Tesla Leveraged ETFs Hit A Death Cross: Is A Short Squeeze Next For TSLL, TSLR?

Tesla Inc TSLA stock's wild ride in 2024 has been painful for its leveraged ETFs, and now, the charts are flashing a classic technical red flag: the dreaded Death Cross.

Both the Direxion Daily TSLA Bull 2X Shares TSLL and the GraniteShares 2x Long TSLA Daily ETF TSLR have succumbed to this bearish indicator, raising the question: Are things about to get worse, or is this the perfect contrarian bullish signal?

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Tesla’s Stagnation Weighs On TSLL, TSLR

Tesla stock is down over 30% year-to-date and has shed 7% in the past month, leaving its leveraged ETFs in the dust. TSLL is down nearly 60% YTD, while TSLR is off by almost 59%.

Chart created using Benzinga Pro

A Death Cross, where the 50-day moving average falls below the 200-day moving average, has materialized for both ETFs, typically signaling a prolonged downside.

Chart created using Benzinga Pro

Mixed Signals: A Rebound On The Horizon?

Despite the ominous chart patterns, there are glimmers of hope.

Chart created using Benzinga Pro

Tesla stock, at $266.18 is above its 20-day simple moving averages (SMAs), indicating short-term buying pressure. The same holds true for TSLL and TSLR, where prices have recently climbed above their 20-day SMAs.

Historically, leveraged ETFs can stage vicious comebacks when the underlying stock finds its footing.

Death Cross Or Buying Opportunity?

With Tesla's trend stagnating but not collapsing, traders are left with a classic dilemma: Should they ride the bearish momentum or bet on a turnaround?

If Tesla stock continues to show strength above its shorter-term moving averages, a short squeeze in TSLL and TSLR could be on the table.

However, if the Death Cross holds true, the pain might not be over.

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