 167.50, which is where the stock headed for the close. Market makers definitely didn't want to see a close over 170, and especially not over 175.

Friday's TSLA options volumes

After three weeks of market makers nailing the stock price to max pain for Friday close, we've had a week with a big deficit in the stock price followed by this week with a moderately excessive stock price compared to max pain. When you look at the tall call and put walls on recent Fridays, though, the option sellers have still managed to make out like bandits even with this volatility.

For this coming Friday, max pain is once again 160. Strike 165 is pretty much the neutral point with call walls at higher prices. Market makers may allow the stock to run higher on Monday if there's buying pressure so that they can spend the rest of the week tweaking the Friday close.

As we enter the new week, the upper bollinger band is right below 185, which could provide some constraint if we see a big run higher. Notice that Friday's red day was lower volume than the previous three green days, suggesting that FOMO is still stronger than Fear of Falling (FOF).

For the week, TSLA closed at 168.29, up 21.24 from the previous Friday's 147.05. Hoping your enjoyed good spring weather this weekend with those who matter to you.

Conditions:
* Dow up 154 (0.40%)
* NASDAQ up 316 (2.03%)
* SPY up 5 (0.95%)
* TSLA 168.29, down 1.89 (1.11%)
* TSLA volume 108.8M shares
* Oil 83.67
* IV 45.3, 34%
* Max Pain 160 for Apr26 & May3
* Percent of TSLA selling tagged to shorts: 50%
* Volume at 4pm closing cross: 4.7M shares

 

[Papafox]

TSLA chart above

QQQ chart above

A 15% gain day anyone? Congratulations, longs.

With Elon working out a deal in China with Baidu for necessary data to enable full self driving in the country (BBC article), TSLA looked like a good buy and we saw the stock gain 15.31% on a day when the Nasdaq was up just 0.35%. I suggest that the big rally came not from just a single cause but from a collection of circumstances: 1) lots of short-sellers still in the stock after expecting a worse Q1 ER and now exiting, 2) Friday's close was artificially low due to option seller manipulations, and 3) the good news from China. The vehicle market is absolutely a mess at present in China, with too many EVs chasing too few buyers, and Tesla making their vehicles even more attractive by pursuing FSD with vigor will aid sales. Monthly fees for renting the software will provide recurring revenue, and once FSD becomes unsupervised China becomes an attractive option for a robotaxi network. All good.

Did the market makers and hedgies try to dampen the climb on Monday? I suggest that with 64% of selling tagged to shorts and more than 11 million shares trading hands in the 4pm closing cross, there's no question of a serious effort. Looking at the TSLA chart you can see the telltale downslope beginning a half hour before market open and then stretching to about 10am when the sledge-o-matic ran out of juice and the stock rose until 1pm. We likely had shorting in the afternoon, judging by the long, shallow, downslope near 2pm.

What does Monday's trading tell us about what may happen on Tuesday? Volume was strong until early afternoon but then fell off, suggesting that the panic short-covering may have mostly been completed by early afternoon. OTOH, despite heavy shorting to slow the gains TSLA still held the vast majority of its gains into close. My guess is that volume will be lower on Tuesday, which may give the option sellers a better shot at stemming the climb. I wouldn't be surprised to see a Mandatory Morning Dip. If it gets reversed strongly then there's room to climb higher. Institutional buyers may be gunshy about buying above the upper bollinger band. We'll see.
News:
* The U.S. Supreme Court decided not to hear Elon's appeal to reverse the Twitter nanny agreement with the SEC
* Sawyer Merritt says that Tesla has secured a $650M contract to build the largest battery storage system in the country

Wondering if the option sellers were trying their best to keep TSLA from rising into the 190s on Monday? With 64% of TSLA selling tagged to shorts, the answer is an unqualified "Yes!".

Yields on 10 year treasury bonds closed near 4.61% on Monday

Max pain Monday morning was 165. Strike 180 had the highest call wall, with 185, 190, and 195 being relatively small. Market makers would like the price to stabilize or descend a bit now so that options are moved to better suit the market and give the MMs a better profit possibility by week's end.

Monday's TSLA options volumes

What stands out in the tech chart is the massive volume, some 241M shares traded on Monday. To get this much volume, we likely needed: 1) short positions still open specifically for Q1 ER being quickly closed, 2) Friday's close likely being noticeably below unmanipulated market close price, due to end of week manipulations to control strong price climb, and 3) Good news from China re FSD. Also, notice that market open price was very close to upper bollinger band. In the absence of a particular target to shoot for in the climb, the market first clutched onto the upper BB. Buying was then too heavy as the day progressed to hold this level and the TSLA price rose.

Conditions:
* Dow up 146 (0.38%)
* NASDAQ up 55 (0.35%)
* SPY up 2 (0.35%)
* TSLA 194.05, up 25.76 (15.31%)
* TSLA volume 241.5M shares
* Oil 82.62
* IV 53.1, 82%
* Max Pain 165
* Percent of TSLA selling tagged to shorts: 63%
* Volume at 4pm closing cross: 11.2M shares