TSLA Market Action: 2018 Investor Roundtable

[Cherry Wine]

You mean option sniper?

Yes.

 

[Unpilot]

At this point time is working against the shorts. They can't stop the machine now..maybe delay it a little bit..but it is going to wash over them.

That is an advice.

 

[ZachF]

There's also someone who desperately wants to mark down the TSLA price: there were two brutal sell spikes today, at 11:17am with 75k shares sold in a very short amount of time, and 11:29am when 87k TSLA shares were sold in a 'dumb spike' that no genuine seller of the stock would utilize. Today there were no macro events that would have caused these spikes/icicles: NASDAQ futures were rising and stable, Dow futures were rising, the dollar was stable. There was no Tesla specific news either that would have triggered these orders.

Saw two of these spikes/icicles yesterday as well (November 6) at 12:45 and 15:53 and chalked them up to probably elections related deleveraging - but today there's no such reason - it looks like a clear attempt to mark down the TSLA price below the key $347 level.

In particular the Nov 6 12:45 event was remarkable in that it dropped the TSLA price by $2 within a fraction of a second. Very few rational market participants would execute an order than that, without the intent to drop the price in a visible fashion and cause losses to Tesla investors (which I believe is illegal price manipulation).

This could be another entry to @Papafox's growing list of 'weird TSLA price events'.

If only we had a federal government agency tasked with overseeing the health of the financial markets, having the power to request transaction level data that identifies the traders behidn those selling spikes, enforcing laws that prohibit illegal market manipulation!

if you take a look back at the historical prices, it looks like over $350 will be a level where pretty much all but a very few shorts will then be under water.

 

[Fact Checking]

New At this point time is working against the shorts. They can't stop the machine now..maybe delay it a little bit..but it is going to wash over them.

While that might be true in the long run, their efforts to mark down the price is actively harming Tesla investors who were selling shares today after those spikes down. Their price manipulation efforts might also be successful: for example if there's a negative macro or Tesla event then the short sellers will profit from the subsequent drop in price - at the expense of Tesla shareholders.

I.e. my point is not that short sellers are harming Tesla - that is true but not (yet) illegal.

My point is that short sellers are performing illegal market manipulation by executing these 'dumb' block sales of thousands of shares at a time, in a very clear attempt to manipulate the price. That is illegal even today, in my not-a-lawyer opinion.

 

[Unpilot]

Yes and they seem to not care. Sad really. IF Tesla was a train wreck I could see it...but my gawd look at what it is and will be...even short term (2/3 years).

I'm looking forward to the ride!

 

[Johan]

if you take a look back at the historical prices, it looks like over $350 will be a level where pretty much all but a very few shorts will then be under water.

It's a nice round number with both psychological and actual significance. Yes, the ATH is 390 but not that many short/long positions were opened in the 350-390 range, the stock was only trading in that range for a short period of time and the total accumulated (cumulative) volume in that range wasn't all that high. Also, one could suspect that an even higher than normal fraction of trades near ATH were very short term positions (day trading, scalpers) that haven't been held.

Soo...

 

[Fact Checking]

I have access to transaction level data a couple of weeks old (with no trader identifying information) - and these are usually single very large blocks of sell orders executed by short sellers.

BTW., for those who'd like to take a look at short sales transaction level data as well (shout-out to @Papafox, @neroden, @KarenRei, @ZachShahan and @ggr), it's publicly available in an obscure location on FINRA's website.

The ones for June, July, August and September can be downloaded from the following links:

http://regsho.finra.org/FNSQsh201806.txt.zip
http://regsho.finra.org/FNSQsh201807.txt.zip
http://regsho.finra.org/FNSQsh201808.txt.zip
http://regsho.finra.org/FNSQsh201809.txt.zip
​

(October data is not available yet.)

Warning: these are very large ZIP files, hundreds of MB compressed, ~3 gigabytes uncompressed.

The structure of the short-sales transaction logs is straightforward:

• it's text files with a fixed record format of one transaction per line:
• "Q|TSLA|20180831|15:58:10|S|100|301.850000||"
• 'Q' is NASDAQ, then comes the ticker, date, timestamp, short-sale marker 'S', shares sold and finally execution price.
  
• the files include all NASDAQ short sales - so filter for TSLA first. The data becomes a lot more manageable once filtered out for Tesla transactions only.
• the data is always time-delayed by several weeks - the SEC and FINRA wouldn't want to create a disadvantage for short seller 'investors' by disclosing the patterns of their trades in an overly timely fashion, right? In a world of nanosecond level trading the short-seller transaction log itself becomes public only with weeks of delay. For example it's November 7 already, yet the October data won't be available for weeks.
• Note the scope of the 'short sales' transaction log: these are only short sales, i.e. TSLA stock sold by traders who had a short position at the time of the trade. They do not include sales by traders long in TSLA.
• Entries with the 'E' tag can probably be ignored: these are rare transactions by 'exempt' parties such as market-makers who technically are short TSLA in terms of inventory but are not actively trying to profit from shorting Tesla - they make up a fraction of the volume and are not significant factors in determining TSLA price action.

Anyway, even with these restrictions the transaction level short-sales data is very interesting and confirms @Papafox's empirical observations that 'icicles' of sudden downwards $TSLA price movements are created by short-sellers executing 'dumb' sale orders sometimes trading more than 10k shares in a single transaction with significant 'slippage' and immediate trading loss that no true investor in Tesla would utilize when selling shares.

The short-seller transaction data is evidence that many of these $TSLA price action anomalies are not primarily caused by stops or by HFT algos, they are not primarily caused by clever large investors trying to create additional liquidity during their periods of accumulation - but are caused by bog standard short-sellers with a short position in TSLA...

 

[neroden]

Is it just me or is the myth that wealthy people don’t pay taxes absolutely ridiculous?

It's just you.

I mean, yeah, sure, I pay taxes. The point is, Mitt Romney pays an average tax rate of about 16%. A Silicon Valley computer programmer -- a worker -- pays an average tax rate of over 50%.

Given who has the money, does this make any sense at all?

 

[anthonyj]

This is the most epic tug of war... both shorts and longs are so strong.

 

[neroden]

On the off chance you really are just misinformed on US taxes, the opposite is true. Not only does the US upper class pay the overwhelming majority of the taxes, the US tax system is one of the most progressive in the world:

That's a cute piece of dishonest charting. I'm not going to reproduce it.

The fundamental dishonesty is that it looks at the top "10%". That's not the rich. That's the upper middle class. I'm in the top 1%, myself, and I'm really only on the edge of being rich.

Look at the top 0.1% if you want to see what's really going on. I'll wait while you go look it up.

The US tax system is designed to absolutely soak the upper middle class, so as to prevent them from becoming rich. Taxes on work go up really high, upwards of 50%. Once you actually get rich, your taxes go way, way down, typically to a maximum of 23.8%.


The main way this works is by having high taxes on working, and low taxes on dividends, capital gains, and income from owning businesses. I think it's disgraceful: basically, the workers get taxed super heavily (including upper middle class workers), while those of us who don't work for a living get a great deal.

In today's Republican tax system, working is for suckers. I realize I'm posting this on the investment forum, but is that really what we want America to be?

Shouldn't I be paying the same tax rates as people who get their money by actually working?

The fact that so many people think this isn't the case is testimony to the power of the media to control the narrative.

The fact that you have been hoodwinked by a dishonest narrative is, in fact, testimony to the power of the media to control the narrative.

 

[Chop110]

Volume is too low to sustain +350. Waiting for the hammer to fall...

 

[ZachF]

It's a nice round number with both psychological and actual significance. Yes, the ATH is 390 but not that many short/long positions were opened in the 350-390 range, the stock was only trading in that range for a short period of time and the total accumulated (cumulative) volume in that range wasn't all that high. Also, one could suspect that an even higher than normal fraction of trades near ATH were very short term positions (day trading, scalpers) that haven't been held.

Soo...

View attachment 350607

Here's what a mean:

The amount of time the SP has spent above $350 is pretty low, right around here ($350) is probably where a large chunk of short buy-ins who aren't yet underwater, become underwater.

 

[mickificki]

From option sniper:

 

[Fact Checking]

The point is, Mitt Romney pays an average tax rate of about 16%. A Silicon Valley computer programmer -- a worker -- pays an average tax rate of over 50%.

Also note that it's even worse than that: a lot of the true annual income of very high net worth individuals in the top 0.01% like Mitt Romney is not categorized as 'income' and is not taxed with any income tax, at all. Their declared "income" is just a residual flow their tax advisor couldn't find a legal way to put into various corporate, off-shore or other tax-exempt holdings ...

The Silicon Valley computer programmer on the other hand will have a large chunk of their annual income declared and taxed as income.

 

[neroden]

A secured loan backed by housing (which can be relocated if required), built in a place with a housing shortage and soaring housing prices, sounds like the easiest loan-acquisition process ever.

If it's done with non-recourse loans through a housing finance subsidiary and requires no more than, say, 10% downpayment from Tesla (including the land purchases, farm purchases, water rights purchases, etc), then OK, I fold, go for it.

 

[ZachF]

That's a cute piece of dishonest charting. I'm not going to reproduce it.

The fundamental dishonesty is that it looks at the top "10%". That's not the rich. That's the upper middle class. I'm in the top 1%, myself, and I'm really only on the edge of being rich.

Look at the top 0.1% if you want to see what's really going on. I'll wait while you go look it up.

The US tax system is designed to absolutely soak the upper middle class, so as to prevent them from becoming rich. Taxes on work go up really high, upwards of 50%. Once you actually get rich, your taxes go way, way down, typically to a maximum of 23.8%.


The main way this works is by having high taxes on working, and low taxes on dividends, capital gains, and income from owning businesses. I think it's disgraceful: basically, the workers get taxed super heavily (including upper middle class workers), while those of us who don't work for a living get a great deal.

In today's Republican tax system, working is for suckers. I realize I'm posting this on the investment forum, but is that really what we want America to be?

Shouldn't I be paying the same tax rates as people who get their money by actually working?


The fact that you have been hoodwinked by a dishonest narrative is, in fact, testimony to the power of the media to control the narrative.

There is a similar problem in the US on the business tax front. The US has (er, had) some of the highest business tax rates in the world, but giant businesses all lobby for special tax cuts and provisions, and in the end giant business pay very little and small/medium sized businesses get soaked, helping keep big businesses big, and small businesses small. The tax cut bill helped with this a tiny bit but didn't get rid of enough special provisions so much of this problem still exists.

 

[neroden]

Apparently, not as wealthy as you think. Income tax is for losers like us. Imagine having your net worth make untaxed capital gains in perpetuity which are 10x as much as your consumption requirements/desires.

My conservatism regarding leverage means that I often pay federal taxes. At the superdiscount capital gains rate, usually. Short put sales are fully taxed, though.

However, rich people who are OK with taking out large loans (like Musk!) simply borrow against their stock at ~5% interest rates and pay 5% per year to Morgan Stanley (or whoever) instead of 20% to the government. Musk does this so Musk probably hasn't paid income taxes in years.

And that's before I start talking about the designs of the actual *tax shelters*; I know the structure of several of them....

 

[neroden]

BTW., for those who'd like to take a look at short sales transaction level data as well (shout-out to @Papafox, @neroden, @KarenRei, @ZachShahan and @ggr), it's publicly available in an obscure location on FINRA's website.

The ones for June, July, August and September can be downloaded from the following links:

http://regsho.finra.org/FNSQsh201806.txt.zip
http://regsho.finra.org/FNSQsh201807.txt.zip
http://regsho.finra.org/FNSQsh201808.txt.zip
http://regsho.finra.org/FNSQsh201809.txt.zip
​

(October data is not available yet.)

Warning: these are very large ZIP files, hundreds of MB compressed, ~3 gigabytes uncompressed.

The structure of the short-sales transaction logs is straightforward:

• it's text files with a fixed record format of one transaction per line:
• "Q|TSLA|20180831|15:58:10|S|100|301.850000||"
• 'Q' is NASDAQ, then comes the ticker, date, timestamp, short-sale marker 'S', shares sold and finally execution price.
  
• the files include all NASDAQ short sales - so filter for TSLA first. The data becomes a lot more manageable once filtered out for Tesla transactions only.
• the data is always time-delayed by several weeks - the SEC and FINRA wouldn't want to create a disadvantage for short seller 'investors' by disclosing the patterns of their trades in an overly timely fashion, right? In a world of nanosecond level trading the short-seller transaction log itself becomes public only with weeks of delay. For example it's November 7 already, yet the October data won't be available for weeks.
• Note the scope of the 'short sales' transaction log: these are only short sales, i.e. TSLA stock sold by traders who had a short position at the time of the trade. They do not include sales by traders long in TSLA.
• Entries with the 'E' tag can probably be ignored: these are rare transactions by 'exempt' parties such as market-makers who technically are short TSLA in terms of inventory but are not actively trying to profit from shorting Tesla - they make up a fraction of the volume and are not significant factors in determining TSLA price action.

Anyway, even with these restrictions the transaction level short-sales data is very interesting and confirms @Papafox's empirical observations that 'icicles' of sudden downwards $TSLA price movements are created by short-sellers executing 'dumb' sale orders sometimes trading more than 10k shares in a single transaction with significant 'slippage' and immediate trading loss that no true investor in Tesla would utilize when selling shares.

The short-seller transaction data is evidence that many of these $TSLA price action anomalies are not primarily caused by stops or by HFT algos, they are not primarily caused by clever large investors trying to create additional liquidity during their periods of accumulation - but are caused by bog standard short-sellers with a short position in TSLA...

You are doing amazing research. Can you break this out to an independent thread, so that we can crowdsource the work to analyze this, for instance to verify that the "icicles" are caused by short sellers? It'll be fascinating, but it'll get lost in the Market Action thread.

 

[tivoboy]

There is a similar problem in the US on the business tax front. The US has (er, had) some of the highest business tax rates in the world, but giant businesses all lobby for special tax cuts and provisions, and in the end giant business pay very little and small/medium sized businesses get soaked, helping keep big businesses big, and small businesses small. The tax cut bill helped with this a tiny bit but didn't get rid of enough special provisions so much of this problem still exists.

no counter argument here, but if the tax cuts at the corporate level helped so little, why are federal corporate tax receipts DOWN 20% this year.

 

[larmor]

View attachment 350609 From option sniper:View attachment 350608

Its becoming clearer that going private was just about someone or some entity buying a business to secure an ongoing ROI, as tesla keeps making cars, and for the foreseeable future continues to demonstrate demand.

Staying public allows everyone to partake in that ROI.