Tesla’s Stock Faces Challenges as Death Cross Emerges

Tesla Inc TSLA experienced tumultuous conditions in 2024 that have negatively impacted its leveraged ETFs. Recently, technical indicators have revealed a significant bearish signal—known as the Death Cross.

Both the Direxion Daily TSLA Bull 2X Shares TSLL and the GraniteShares 2x Long TSLA Daily ETF TSLR have displayed this concerning pattern, prompting investors to consider: Are the prospects for these ETFs about to worsen, or could this signal a potential rally for contrarian investors?

Read also: Tesla’s EV Crown At Risk As BYD Closes In With Breakthrough Charging Tech

Sales Slowdown Affects TSLL and TSLR

Tesla’s Stock has fallen over 30% year-to-date and declined by 7% in the past month, leaving its leveraged ETFs trailing significantly. TSLL plummeted nearly 60% YTD, while TSLR has decreased by almost 59% during the same period.

Chart created using Benzinga Pro

Currently, both ETFs have encountered a Death Cross, which occurs when the 50-day moving average drops below the 200-day moving average. This technical setup often indicates a tendency for sustained declines ahead.

Chart created using Benzinga Pro

Potential for Recovery Amid Uncertainty

Although technical indicators are discouraging, there are sparks of optimism.

Chart created using Benzinga Pro

Tesla’s stock is currently priced at $266.18, surpassing its 20-day simple moving averages (SMA), which suggests some short-term buying interest. The trend is similar for both TSLL and TSLR, as they have also recently crossed above their 20-day SMAs.

Historically, leveraged ETFs can experience rapid rebounds when the underlying Stock regains its stability.

Is the Death Cross a Sign of Trouble or a Chance to Buy?

As Tesla’s performance fluctuates but does not enter freefall, traders face a critical question: Should they follow the bearish trend or anticipate a reversal?

If Tesla maintains its position above the short-term moving averages, a short squeeze could be possible for TSLL and TSLR, potentially setting the stage for a recovery.

Nonetheless, if the Death Cross proves accurate, further declines may be in store.

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