Sign InTQQQ closes with dip in value, bearish sentiment suggests potential short selling strategies
Summary
On August 11, 2023, ProShares UltraPro QQQ (TQQQ) closed at $39.09, experiencing a dip in value, with technical analysis suggesting a bearish pressure and the possibility of downward pressure in the next trading session, making it advisable for risk-averse investors to hold their positions or not enter a position at the moment, while tactical traders or risk-tolerant investors might find the increasing trading volumes and the fund's mechanism appealing for a potential buy.
1. Overview
ProShares UltraPro QQQ (Ticker: TQQQ) closed last at $39.09 on August 11, 2023. The fund's last recorded price change was -0.80 (-2.01%), indicating a dip in the ETF's value. The daily trading range indicates price fluctuations between $38.6 and $39.675. The 52-week range, however, considerably broadens from $16.1 to $47.14. The fund operates on heightened volume levels with an average of around 100.61 million, underlined by the previous day's volume of approximately 99.82 million.
2. Technical Analysis
The fund's RSI14 is currently at 35, suggesting a bearish pressure as it is below the threshold level of 50. The 50-day Moving Average (MA) stands at $40.74, which is higher than the last close price, indicating a negative short-term momentum. However, the considerably lower 200-day MA at $27.87 reflects a relatively positive long-term outlook. For the past three months, the MACD has been 0.54, indicating bullish market sentiment. The Expectation of future volatility (ATR) at 4.7 suggests traders can anticipate regular price fluctuations.
The fund's immediate support stands at $35.47, which is slightly below the RSI14 level, indicating that there is room for the price to fall before hitting this support level. The resistance level is $39.35, which is just marginally above the last close price.
3. Fundamental Analysis
Notably, the TQQQ operates with a leverage of 3x, making the fund not an ideal option for more conservative investors due to its inherent risks involved in higher movements. Additionally, the Proshares UltraPro QQQ doesn't report any value for EPS (Earnings Per Share), PE (Price to Earnings) ratio, and the number of shares outstanding, which have a significant influence on the investment decisions of some investors.
Recent news developments indicate that leveraged ETFs like TQQQ have gained more prominence due to their performance in the second quarter of 2023, further lending credibility to such investment provisions. Additionally, the fund also featured in the list of 10 most heavily traded ETFs in the last three months, indicating its growing popularity among traders.
4. Outlook
Given the technical indicators and the market trend's vulnerability, it is likely that the stock price might experience a downward pressure in the next trading session on August 14, 2023, suggesting potential for intra-day short selling strategies.
On a weekly basis, there might be a slight recovery, considering the fund's popularity and its inclusion in some tactical traders' portfolios. However, the rise might not be very significant due to its recent downfall and the fact that the 50-day Moving Average is higher than the current price.
5. Final Evaluation
With no specific outlook for massive growth and high volatility coupled with inherent risks due to 3x leverage, it is advisable for risk-averse investors to Hold their positions or not to enter a position at the moment. However, tactical traders or risk-tolerant investors might find recently increasing trading volumes and the fund's mechanism that magnifies daily movements to be of interest. Consequently, for those investors, TQQQ can be a Buy.
