Tesla’s struggling stock just saw a dreaded ‘death cross’ that could signal further losses
Major stock indexes flashed so-called ”
death cross
” signals this week. On Tuesday, it was
Tesla
‘s turn.
Shares of the EV-maker met the definition of a death cross when their 50-day moving average ($288.76) crossed below the 200-day measure ($290.60). The formation has historically been a bearish indicator for the underlying asset.
Tesla stock
has experienced incredible whiplash
in recent months.
On the heels of President Trump’s election, Tesla — which was seen as a beneficiary given CEO Elon Musk’s close ties to the administration — soared nearly 100%.
But since its mid-December peak at nearly $500 per share, the stock has plunged about 50% as investors worried have mounted around slowing EV sales and
growing protests against the brand.
This is the first time Tesla stock flashed a death cross since May 2022, the early days of a brutal bear market sell-off that was sparked by surging inflation and interest rates. Shares of Tesla went on to decline by as much as 54% before it found its bottom in January 2023.
It’s important to note that the moving-average crossover strategy is a lagging indicator. Therefore, it can flash head fake signals, which occur when a stock quickly rebounds after a “death cross” and triggers a “golden cross” buy signal.
As Ari Wald, the head of technical analysis at Oppenheimer & Co., explained to BI last month: “While every major decline starts with a ‘death cross’ not every ‘death cross’ leads to a major decline.”
Tesla isn’t the only stock flashing a bearish death cross. Other notable death crosses hit
bitcoin
earlier this month and
Nvidia
in late March. The S&P 500 and Nasdaq 100
also flashed a death cross signal on Monday.
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Business Insider
