Sign InProShares UltraPro QQQ (TQQQ) Shows Potential for Bullish Reversal
Summary
As of August 9, 2023, ProShares UltraPro QQQ (TQQQ) is trading at $39.71 with a decrease of 3.33%, indicating potential oversold conditions and a potential bullish reversal in the short term, although the high volatility of this 3x leveraged fund may not be suitable for all investors.
Technical Analysis
ProShares UltraPro QQQ (TQQQ), as of its last close on August 9, 2023, currently trades at $39.71, indicating a decrease of $1.37 or -3.33%. The day's trading range was between $39.45 and $41.21, with an above-average volume of 97.77 million shares traded. Comparatively, this is lower than the average volume of 100.91 million shares. This signifies that the trading activity surrounding TQQQ has been particularly high as of this date.
The 14-day Relative Strength Index (RSI) stands at 36, showing a potential oversold condition. Generally, when the RSI drops below 30, it’s considered oversold, which may indicate an upcoming reversal or pullback. However, TQQQ is close to the oversold boundary, suggesting it might see a bullish movement soon if the RSI continues to decline under 30.
Another significant indicator is the Moving Average Convergence Divergence (MACD), with TQQQ having a 3-month MACD of 1.11. This positive MACD indicates a bullish trend, which aligns with the potential reversal indicated by the RSI.
Nonetheless, TQQQ is trading below its 50-day moving average of $40.56 but well above its 200-day moving average of $27.67. Following the trading above the 200-day average but below the 50-day average may suggest a short term bearish pattern.
Fundamental Analysis
TQQQ is an exchange-traded fund (ETF) that aims to deliver three times the daily performance of the NASDAQ-100 Index, making it an extremely volatile fund that isn't suitable for all investors. Investors chasing short-term growth often gravitate to such funds. As such, it's resistance and support levels at $40.19 and $35.47, respectively, are crucial to watch.
Recent news indicates that exchange-traded equity funds have been enjoying weekly net inflows, marking the fourth straight inflow. Leveraged ETFs, like TQQQ, were also noted for gaining more than 45% in the second Quarter of 2023. Despite the risks, this market sentiment fuels a positive outlook for TQQQ.
However, lack of information on key fundamental metrics such as Market Cap, EPS, PE ratio, and Outstanding Shares, hampers a comprehensive fundamental analysis.
Upcoming Trading Predictions
Guided by the technical indicators and the characteristically high volatility, TQQQ's price might experience a bullish reversal in the short term due to oversold conditions implied by the RSI. With recent market trends favoring equity funds, there could be upward momentum in the next trading day, August 10, 2023, and over the next week.
Final Evaluation
Based on the available data, TQQQ is rated as a 'Hold.' The technical indicators suggest potential bullish momentum. However, the inherent high-risk associated with 3x leveraged funds like TQQQ might not be suitable for all investors, especially those with a lower risk tolerance. Consequently, investors who already hold TQQQ stock might want to maintain their positions, while potential investors might want to take note of the volatility before diving in.
