Sign InProShares UltraPro QQQ: Technical and Fundamental Analysis Points to Possible Volatility Ahead
Summary
The article, analyzed on October 2, 2023, provides an in-depth review of ProShares UltraPro QQQ (TQQQ), a popular ETF, indicating a bearish short-term outlook due to it trading below the 50-day moving average, but a bullish long-term trend as it is above the 200-day moving average, with the potential for increased volatility and price fluctuations in the coming days.
Introduction
ProShares UltraPro QQQ (TQQQ) is a well-known exchange-traded fund (ETF) listed on the NASDAQ exchange. With careful attention to critical indicators such as price points, moving averages, resistance and support levels, as well as the recent publication regarding its status as one of the most actively traded ETFs in Q3, this analysis grants an in-depth review of its technical and fundamental aspects and investment appeal.
Technical Analysis
TQQQ closed the trading day on October 02, 2023, at $36.47, with a 2.39% rise or an $0.85 increase from the previous close. It traded within the day between $35.48 and $36.9. It's notably a level below the 50-day moving average of $39.89, indicating bearish momentum for the ETF. However, it is above the 200-day moving average of $31.0553, which signifies a bullish trend in the long-term perspective.
The Relative Strength Index (RSI), often used to identify overbought or oversold conditions, is at 33. This is below the typical overbought threshold of 70 and above the oversold marker of 30, indicating relatively neutral momentum.
Moreover, the Average True Range (ATR), a volatility indicator, stands at 4.5750442443507, demonstrating high price fluctuations, therefore, the ETF may experience significant price changes. The Moving Average Convergence Divergence (MACD) over a 3-month period is -0.810908, suggesting that fewer investors are buying TQQQ, contributing to its bearish momentum.
The support and resistance levels, akin to the floor and ceiling for stock prices, are at $35.62 and $38.04, respectively. As TQQQ is currently trading above its support, it may continue in the bullish phase if it manages to break past its resistance level.
Fundamental Analysis
On the fundamentals, the lack of a P/E ratio and zero earnings per share (EPS) indicates no measurable earnings, which is not uncommon for ETFs. The trading volume of TQQQ is relatively high, with 128,039,390 shares trading hands compared to the average volume of 94,482,984 shares. High trading volume often points to high liquidity which ultimately offers a quick buy-sell opportunity for investors.
The recent news on September 27, 2023, announced TQQQ as one of the "10 Most Actively Traded ETFs of Q3," which potentially draws attention from traders and investors and could result in increased trading interest, thus improving liquidity.
Predictions and Final Evaluation
Given the technical and fundamental analysis, there is a potential for price fluctuations, assuring increased volatility for the upcoming trading days. For the next trading day, October 03, 2023, the TQQQ price might remain within the range of $35.62 and $38.04, tending towards the bullish side.
Looking at the trend for the forthcoming week, if the ETF breaks past its resistance level, there might be an uptrend. However, the ETF could swing into a bearish phase if it falls below its support level.
In conclusion, given the high trading volume, likelihood of high liquidity, and potential for significant price changes in the near term due to its volatility, TQQQ is categorized as a "Hold." It could offer a quick buy-sell opportunity for traders and investors who can monitor the market closely and react quickly to price changes. New investors should, however, exercise caution given the increased volatility and monitor their positions closely to react promptly to price fluctuations.
