Tesla short-sellers are effectively admitting defeat after the company’s first trading days in the S&P 500 Index after new data from Ortex Analytics shows that short interest hit record lows.
At one time, TSLA stock was one the most-shorted stocks on Wall Street, but the company’s record year has had bears rethinking their strategy to put money on the downfall of the automaker, which has never really occurred.
Ortex Analytics has new research that shows that bets against Tesla have fallen to numbers that haven’t been seen since 2017. After an estimated $28.5 billion in losses, Tesla shorts are calling it quits on being bearish toward the stock. According to Ortex, bearish bets against the stock have fallen to 31.4 million in December, which is “considerably lower than the peak of 93.6 [million] recorded in January of this year.”
What short-sellers haven’t done well is predict Tesla’s growth because they have estimated for years that the stock would lose value, turning the automaker into a struggling and barely-surviving entity. This hasn’t happened, though, not even in a year where a pandemic has slowed industry and innovation.
Tesla shares have exploded in 2020 and have surged from $86 to over $600, trading as high as $695.00 on the company’s final day before joining the S&P 500. At the time of its inclusion before trading began on Monday, it was one of the biggest companies in history and is currently the fifth or sixth largest constituent in the index, MarketWatch reported.
Traders who made bets against the company are waving their hypothetical white flags in surrender, as large funds which have been vocal disbelievers in the stock have folded under the pressure, and the losses, that Tesla’s momentum has caused them in 2020.
“As a result, a large number of short-sellers have closed their positions, wanting to avoid the ‘hype premium’ that is so often associated with Elon Musk’s company,” Ortex co-founder Peter Hillerberg said.
Hillerberg doesn’t anticipate the shorting to stop once and for all, though. “However, the battle is far from over, we expect many to be waiting on the side lines looking to pounce when the hype dies down.”
Tesla, Inc., formerly Tesla Motors, Inc., designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products.
The Company operates through two segments: Automotive, and Energy generation and storage.
The Automotive segment includes the design, development, manufacturing, and sales of electric vehicles.
The Energy generation and storage segment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers.
The Company produces and distributes two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle (SUV). It also offers Model 3, a sedan designed for the mass market.
It develops energy storage products for use in homes, commercial facilities and utility sites.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 505.54.
The projected upper bound is: 704.69.
The projected lower bound is: 583.91.
The projected closing price is: 644.30.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 63.0370. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 59.89. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed down -9.520 at 640.340. Volume was 100% below average (consolidating) and Bollinger Bands were 5% narrower than normal.
Open High Low Close Volume 648.000 649.880 614.230 640.340 26,795
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 637.85 505.93 315.48 Volatility: 87 72 105 Volume: 66,067,772 43,814,196 69,086,888
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TESLA INC is currently 103.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into TSLA.O (mildly bullish).
Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 23 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.