Short-Term TSLA Price Movements - 2014

[The Blue Owl]

As someone trained in classical financial economics, I'm baffled by technical analysis. There is no support for technical analysis that I'm aware of in the academic literature. Is there any 'proof' that this is anything more than people trying to read patterns in clouds or chicken entrails?

I have no proof, but I am convinced TA has no predictive power. I think short term movements are random, in the sense that if you regard a chart as a pure signal (and by "pure" I mean you just look at the numbers, completely disregarding any other information about the company, current events, and the macro environment), no matter what TA would predict, it will do no better than chance when applied to many charts, many times.

The reason I believe this is that, whatever predictive power TA could offer, the many competing actors trying to capitalize on it will extract that information out of the signal immediately, leaving only the noise. I don't know how to explain it better, but it's really just the principle of arbitrage; from all the players out there, at least some will "see" the hidden info, and by acting on it, they will bring the system back to equilibrium.

This is not the same as the efficient market hypothesis (I don't subscribe to that one, either.) Again, what I said only applies to treating the chart like you would a signal from space, so to speak, with no regard to context. Confirmation bias and the tendency to see patterns in noise are two of the most powerful forces shaping the human mind, so I am not surprised many swear by TA. I think it has the same explanatory power as astrology (some people find that one useful too.)

 

[maoing]

As soon as we closely monitor the P85D delivery thread and nobody complains about December delivery moved to January, the "D" impact should have no impact.

fwiw, if anyone is trying to figure out whether the "D" delay will impact Tesla hitting Q4 delivery numbers (and result in some short term FUD distortion), there was this from member NSX1992 on the P85 tracking delivery thread last night:

"I called my DS today and was informed that I am in the last batch and the delivery will be between 12/27 and 12/31. She expects all the P85Ds will be delivered in late December (I assume North America). I had ordered a S85 on 9/2 and changed it to P85D when the tan interior became an option (64306). I asked why the delay for others and she said "didn't you get the memo from Jerome?". I said no and she thought that was strange but I told her I knew the content. I asked her if the problem was the front or rear seats and she thought it was the front seats. Then she said something interesting that the new seats got a 4.9 safety rating and Tesla would not be pleased with anything lower than the perfect 5s they have received and therefore were making the changes. It makes sense to me.

I have been promised Late December since the beginning so I can't complain. I was just hoping for a Christmas present instead of New Years. At least now I don't have to look at my dashboard twice a day."

just one comment from one delivery specialist being relayed, but perhaps of interest.

 

[SteveG3]

As someone trained in classical financial economics, I'm baffled by technical analysis. There is no support for technical analysis that I'm aware of in the academic literature. Is there any 'proof' that this is anything more than people trying to read patterns in clouds or chicken entrails?

I'm quite skeptical that it works much for anyone other than the 24 hour financial media that's looking for bait for us to tune into or click. That said, people I respect use it. Possibly it can work in select circumstances if you really put time into it (such as stocks with very low in volatility and where it's rare for any news to reach investors) but even if that is the case, I think you'd get a much better payoff putting that time into researching stocks for whom you can get insight into fundamentals.

- - - Updated - - -

As soon as we closely monitor the P85D delivery thread and nobody complains about December delivery moved to January, the "D" impact should have no impact.

you're right maoing, we can wait and see. one thing did occur to me... even if all the P85Ds that were to hit December do, the delay may still lead to a miss. there was likely some element of start, stop, switch to RWD, stop, do some P85D slowly, okay speed up, slow down, stop, switch to RWD... they may have mitigated this with overtime.

of course, big picture this means nothing, just possible FUD we may see impacting short-term. fwiw, wherever deliveries end up, it's likely to be announced on the Q1 call, amid more significant information like full year guidance, and possibly some details on residential and commercial battery initiatives (one analyst recently wrote that some sales would begin Q2/Q3).

 

[austinEV]

TA doesn't work, as Sleepyhead likes to say if it did it would take about 5 minutes to automate and you (really Goldman Sachs) could make billions. (wait a minute....)

I look at it as a framework for monitoring the markets. It helps me pay attention. By attempting to do TA, I am focused on the price action and it allows me to never be able to say "dang it, I wish I had known the stock dipped to $210, i would have bought a bunch!". Kind of like fantasy football helps you understand the actual NFL. It works only in hindsight, but even that helps me feel better.

 

[uselesslogin]

There is this quote as well although forum members may have been far more likely to order immediately than non-members therefore skewing production starts.

I counted 166 December deliveries on the spreadsheet, and 88 in production, so 53% so far. I know our spreadsheet is a relatively small snapshot, but if it is a statistical representation, and there are two weeks left to make the end of month deliveries, and an average of 8 cars per day go in, we should make it, but close!

I hope this storm doesn't disrupt things.

I would expect there would be less cars than hoped because of the Norway drivetrain issue and the slow P85D start. But I have no idea where their stretch target is vs. their publicly stated target. At this point I personally expect anything from 32,000-34,000 deliveries but slightly under 33,000 being the most likely since we know they had 2 fairly major issues. I leave 34,000 out there because there is a slight possibility they were able to ramp up sooner than they expected.

 

[MartinAustin]

there was likely some element of start, stop, switch to RWD, stop, do some P85D slowly, okay speed up, slow down, stop, switch to RWD... they may have mitigated this with overtime.

I would also put forward that TM has accumulated some skill at mitigating those sorts of things, and fluctuations in inventory of parts or whatever, by very quickly shuffling around the VINs that are going into production. As soon as they realise something is wrong with the cars that are currently on the production line, they can immediately switch to RWD orders... and the cars that are on the production line are either fixed in some separate area, or fixed while they're still on the moving production line. I think it'd be wrong to assume that there is some halt to the entire production line, or a guaranteed lowering to monthly output. As you also said, there is overtime, and we know that the factory does not normally operate 24hrs a day.

A question to answer would be, how many actual cars are on the production line at any one time? This can probably be estimated with maths, but I will guess at 200. I will further guess that for a good part of the last 2 weeks, 75% of those have been P85D's which they've naturally been front-loading over other configurations in order to maximise Q4 profit. (and besides, they made the December delivery promise)

If they can make (say) 3,000 cars per month, they can easily deliver a large number of that in any given month even with issues line this; if a problem with a configuration is discovered while cars of that configuration are on the assembly line, it won't be that large of a fraction of 3,000. In any case, as we know now they have a lot of fixed P85D's in hand, and are scrambling to play catch up w/ deliveries.

I don't doubt it will be a hellacious end to the year, with the usual end-of-quarter scramble, plus the desire to get P85D deliveries back onto their original projected track. But I am confident we will be surprised by the result that follows all the doom and gloom that happened on this forum over P85D delivery delays - which has been compounded by the simultaneous, close-proximity discussion of the stock decline, that IMO just happens to be occurring at the same time (but is for an unrelated reason - negativity across a great many stocks caused by the decline in oil price).

Glad to see TSLA up today, along with all my other stocks. What I read is 1) TSLA has been drifting with the market for a while, and 2) there is some support around $210, where people are saying to themselves that it'd be crazy to ignore TSLA at this low price. TSLA has climbed two out of the last three days! LOL

 

[green1]

Technical analysis only helps in context. It's great for getting an idea of where the stock is on it's run up or down to a price point and time that you have already established separately, and gives you the ability to decide to buy/sell any time it's out of the channel that you think is reasonable. But it can't tell you what reasonable is. It also allows you to compare the stock with the broader market, which when considered along with news about the company, can tell you if people are over/under reacting to various news pieces, or nothing at all.

So Technical analysis is very useful, just not without a broader context from either company or market analysis.

 

[Jack6591]

Somebody really doesn't like Tesla

Why The Founder Of Hamzei Analytics Did Nothing To Play Tesla This Week - Yahoo Finance

Interesting observation. It amazes me the vitriol that is aimed at Tesla. Great product, incredible innovation, positive social culture. Could it be OPEC?

 

[jhm]

Perhaps in 2015 we should have a separate short-term thread just for technical analysis. We often run into debates in this thread about the merits of TA, but it's not so helpful to have to wade through all the TA discussion to keep up on current events. Those who want to engage TA can have a thread and the rest of us can choose to ignore it.

 

[FluxCap]

I find TA useful mostly because there is some fraction of people that make trading decisions based on it, therefore it is a self-fulfilling prophecy at times, therefore I can use that information to inform my own trades. I think it's fine to discuss in the context of short-term price movements right here in this thread.

Also, Curt literally wrote the (a) book on TA, and I wouldn't want him to stop chiming in here.

The moving averages I find very useful as rough guideposts, personally.

 

[Auzie]

As someone trained in classical financial economics, I'm baffled by technical analysis. There is no support for technical analysis that I'm aware of in the academic literature. Is there any 'proof' that this is anything more than people trying to read patterns in clouds or chicken entrails?

TA looks into past patterns and predicts the future by projecting past patterns into the future.

I concede that patterns are a formidable driving force in shaping the future. If there is no influx of new energy, the most likely path into the future is shaped by the established patterns and paths.

There are often new developments and disruptions to established patterns and any past patterns do not contain such information.

The weakness of TA is that a future is influenced by so much more than just past patterns as new forces come into play all the time. These new forces are unaccounted for by TA.

The strength of TA lies in its followers. If enough traders adhere to TA principles when placing their bets, they will create self-fulfilling prophecy events.

My summary view on TA: take TA input into consideration as all other data inputs, process all the available data through my head and then through my trading tool and place the orders accordingly.

 

[Robert.Boston]

Perhaps in 2015 we should have a separate short-term thread just for technical analysis. We often run into debates in this thread about the merits of TA, but it's not so helpful to have to wade through all the TA discussion to keep up on current events. Those who want to engage TA can have a thread and the rest of us can choose to ignore it.

Good idea. We definitely need to improve this forum's threading for next year. I've started a thread to discuss threads: Investor Discussion Threads for 2015

 

[maoing]

We closed the lowest since ATH correction again. I certainly believe $204 is not the bottom!

 

[SteveG3]

We closed the lowest since ATH correction again. I certainly believe $204 is not the bottom!

Sure we may touch $204 again tomorrow. However, by Monday, I'd be quite surprised if we don't at least have some customer reviews on the P85D. Of course, that itself is not directly impactful to the market (or, is not likely to be), but any day we could get at least some quick takes from major auto magazines who get their hands on someone's P85D for a day (and the customer reviews will signal this is imminent to anyone paying attention).

Not to ignore that an overall market selloff could take us under $200 even if great D reviews start turning up. I just think some of the near term significant moving pieces are positive ones.

 

[woof]

What do the more experienced investors think about the attached chart?

View attachment 65705

Well, one can clearly see the "Head & Shoulders" pattern, and the bottom part looks to my eye a lot like "Selsun Blue". This indicates a probable case of mild eczema due to breaking the 200 day weighted moving average scalp condition, which they say can be cured by looking at the chart cross eyed until one sees the unicorns dancing. There may even be a bullish** cross somewhere in there, with the bull charging at the red pennant super charger. Oh, and is Venus rising somewhere in there too? Yes! See that line with the planet's rising from the bottom left to top right? It's crossing the ecliptic in mid-September which foretells crop failure next Spring. You may wish to sow your winter oats just in case, and buy a P85D.

 

[LakeForest]

Veronica Wu, the head of Tesla China has resigned. I would guess she 'resigned' over the Weibo listing controversy.

Tesla’s China President Resigns After Less Than 9 Months - Bloomberg

 

[maoing]

I think China order # is not as stellar as Elon expected might be the main reason, otherwise the rest of small issues is just noise. Btw, China demand grows steadily with super chargers and SC deployment. But the over picture is just not as irrational as the beginning.

 

[Krugerrand]

Veronica Wu, the head of Tesla China has resigned. I would guess she 'resigned' over the Weibo listing controversy.

That's as good a guess as any. I can't imagine that Elon would have been too happy about the question he was asked in that regard on the last conference call. May have been the last straw.

 

[Auzie]

This morning I had a look at the daily chart.
I do have to admit that, to my opinion, current technicals do not look too good.
What do the more experienced investors think about the attached chart?

I guess Forbes contributors can fall into "more experienced investor" category. Maybe, maybe not.

Here is what they say:

Tesla is oversold.

Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

In trading on Tuesday, shares of Tesla Motors Inc (NASD: TSLA) entered into oversold territory, hitting an RSI reading of 29.9, after changing hands as low as $204.27 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 53.9. A bullish investor could look at TSLA’s 29.9 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.

 

[aznt1217]

That's as good a guess as any. I can't imagine that Elon would have been too happy about the question he was asked in that regard on the last conference call. May have been the last straw.

Wait, what weibo listing? Are you talking about the alibaba emall with the gray market Model S'? There's a TON of gray market Model S'. No control over that.