Sign InSummary
ProShares UltraPro QQQ (TQQQ) is a triple leveraged ETF that focuses on technology companies listed on the Nasdaq index, with recent performance showing potential for further growth, but it is advised to be considered for short-term trading rather than long-term investment due to its high-risk nature. (August 30, 2023)
Company Overview and Recent Performance
ProShares UltraPro QQQ (TQQQ) is a triple leveraged Exchange-Traded Fund (ETF) investing primarily in technology companies listed on the Nasdaq index. It aims to amplify the daily movements of its underlying index, rendering it inherently a high-risk, high-reward investment instrument suitable for short-term trading.
As of the close on August 30, 2023, TQQQ was valued at $42.06, up by $0.69 (1.67%) from the previous trading day. Its daily trading range was from a low of $41.08 to a high of $42.28. Despite its recent upward trend, TQQQ has yet to reach its yearly high of $47.14, suggesting potential room for further growth.
Trading volume for TQQQ was 92.11 million shares, slightly less than its average trading volume of 98.74 million shares. The recent trading activity highlights substantial stakeholder interest in the ETF, which can impact its volatility.
Fundamental Analysis
Exclusive from their occasional rebalancing, leveraged ETFs like TQQQ don't have straightforward fundamentals such as earnings per share (EPS) or price-to-earnings ratio (PE). Since TQQQ aims to attain daily investment results corresponding to three times (3x) the daily performance of the NASDAQ-100 Index, its fundamental analysis largely depends on the behavioral analysis of this parent index.
The most recent news surfaces the potential rise in demand for tech-heavy ETFs like TQQQ due to the growing interest in Artificial Intelligence (AI) stocks. This phenomenon has been reflected in the 50% rise in TQQQ's performance within the year.
Technical Analysis
The TQQQ's 14-day RSI stands at 56, indicating neither a predominantly overbought nor oversold sentiment. The ETF is trading above both its 50-day moving average (MA) of $40.97 and its 200-day MA of $29.09, signaling a bullish trend.
Marginally, the MACD shows a value of -2.32, suggesting a recent bearish crossover, yet its stop-loss level lies at $40.64, and it holds an ATR value of 4.52 that demonstrates a moderate level of volatility.
The ETF currently has a support level at $40.19 and a resistance level at $42.9.
Recent News
Despite the concerns raised about the NAV decay inherent to leveraged ETFs, an article, published recently, promoted a prospective pairs trading strategy that could work in favor of investors. Meanwhile, a subsequent article emphasized TQQQ's suitability for capitalizing on short-term rallies, which aligns with the ETF's purpose.
Prediction and Recommendation
While TQQQ has demonstrated a strong performance recently, it is essential to consider that leveraged ETFs are primarily designed for short-term trading. The technical indicators portray a moderately bullish trend for the next trading day as well as the upcoming week. However, given the inherent NAV erosion and high volatility, TQQQ should not be considered for long-term investment.
Thus, while it's showing potential for short-term gains, overall, TQQQ would be considered a 'Hold' for investors seeking short-term trading opportunities and a 'Sell' for long-term investors, given its inherent risks and the lack of fundamentals typically associated with individual stocks.
