I've been trying to game theory what might happen over the next five weeks. Not easy as there are many actors.
Until the index tracker funds are allowed to buy I think it is in no-ones interest to sell (except day traders, high frequency trading and other algos).
The key to this is realizing that a squeeze is happening and that there is guaranteed buying when the index trackers are finally allowed in. So there is no incentive to sell now, no matter what the price the index trackers will be forced to pay.
Short sellers will be forced to cover. That is about 1 million shares on average, but probably concentrated in the first few days. Maybe half the shares shorted will cover, the rest will be part of various hedging strategies, it is possible that most of those cover as well as the hedging strategy becomes mute.
Index benchmark funds, probably have few Tesla shares to sell, but have a large incentive to buy. Regardless of whether they aim to be above, below or equal weight in Tesla in the long term, in the short term they can ride the rise and beat the index. On average they will probably end up slightly under-weight, but that is still a lot of shares they need to buy and hold. Some might decide to wait, and only buy after index inclusion and the share price has settled down, this avoids potential losses but also misses the chance to beat the index. If they all bought to hit equal weight by 21st December that would be about 10 million shares a day, it will be lower than that, perhaps 3-5 million shares a day.
Some index tracker funds will have rules allowing them to buy early, or other mechanisms allowing them to acquire shares, perhaps 0,1 million shares a day at present rising to 1-2 million just before the main index tracker purchase period.
Traders, hedge funds, etc. will probably do a similar analysis to this and so will want to buy and hold until the index trackers start buying. They will try and time the top of the squeeze, which could lead to violent swings.
There could be FOMO among retail and some institutional investors, hard to predict how much, many I think lost out over the summer and will be reluctant to gamble on S&P inclusion again.
Call buying (private and institutional investors) will have to be delta hedged by the MMs, maybe to the tune of 1 million shares.
If there are so many shares being taken out of the immediate float each day and no significant selling, it would normally be up to the MMs to provide liquidity. But they if they did, then they could be on the hook for hundreds of billions, with no realistic prospect of delta hedging.
To sum up until the index tracking funds are allowed to buy there will more than usual buying pressure and it is in no ones interest to sell. This will drive the share price up and up.
After that until the 21st December there will be a fight between those wanting to cash out at the peak and those needing to buy almost at any cost, this is likely to lead to wild price swings, perhaps 20% up or down in a day. The other possibility is a very sharp high peak and then a crash.
By the new year I expect the share price to be returning to fundamentals, so perhaps about $600, but with lots of volatility. This volatility is driven by the different ways of valuing a company EDP, DCF, etc. giving wildly differing valuations and the inherent uncertainty of Tesla's S-curve ramp in production and the introduction of FSD.
