I'm a bit reluctant to point this out here... but I will anyway. Crude is up sharply. $37.90.
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I'm a bit reluctant to point this out here... but I will anyway. Crude is up sharply. $37.90.
FredTMC
Model S VIN #4925
yep. 5% move in oil since the open. Here's the good part... Once TSLA starts moving on its own due to Model 3 anticipation, could be nice. March 31st launch looms.
Shorts should be concerned. No guarantee of an orderly exit. Me? I'd prefer they feel some serious sharp pain
Citizen-T
Active Member
Hey. I realized today that I often drop in to say when I'm buying but often don't let the group know when I'm taking profits. Today I'm unwinding a lot of the calls that I accumulated starting with this post and all the way down to the lows shortly after. It's been a very good year so far for me, and if there is one thing the market has taught me, it is to not convert trades into investments because things happen to be going well right now.
I intend to be completely out of those calls by the time Model 3 is announced (though I reserve the right to buy a lottery ticket or two for that event). I mention this because I want to make it clear that the reason I've been able to take advantage of TSLA's periodic plunges is because I raise cash at times like this. It isn't because I have some bottomless hoard of cash that I can keep throwing on the fire. If you want to partake in the next sale, you might want to take some chips off the table now-ish (excuse the mixed metaphor).
Of course, your situation is different, so make your own investment decisions.
BTW, my core position remains untouched as it has been since the IPO. Still very much a bull.
chickensevil
Active Member
I wouldn't call the note released by Andrea James as "no news". I think we are finally getting to the positive news cycle on the X that we all knew was coming it just didn't happen as soon as we had hoped. Imagine if they had gotten the X out for this level of deliveries and events by December like they had originally planned. Not only would we have more easily weathered the negative market cycle, but would have likely gone from 240 to 280 instead of 240 to 150. It's just too bad it won't likely climb fast enough to let me get any value out of my March calls I bought toward the end of December that devalued to nothing...
jesselivenomore
Member
I said many times on here over the past month that there is no short squeeze yet, and that was true below 200. I think that will be confirmed when the next short interest is released and show % has increased over the past month.
That is now changing above 200.
There are two groups of shorts - long term fundamental shorts, and short term technical traders.
The long term fundamental shorts are the core of the short %. They have been a fixture over the past 4 years. They have come and gone where some were burned(to death) from lower prices and new entrants are still here from higher prices. The major short squeeze ala 2013 will not happen until these people give up. They were experiencing gains for the first time in a long time on the way down to 140. However they did not cover. They will not cover until there is a fundamental change in the company(earnings, cash flow), or until they experience pain due to loss. Neither of those two criteria were met during the rally from 140 to 200. Earnings were still negative(worse than expected) and they were merely giving back gains instead of experiencing pain from loss. Psychologically they are a mirror of fundamental longs(many on this site). You will not sell until there is a fundamental change in the company(growth), or until you experience pain due to loss(a handful quit this board after selling below 200).
On the other hand, there are the technical traders. They were not in for 4 years. They have no skin in the game. They are purely in it to ride the wave. They shorted when the stock first broke below 180(200 if they were really good). More shorted the first time back up to 172(a retracement level). Many shorted once we got back up to 180 again, which they thought would be resistance. Even more piled on between 190-95. This was the 50 day moving average, and no coincidence that this was the price Andrew Left decided to declare his position. I know this for a fact because I sit with 50 of these traders everyday and this is what they do.
These are the guys getting squeezed once we broke above 200.
The question is can they bring the stock high enough to trigger enough pain for the core fundamental shorts. I estimate this pain threshold to be at 220, which is where I am looking to add to my long position. My guess is that it won't be enough, and we will require a news event and heavy volume to break above that level. The good news is I hear there is something like that coming up in a couple of weeks.
But the point is this. The vast majority of this bounce from 140 has not been the result of a short squeeze. If anything, more shorts have piled on, and we may be seeing the very tip of the ice berg of a squeeze which would be triggered en masse above 220.
That is now changing above 200.
There are two groups of shorts - long term fundamental shorts, and short term technical traders.
The long term fundamental shorts are the core of the short %. They have been a fixture over the past 4 years. They have come and gone where some were burned(to death) from lower prices and new entrants are still here from higher prices. The major short squeeze ala 2013 will not happen until these people give up. They were experiencing gains for the first time in a long time on the way down to 140. However they did not cover. They will not cover until there is a fundamental change in the company(earnings, cash flow), or until they experience pain due to loss. Neither of those two criteria were met during the rally from 140 to 200. Earnings were still negative(worse than expected) and they were merely giving back gains instead of experiencing pain from loss. Psychologically they are a mirror of fundamental longs(many on this site). You will not sell until there is a fundamental change in the company(growth), or until you experience pain due to loss(a handful quit this board after selling below 200).
On the other hand, there are the technical traders. They were not in for 4 years. They have no skin in the game. They are purely in it to ride the wave. They shorted when the stock first broke below 180(200 if they were really good). More shorted the first time back up to 172(a retracement level). Many shorted once we got back up to 180 again, which they thought would be resistance. Even more piled on between 190-95. This was the 50 day moving average, and no coincidence that this was the price Andrew Left decided to declare his position. I know this for a fact because I sit with 50 of these traders everyday and this is what they do.
These are the guys getting squeezed once we broke above 200.
The question is can they bring the stock high enough to trigger enough pain for the core fundamental shorts. I estimate this pain threshold to be at 220, which is where I am looking to add to my long position. My guess is that it won't be enough, and we will require a news event and heavy volume to break above that level. The good news is I hear there is something like that coming up in a couple of weeks.
But the point is this. The vast majority of this bounce from 140 has not been the result of a short squeeze. If anything, more shorts have piled on, and we may be seeing the very tip of the ice berg of a squeeze which would be triggered en masse above 220.
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dreamingof3
Member
Somewhere Julian is smiling, knowing unwashed socks may not be on the menu.
All I care about is higher highs and higher lows. This stock is acting healthy again
Cup w handle? V shape bottom? Any way you slice it we reversed AND trapped a lot of shorts in the process who had their eyes on much lower prices
Let the shorts fry like bacon in a new t fal pan
All I care about is higher highs and higher lows. This stock is acting healthy again
Cup w handle? V shape bottom? Any way you slice it we reversed AND trapped a lot of shorts in the process who had their eyes on much lower prices
Let the shorts fry like bacon in a new t fal pan
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mmd
Active Member
1. Fundamental story hasn't changed for either the shorts or the longs. When Tesla starts making profits and becomes FCF positive (not the phony debt-line positive), the story will change against the shorts.
2. Fundamental shorts are not holding still. They also increase and decrease their positions as the stock bounces up and down like a yo-yo.
3. If the stock is climbing because of short covering, then it could also mean many of those will be back at higher prices. Just like the new longs who came in to buy at lows, there will be new shorts that will emerge at higher prices (unless fundamental story changes).
As for myself: I will grow increasingly bearish when TSLA goes above $230.
2. Fundamental shorts are not holding still. They also increase and decrease their positions as the stock bounces up and down like a yo-yo.
3. If the stock is climbing because of short covering, then it could also mean many of those will be back at higher prices. Just like the new longs who came in to buy at lows, there will be new shorts that will emerge at higher prices (unless fundamental story changes).
As for myself: I will grow increasingly bearish when TSLA goes above $230.
chickensevil
Active Member
You must spread some Reputation around before giving it to jesselivenomore again.
Seriously, every time the stock goes up 10$ someone is saying "short squeeze" like that is going to make it happen any more than the last time it went up by 10$.
We haven't even climbed up *as fast as* we fell down. the last time we closed above 200 it was 13 trading days to the bottom. It has been 16 trading days from that bottom to return and close above 200 again. If there was to be a squeeze you would see a departure from the speed of the ups and downs, this is simply a recovery from a dramatically oversold stock that lost 50% of its value in a matter of 2-2.5 months. We will be lucky to return back to those levels in the same time span (and with the macro market holding out positive for now, and the Model X reviews and deliveries finally happening in large enough quantities to matter, this might actually be possible).
From the 240+ close it was 27 trading days, let's see if we can get back to 240 in the next 11 trading days. My guess? If we continue to go at the 23% slower rising pace of what it took to fall, the return to 240 won't happen until 33 trading days from the bottom, which means that we have another 17 days left to get back to 240 which puts it around Mar 29th. That actually makes sense given that we will be building up to the Model 3 reveal and would not be surprised to see us right around 240 just before that happens.
Whether we sell off after the Model 3 reveal and subsequent release of the Q1 numbers is anyone's guess, but short term, I would put us as headed to 240-ish by that point. I would recommend what CitizenT stated which is wisely unwind any options or trading shares at that point and wait to see if we can actually break the pattern of buy the rumor sell the news...
jesselivenomore
Member
Sort of. If Tesla never reaches its fundamental goals, then yes eventually the stock price will fade back even after a squeeze. But in the meantime while that is still an unknown, there can definitely be long term fundamental shorts who end up covering due to pain from loss/margin requirement. Just like there were fundamental longs who sold below 200 even though they did not think anything changed - they simply could not handle the loss anymore. We know a couple on this site who are no longer here. The decline from 180 to 140 was due in no small part by stop losses from longs. The same can happen to shorts above 220.
Agree this isn't the short squeeze. Though there is definitely some short covering in the mix.
I wouldn't expect the short squeeze until April at the earliest.
chickensevil
Active Member
This is exactly what I was saying months ago, and hoping they would actually follow through in Q4 on doing... or at least reaffirm that they would hit it in Q1... which they aren't. This is going to be *the* pivotal moment that will start a squeeze. Yes, positive notes about the Model X getting rave reviews will help, Positive details on the Model 3 will help, Positive details on the Gigafactory and TE will help... but hands down the *ONE* thing that will actually drive the shorts into a panic selling frenzy is going to be GAAP/Non-GAAP positive earnings and/or positive cash flows. From the sound of the last ER we won't likely *feel* the cash flows until Q3 (as it will go positive *in* Q2, I take that to mean that the trend will stop, but won't necessarily be enough to drive us to actual cash positive by the end of the quarter.) and then Q4 with a tiny GAAP positive. If both of these things happen (and that's a big if, because timelines have continually fallen backward for Tesla) then rest assured we will see a squeeze out because the stock price will shoot up from a GAAP positive alone (AMZN anyone???).
Regardless of what happens to the underlying price between now and Q3, I wouldn't expect shorts to run for the hills until those events actually happen, and a higher shareprice (back into 280 by then???) will only make them pile back on en-mass all over again (sell high, buy low, right?)
dreamingof3
Member
This is not a short squeeze. IMO this is momentum buyers getting back in after confirmation of a reversal. There may be some short covering but not over 5-6 million shares of the 31m plus short. QCOM in 1999, that was a short squeeze!
Thanks 'Jesse'. My expectation of a real short squeeze will be Q1 ER (maybe) if model3 reservations are 100K+ and we are FCF neutral or Q2 ER (more likely) when we are FCF +/ have evidence that the X is fully ramped and QC issue free.
jhm
Well-Known Member
Remember to add the shares short to the remaining share. Other shareholders own 15 + 31 = 46 million shares long.
People always seem to overlook that when a short sells a share that creates a second long position on a single share. Shorts expand the supply of long positions in a stock.
Why do so many people assume a short squeeze is a black or white event? Different people I suppose use the term 'short squeeze' differently as there is no black and white measurement of what is or is not a short squeeze (other than the fact that some amount of shorts or net-shorts must be covering). I do think this could very well be the beginning of a short squeeze(why couldn't it be?), but it is a GRADUAL SHORT SQUEEZE which could last weeks/months and that a few months from now we will be much much higher than we are now. The short squeeze in 2013 was gradual as well and lasted for months..it didn't go from the 30s to 150+ overnight or even in a few weeks. I think we'd all agree that was a 'short squeeze' in 2013 but if you look at the data, it took months to play out.
AFTER it plays out then we can all listen to the 'technicals' experts tell us the story of what happened and why it was a short squeeze, looking at moving averages, fibonacci changes, head and shoulders, etc. (I personally think 'technicals' are hogwash and will use real data such as the NASDAQ publication to say whether it was a 'short squeeze' or not)
DURING the short squeeze it is not so evident to people, we are all just speculating (including me)
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I wouldn't underestimate the potential impact in April of a tweet by Musk saying "Just passed 250k Model 3 reservations!" (or something similar). I think the amount of Model 3 reservations will be simply staggering.
dmckinstry
Model X 2019
Agreed. I don't even think the Model 3 reveal will do it. However, a positive delivery announcment in early April could help. But I suspect the real squeeze could happen with the Q1 CC. Maybe Julian has thoughts on this, but it may not be until Q2 is done before it really happens.
Hogfighter
Professional Lurker
I've been thinking about this Asset-Backed Line of Credit (ABL) since the last CC. Essentially Tesla is getting paid for the cars when they leave the factory via the ABL rather than when the actual delivery takes place. As more cars fill the pipeline, the ABL increases and Tesla takes more out of the ABL. This is very, very different than traditional ABLs since these cars are (for the most part) already ordered by customers....they are not just going to a sales lot, which in an economic downturn, could sit unsold for months.
When the ABL was described on the CC, I wasn't too happy about them rephrasing 'free cash flow' to whatever term TSLA wanted to make up. But thinking about it more, it seems to make sound business sense, and as an investor doesn't sound too shady. Anyone want to add a little more color to this?
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