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ProShares UltraPro QQQ (TQQQ) Analysis: Bearish Sentiment with Potential for Trend Reversal

StockInvest.us, 2 months ago

StockInvest.us Fundamental Analysis

The stock under observation is the ProShares UltraPro QQQ (TQQQ), listed on the NASDAQ. As an Exchange Traded Fund (ETF), the traditional metrics such as Earnings per Share (EPS), Price to Earnings Ratio (PE), and Market Capitalization (Market Cap) are not applicable. Similarly, the number of Shares Outstanding is also not relevant.

ProShares UltraPro QQQ is designed to provide 3x the daily performance of the NASDAQ-100 Index, therefore its performance is largely dependent on the technology-heavy index. Taking into account that the tech industry has been under some pressure recently, reflected in TQQQ's last closing price of $34.49 on September 26, 2023, a 4.46% decrease compared to the previous trading day.

Presently, the ETF shows no sign of significant support, suggesting that the market is demonstrating a bearish sentiment. However, it does have a resistance level of $38.04 which could potentially be a level to watch for an upward breakout.

Technical Analysis

The Relative Strength Index (RSI14) stands at 25, which is significantly below the oversold threshold of 30. This is traditionally an indication that the stock may be undervalued and due for a price correction. However, this alone is not a guarantee, as prices can remain oversold for extensive periods in a downtrend.

Looking at the averages, the 50-day Moving Average (MA) stands at $40.83, above the last close, which suggests a bearish trend. The 200-day MA stands at $30.70, which is lower than the last close and therefore indicates a longer-term bullish trend. The difference between the short term and long-term trends suggests that TQQQ could be in a period of consolidation or perhaps a trend reversal.

Furthermore, the Moving Average Convergence Divergence (MACD) for the past three months registers at 0.58, aligned with the signal of trend reversal.

TQQQ On the volatility front, the Average True Range (ATR), which measures market volatility, is reasonably high at 4.79, suggesting potential for significant price movements, although direction is not indicated by this measure.

Volume Analysis

During the last trading session, the volume constituted approximately 103.52 million units, which is above the average volume of about 91.44 million. High volume coupled with a falling price may indicate bearish sentiments among investors.

Prediction and Evaluation

For September 27, 2023, looking at the conditions of the market and bearish pressure, the stock may continue its downward trend. However, given the oversold RSI, a potential price correction cannot be ruled out.

As for the prediction for the upcoming week – the technical indicators are mixed, with short term indicators being bearish and longer-term indicators showing potential bullishness, suggesting potential consolidation or trend reversal. Hence, it is difficult to predict with certainty.

Final Evaluation

Considering all the above analysis and the inherent uncertainties, TQQQ should be considered as a 'Hold' at the moment due to its potential for a trend reversal as shown by the RSI and MACD, which indicate that the stock could be in oversold territory and may see a price reversal in the future. However, investors are recommended to keep a close eye on the market and any news that may affect the tech sector. As always, a balanced and diversified portfolio is recommended to spread risk.

Check full TQQQ forecast and analysis here.