SQQQ Soars 16.2% Amid High Volume and Tariff News: Potential for Continued Upside

Technical Analysis

ProShares UltraPro Short QQQ (SQQQ) experienced a significant surge of 16.20%, closing at $42.53 on April 3, 2025. This price action is influenced by high trading volume, nearly tripling the average at 226.98 million, indicating heightened investor activity. The Relative Strength Index (RSI14) at 64 suggests that the ETF is nearing overbought conditions, though it still allows room for upward momentum. The 50-day and 200-day moving averages at $32.41 and $35.97, respectively, are below the current price, illustrating a strong bullish trend.

The Average True Range (ATR) of 6.05 indicates expected high volatility, which aligns with the observed price movement. Additionally, the MACD of 1.80 showcases a solid bullish momentum. Immediate support is at $36.60, while resistance does not have a clearly defined level, suggesting that if the price breaks higher, it could continue to rise unimpeded in the short term.

Fundamental Analysis

SQQQ, being an inverse leveraged ETF, is designed to deliver triple the daily inverse performance of the NASDAQ-100 Index. Unlike typical stocks, it does not hold assets directly tied to company performance and thus lacks a P/E ratio or earnings per share (EPS). The recent U.S. tariff announcement by Trump has negatively impacted broad U.S. indices. In contrast, it benefited inverse ETFs like SQQQ as investors sought protection against downside risk in their portfolio.

The market capitalization of $2.62 billion underscores significant investor interest, especially during turbulent market conditions. Pound for pound, SQQQ serves as a hedging tool rather than a long-term growth investment due to its structure and intended use.

Predictions for Next Trading Day and Upcoming Week

Given the sharp increase and current market sentiment following the tariff news, SQQQ might continue to see upward momentum in the next trading day. However, with the RSI nearing overbought territory, some profit-taking could occur, leading to potential price consolidation. The upcoming week may witness continued volatility, where SQQQ could benefit if negative market conditions persist.

Intrinsic Value and Long-term Investment Potential

SQQQ does not hold intrinsic value in the traditional sense given that it is a derivative-based ETF. Its design caters to short-term strategic plays or market hedges rather than intrinsic value growth opportunities. Long-term investors might not find SQQQ suitable as it is primarily structured to capitalize on immediate market trends, rather than offering appreciation over time.

Overall Evaluation

SQQQ is best categorized as a 'Hold' in the context of active or tactical management. It remains an effective tool for hedging or speculative plays amidst current market uncertainties. However, due to the inherent risks and volatility associated with inverse leveraged ETFs, potential investors should actively monitor market developments and assess risk tolerance accordingly. Given these dynamics, and absent favorable or stabilizing news for the broader market, SQQQ maintains its appeal for short-term engagements.