After spending significant time as the outcast/overt laggard in the magnificent 7, Tesla (TSLA) has snapped out of its funk. Even with a 2% dip on Sept. 18, shares of Elon Musk’s company are higher by 13% over the past week and 26.58% over the past month.
It remains to be seen what the stock has in store over the near-term, but for traders with bullish views on the electric vehicle (EV), the Direxion Daily TSLA Bull 2X Shares (TSLL ) could be an ETF to consider. As its name implies, TSLL attempts to deliver double the daily performance of Tesla shares.
The Direxion ETF recently strutted its stuff amid news that Musk purchased $1 billion worth of his company’s shares. Love him or hate him and while $1 billion is pennies to one of the richest men in the world, Musk is showing investors that he’s confident in Tesla’s long-term outlook. Musk’s insider buying coupled with other factors could bring the short-term opportunities needed for traders to capitalize with TSLL.
Time to Talk TSLL
Tesla’s recent surge might imply the stock is ready for a breather. TSLL may be less worthy of being on watch lists than being owned directly. For market participants employing that line of thinking, just remember to keep an eye on Tesla and TSLL because there’s chatter the stock could be a short squeeze candidate.
Current short interest in the EV stock is 78.27 million shares, according to Finviz data. That could be covered in relatively short order, but it’s still enough that if those bearish traders were forced to cover, that buying activity would likely boost the stock and TSLL.
“The big level is $440. This is where shares stalled in mid-January and it now marks clear resistance. Market technicians note that past sellers often return near familiar levels, which can slow a rally as profit-taking kicks in. If buyers chew through that supply, it would be a strong signal that the uptrend has more room,” reports TipRanks.
Tesla stock and TSLL could also be plays on lower interest rates. While those assets didn’t go wild in the wake of Wednesday’s Federal Reserve announcement, more rate cuts could be on the way into year-end and those lower borrowing costs could be catalysts to bring more buyers into the EV market.
“Car companies, including Tesla, like lower interest rates. Many cars are financed, and lower rates equal lower monthly payments,” according to Barron’s.
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