Technical Analysis: TQQQ Shows Bullish Momentum with Potential Short-Term Pullback

StockInvest.us, 2 weeks ago

StockInvest.us Technical Analysis:

ProShares UltraPro QQQ (TQQQ), a leveraged ETF tracking the Nasdaq-100 index, closed at $75.03 on July 01, 2024, reflecting a 1.64% gain from the previous session with a price range between $72.42 and $75.29. Notably, the stock hovers near its annual high of $77.72, indicating significant bullish momentum. The 14-day RSI stands at 68, suggesting the ETF is approaching the overbought threshold, potentially hinting at a short-term pullback.

Technical indicators show positive signals. TQQQ's 50-day and 200-day moving averages are $63.55 and $52.56, respectively, indicating a strong upward trend. The MACD over a three-month period is at 4.37, suggesting sustained bullish momentum. However, the ATR of 3.25 indicates a relatively high volatility level, showing potential for significant price movements.

For the next trading day, the ETF may face strong resistance at $75.09. Barring breaking this resistance, a slight pullback to the support level at $58.93 is plausible. For the upcoming week, market dynamics will likely determine whether TQQQ can maintain its position or experience minor corrections towards the moving averages.

Fundamental Analysis:

TQQQ TQQQ's market cap stands at $21.76 billion, solidifying its position as a major player in the leveraged ETF space. The ETF does not generate earnings, resulting in an EPS of 0 and no applicable PE ratio. As a leveraged ETF, its performance is driven by the underlying index—Nasdaq-100—mirroring its gains and losses but amplifying them.

Recent news highlights TQQQ as one of the top-performing leveraged ETFs in the first half of 2024, evidencing strong market sentiment and heightened investor interest in leveraged exposure to high-growth tech stocks. This aligns with the broader tech sector's rally, supported by robust earnings, innovation, and favorable macroeconomic conditions.

Looking forward to its intrinsic value and long-term investment potential, while leveraged ETFs like TQQQ provide impressive short-term returns, they also carry high risk due to their design, which involves daily rebalancing. This makes them unsuitable for long-term holding compared to traditional ETFs.

Overall Evaluation:

Given the current high RSI, nearing resistance, and high volatility indicated by ATR, TQQQ might experience short-term pressure. Nevertheless, the strong upward trends in moving averages and MACD indicate underlying bullish fundamentals.

For the immediate term, TQQQ is potentially categorized as a 'Hold' due to nearing overbought conditions and elevated volatility, suggesting potential minor pullbacks before a direction is confirmed. For the longer term, due to intrinsic characteristics of leveraged ETFs, typical of higher risk and volatility, it demands cautious consideration aligning with individual risk tolerance and investment horizon. Therefore, for investors comfortable with such conditions, it may continue to provide favorable returns, conditional on the tech sector's sustained growth trajectory.

Check full TQQQ forecast and analysis here.