Direxion Daily TSLA Bull 2X Shares (TSLL), an ETF providing leveraged exposure to Tesla stock, plummeted 5.98% in pre-market trading on Wednesday. This significant drop comes as Tesla's stock chart recently formed a bearish "death cross" pattern, signaling potential momentum loss for the electric vehicle maker and amplifying concerns in the broader automotive industry.

The "death cross," a technical indicator where the 50-day moving average crosses below the 200-day moving average, has raised red flags among investors. While Tesla's stock showed resilience by closing up 0.7% in the previous session, the leveraged nature of TSLL magnified the impact of market sentiment on the ETF. Analysts note that this technical pattern often suggests a stock is losing momentum, though its reliability as a predictive tool remains debated.

Several factors are contributing to the negative outlook for Tesla and, by extension, TSLL. Investors are reportedly nervous about Tesla's vehicle sales, CEO Elon Musk's recent activities related to cryptocurrency, and the potential impact of tariffs on the global auto industry. The U.S. currently imports about half of its new cars, which face a 25% import tariff. While Tesla doesn't import completed vehicles, it is affected by the 25% levy on imported car parts. Additionally, broader market uncertainties surrounding trade policies and their effects on the tech and automotive sectors may be amplifying the bearish sentiment towards Tesla-related investments. As TSLL provides twice the daily performance of Tesla's stock, these concerns are having an outsized impact on the ETF's value.