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July 9, 2021, 4:14 p.m. EDT

A Tesla ‘death cross’ has appeared for the first time in more than 2 years

Tomi Kilgore

Tesla Inc.’s stock chart has produced the first bearish “death cross” pattern in more than two years on Friday, which some market technicians could view as a warning of further losses.

The electric vehicle industry leader’s stock (NAS:TSLA) rose 0.6% to close at $656.95, seesawing from a loss of as much as 1.2% and gain of as much as 0.9% in intraday trading.

The 50-day moving average (DMA), which many Wall Street chart watchers use as a guide to the shorter-term trend, fell to $629.66 from $630.44 at Thursday’s close.

Meanwhile, the 200-DMA, which is viewed by many as a dividing line between longer-term uptrends and downtrends, rose to $630.76 from $629.61.

That snapped a 20-month streak in which the 50-DMA has closed habove the 200-DMA.

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The point where the 50-DMA crosses below the 200-DMA is referred by technical analysts as a “death cross,” which many believe marks the spot a shorter-term pullback evolves into a longer-term downtrend.

Death crosses aren’t usually seen as good market timing tools, given that their appearances are telegraphed far in advance. To some, they only represent an acknowledgment that a stock’s pullback has lasted long enough and/or extended far enough to consider shifting the narrative on the longer-term outlook.

Tesla’s stock hasn’t closed at a record since Jan. 26, and closed Friday about 26% below its record of $883.09. Meanwhile, other Nasdaq-listed megacapitalization stocks like Apple Inc. (NAS:AAPL) , Microsoft Corp. (NAS:MSFT) , Amazon.com Inc. (NAS:AMZN) and Alphabet Inc. (NAS:GOOGL) have all set fresh records this week, and Facebook Inc. (NAS:FB) shares closed at a record last week.

Tesla shares have shed 6.9% year to date, while the Nasdaq Composite Index (NASDAQ:COMP) has gained 14.1% and the S&P 500 index (S&P:SPX) has advanced 16.3%.

And Tesla’s death cross could still warn of further losses.

The last Tesla death cross appeared on Feb. 28, 2019, about two months after it reached a multi-month closing peak, and after closing 15% below that peak. The stock tumbled another 44% before bottoming out three months later.

If it’s any consolation to Tesla investors, the stock charts of some rival EV makers have already produced death crosses: Nio Inc.’s (NYS:NIO) appeared on May 24 and Nikola Corp.’s (NAS:NKLA) appeared on Nov. 3, 2020.

Link to MarketWatch's Slice.