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This video makes a lot of good points, but I feel that the argument around days to cover / liquidity is pretty weak and IMHO this is not a factor in predicting a short squeeze.
If there is a major catalyst around TSLA--enough to trigger a short squeeze--general trading activity around the stock will explode and volume / liquidity will be there no matter what. The volume of the preceding weeks is irrelevant one way or the other.
I don't think the high borrowing rate has as big an impact as the video implies. It's true that a 40 to 85% interest rate is high over the span of the year, but many shorts move in and out on a much shorter time scale. For instance, being short for a week amounts the only 1 to 2% interest. This is almost negligible given what Tesla's volatility could be over the span of the week.
That being said, I wouldn't completely discount the possibility of a short squeeze. Days to cover is only a very rough metric. It completely ignores the likelihood that there are many potential longs who are sitting on the sidelines, having been scared by recent headlines of potential bankruptcy and other negative headlines too numerous to count. When you take into account that many investors have held back on owning TSLA because of fear, you'll realize that any strong evidence of profitability and high demand for Tesla's cars and energy products will turn this whole thing around very quickly. Longs and shorts will be competing for the same shares. The important thing is that the news has to be so positive that new shorts are too scared to take the place of old shorts who are covering. This is what results in a contraction of the effective number of shares and that is what will give rise to scarcity and price elevation, especially with longs buying in too. That being said, these past few months have really broken my spirit and I'm not counting on it.
Sudre
Active Member
Were the shorts trading 60% of the days total in 2013?
I am curious how that effects things because once that 60% turns into buyers I would think the SP would rise dramatically. Considering the SP rises around 10% whenever the shorts trade less than 50% I think there might be a pretty good increase during the cover. I don't think it will be as large as some think.
As far as days to cover. If 60% of the trading is shorts now and that goes away then 10M shares traded turns into 60% less right? 4M shares. Suddenly that turns into 10 days to cover.
I am curious how that effects things because once that 60% turns into buyers I would think the SP would rise dramatically. Considering the SP rises around 10% whenever the shorts trade less than 50% I think there might be a pretty good increase during the cover. I don't think it will be as large as some think.
As far as days to cover. If 60% of the trading is shorts now and that goes away then 10M shares traded turns into 60% less right? 4M shares. Suddenly that turns into 10 days to cover.
It was about a 1 week period in April or March 2013 if memory serves correctly. They really didn't continue to spike to those rates post Tesla announce their first profitable quarter. It was a mix of people trying to time the peak and shorting again which then triggered another peak. Combined with the 5-year outlook being much better as the argument then turned to market demand and predictions Elon was lying about not being demand limited, but production capacity limited. And that was without China in the picture. Quite frankly, I think everyone knows about China
Don't think that poaching of engineers is a problem for German car/parts manufacturer's.
China needs at least 1000 gigawatts of batteries a year to transition to renewable energy. If only someone would build a gigafactory. 6 of them would be good for now.
Shorties are so committed to their thesis that I don't think they will all run to the exits. They'll change the goal posts once again. It will take the tesla network going live to cause a stampede.
Their thesis falls apart when Tesla shows consistent profits, cash flow, and positive margins. That will be a fun day when it happens. I'm just quietly accumulating until that day comes.
Reciprocity
Active Member
Elon has 23 million followers. Anything he tweets is a big deal.
Speaking of...
Check out @elonmusk’s Tweet: Elon Musk on Twitter
"AC induction front & switched reluctance, partial permanent magnet rear. Silicon Carbide inverters in both. Performance drive units are lot sorted for highest sigma output & get double the burn-in."
This forum will wildly disagree with anyone recommending not to buy at any point.
kingjamez
Member
Yes, because that is the definition of a long.
sundaymorning
Active Member
Looks like we might get a bit of a bounce next week if Elon can deliver the goods tonight.
Is this forum for longs only and not traders? If so, I’ll just see my way out.
Not sure where you got 277 from. Decisively falling below 280 support makes the near term chart once again look ugly to me.
One major reason I bought back at 300 support was because Elon did. I thought he would be bringing out some very big news soon, but that didn’t happen.
Make no mistake, I’m still bullish for Q3 and Q4, and beyond. Very near short term, I’m now bearish again.
If I had to take a guess right now, 262 or so looks attractive. But I wouldn’t be very surprised to see 250 in the cards again.
It's for everybody but there isn't nearly as much talk about active trading that I've seen. Mainly because by the time you've written a post about it, the opportunity to buy and sell has long passed.
Probably looking around the lower BB daily support. Any serious day trader knows how important that particular technical is for TSLA sp action.
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