Why The Tesla ‘death Cross’ Shouldn’t Scare Off Investors

A bearish “death cross” pattern has appeared in the stock chart of Tesla Inc. on Thursday, but history shows it’s not as ominous as it seems.

A death cross is when the widely watched 50-day moving average, a short-term trend tracker, cuts below the closely watched 200-day moving average, considered by many to be the dividing line. split between a long-term uptrend and a downtrend.

Many technicians believe that the cross marks the spot where a short-term pullback turns into a longer-term downtrend.

Remember that dead crossovers are not always good market timing tools, as they are well signaled, but they can help put a stock’s recent performance in perspective. history.

Shares of Tesla
+ 8.57%
was up 8.4% in midday trading Thursday and was up 13.7% in two days. At an 11-month low to close Tuesday of $628.16, the stock has plummeted 49.9% since closing at a record $1,229.91 on Nov. 4, 2021.

The electric-car maker’s stock has been hit by supply chain issues and COVID-19-related lockdowns in China, as well as concerns that CEO Elon Musk could be fragmented. interested and may sell some of his shares as a result of his acquisition agreement to Twitter Inc.
+ 5.53%

That sell-off was strong enough and lasted long enough for the 50-day moving average to drop to $911.89 on Thursday from $914.40 on Wednesday, according to FactSet, to break below the level, according to FactSet. 200-day moving average, ticked up to $912.58 from $912.55.

The final cross of death came on July 9, 2021. Shares closed that day at $656.95 and have risen 8.7% since. That final cross of death came about seven weeks after it hit its last low, after a 36.2%, five-month drop.

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Also read: Opinion: The Dow, S&P 500 and Nasdaq have now gone through a ‘death cross’ – here’s why this could revive them.

Thursday’s death cross is the 10th day in 10 years, while stocks have skyrocketed about 120 times in that time. Meanwhile, Apple Inc.
+ 2.35%
stocks have produced three death passes in 10 years and rallied about seven times in that time, and automaker General Motors Co.
+ 4.78%
produced nine signs of death and grew 68% in the same period.

S&P 500 Index
+ 2.10%
produced five signs of death and has more than tripled in 10 years.

Claudia Assis contributed to this post.

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