Sign InProShares UltraPro QQQ (TQQQ) ETF: Potential Bullish Trajectory Amidst Volatility
Summary
As of July 7, 2023, the leveraged ProShares UltraPro QQQ (TQQQ) ETF is rated as a strong buy due to its significant performance, although there are concerns about its volatility and associated risks, and it is predicted to continue its bullish trajectory in the next trading day and uphold its strong performance in the following week, with a cautious BUY recommendation given the ongoing market rally and optimistic indicators.
Fundamental Analysis
The ProShares UltraPro QQQ (TQQQ) ETF, traded on the NASDAQ, is a leveraged fund aiming to achieve thrice the daily performance of the NASDAQ-100 Index. As it is an Exchange-Traded Fund (ETF), fundamental concepts such as EPS (Earnings per Share) and PE (Price to Earnings ratio) are not applicable.
Given its nature, this stock inherently carries a level of risk due to the leverage involved. It has been rated as a strong buy by some analysts, mainly due to its significant performance as reflected by the year-to-date increase of 118% earlier this year.
However, due to its massive volatility, some financial experts express concerns over the risks associated with the stock, considering its sensitivity to substantial swings that could limit additional gains. Specific macroeconomic vars are advised to be taken into account when going into such leveraged funds.
Technical Analysis
As of the last close on July 7, 2023, TQQQ closed at $39.87 with a decrease of 1.02%. The trading volume was 83.53 million, which was lower than the 10-day average volume of 109.12 million.
The RSI14 (Relative Strength Index) of 43 indicates that the stock was neither overbought nor oversold. The MACD (Moving Average Convergence Divergence), a trend-following momentum indicator, was positive at 2.04, suggesting a bullish market outlook.
In terms of Moving Averages, TQQQ was trading above both its 50-day ($34.35) and 200-day ($25.19) moving averages, which is viewed as a positive technical signal.
News Analysis
While the ongoing bull market and a better-than-expected earnings season have fueled the surge in TQQQ, it has also raised concerns about the high risks associated with leveraged ETFs, especially after significant gains. However, leaning on the positive side, the NASDAQ Composite Index outperformed in May 2023 signaling a strong market performance for tech indices.
Prediction and Conclusion
Given its current trading metrics and trends, the stock shows potential for a bullish trajectory in the next trading day on July 10, 2023 above $39.90. It's expected to uphold its strong performance in the following week, although some consolidation may occur due to its overbought condition earlier this year.
Despite its volatile nature due to its triple leverage feature, given the ongoing broad market rally and optimistic market indicators, TQQQ merits a cautious "BUY" recommendation. This is not immune to risks and investors should incorporate their risk tolerance capability and macroeconomic indicators while making their decisions.
