Tesla Stalls, Dramatically Lags Magnificent Seven Peers But Divergence Has Developed: A Technical Analysis

Tesla, Inc TSLA was trading mostly flat Friday, continuing to trade mostly sideways within a triangle formation on the daily chart.

Unlike NVIDIA Corporation, which has surged about 57% since the first trading day of 2024, Tesla has fallen about 22% and on Thursday, Jim Cramer said Nvidia CEO Jensen Huang is a “bigger visionary” than Elon Musk. Read More Here...

While Tesla’s performance recently has severely lagged behind the six other Magnificent Seven stocks, a reversal has been taking place, which could set the EV giant on a larger rebound because the stock is trading in a triangle pattern and has developed hidden bullish divergence.

For traders hoping to profit from a potential reversal to the upside in Tesla, single-stock ETFs could provide a solid return.

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Single Stock ETFs: ETFs that only track one security are riskier than other leveraged or inverse funds because they don’t offer diversification. Similar to leveraged index funds, single-stock ETFs should only be expected to track the underlying stock(s) for a single day.

For traders who want to play Tesla bullishly, Direxion Daily TSLA Bull 1.5X Shares TSLL offers 150% daily leveraged investment results to that of Tesla. For traders bearish on Tesla, Direxion Daily TSLA ear 1X Shares TSLS seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the performance of the EV giant.

It should be noted that leveraged and/or inverse ETFs are meant to be used as a trading vehicle as opposed to a long-term investment.

The Tesla Chart: Tesla has been trading in a triangle pattern since Feb. 16, making a series of higher lows and lower highs. While the stock has been consolidating within the triangle, bullish momentum has been increasing, which has caused hidden bullish divergence to form.

• For the divergence to correct, Tesla will either need to break up from the triangle into an uptrend or momentum will need to steadily decrease, causing the stock’s relative strength index (RSI) to make a series of lower lows. Traders and investors can watch for the stock to break up or down from the triangle pattern on higher-than-average volume to indicate future direction.
• Tesla recently filled part of an upper gap that was left behind on Jan. 25 when the stock suffered a bearish reaction to its earnings print. A gap still exists between $203.17 and $206.77, which is likely to be filled in the future.
• Bullish traders want to see Tesla break up from the triangle and completely fill the upper gap. Bearish traders want to see the stock break down from the pattern on higher-than-average volume, which could throw Tesla into a new downtrend.
• Tesla has resistance above at $200.51 and at $213.13 and support below at $190.41 and at $177.59.