Kia ora Happiness.,
I've done an analysis of TQQQ based on the latest data as of August 3, 2024, and here are my insights for you. Please note that I am not a financial adviser and that these are my views only π
Current Market Context:
August is historically a very tough month for stocks, especially tech stocks. Itβs a Bear market and will remain so until October. The S&P 500 has experienced a significant decline of about 5% over the past few weeks [oai_citation:1,Why Stocks Have Tanked in August and What Wall Street Expects Next - Markets Insider](https://markets.businessinsider.com/news/stocks/stock-market-outlook-grantham-burry-goldman-rosenberg-wall-street-investors-2023-8). Rising bond yields and economic concerns, including Chinaβs economic slowdown and the recent US debt downgrade, have added to market volatility [oai_citation:2,Why Stocks Have Tanked in August and What Wall Street Expects Next - Markets Insider](https://markets.businessinsider.com/news/stocks/stock-market-outlook-grantham-burry-goldman-rosenberg-wall-street-investors-2023-8) [oai_citation:3,Audience Type β AP Institutional | Invesco](https://www.invesco.com/apac/en/institutional/insights/market-outlook/the-outlook-for-us-tech-stocks-following-the-sectors-outperformance-year-to-date.html).
Tech Sector Performance:
Tech stocks had a strong start to the year, driven by advancements in AI and other innovations. However, they are sensitive to macroeconomic factors like interest rates and inflation [oai_citation:4,Technology sector outlook 2024 | Tech stocks | Fidelity](https://www.fidelity.com/learning-center/trading-investing/outlook-information-technology). Given the Fed's aggressive rate hikes, tech stocks will face headwinds in the short term. See my recent post on SMCI also.
TQQQ Indicators and Analysis:
1. RSI (Relative Strength Index): Neutral, indicating no immediate overbought or oversold conditions.
2. MACD (Moving Average Convergence Divergence): No bullish confirmation yet, with the line remaining parallel and below zero.
3. Bollinger Bands: Trading near the middle band, with the 50-day MA acting as resistance.
4. Stochastic Oscillator: Neutral, indicating balanced market conditions.
5. Chaikin Money Flow: Neutral, showing no significant money flow direction.
6. Candlestick Patterns: Recent patterns suggest indecision, with no clear bullish or bearish signals.
Fibonacci Levels:
- Support Levels: Around $57.00, which corresponds to a significant Fibonacci retracement level.
- Resistance Levels: Near $60.72, another critical Fibonacci level that could act as resistance IF the price attempts to rebound.
Outlook:
Given the current bearish trend in tech and the heightened volatility of leveraged ETFs like TQQQ, holding TQQQ for the long term (2-3 years) could be risky. The mixed signals from various indicators and the challenging macroeconomic environment suggest extreme caution.
Michael James McDonald, a prominent stock market forecaster, mentioned on Seeking Alpha, "The negative net outflow of money in TQQQ indicates an increased risk of lower prices. Longer-term investors should consider taking profits and moving to lower-risk index funds, while short-term investors can stay but should be prepared to limit losses if the market reverses" [oai_citation:1,ProShares UltraPro QQQ ETF (TQQQ) Latest Stock Analysis](https://seekingalpha.com/symbol/TQQQ/analysis) [oai_citation:2,TQQQ β ProShares UltraPro QQQ β ETF Stock Quote | Morningstar](https://www.morningstar.com/etfs/XNAS/TQQQ/quote).
According to MarketBeat, hedge funds have been increasing their positions in TQQQ, signaling confidence in its performance and potential. The report highlights, "ProShares UltraPro QQQ has recently hit a new 12-month high at $66.51, indicating strong upward momentum. However, investors should be cautious due to the high volatility associated with its triple leverage exposure to the NASDAQ-100 Index" [oai_citation:3,ProShares UltraPro QQQ (TQQQ) Chart and Price History 2024](https://www.marketbeat.com/stocks/NASDAQ/TQQQ/chart/).
Suggestions only ~
1. Hold with Caution If you believe in the long-term growth of the tech sector and do not need the funds urgently, holding TQQQ could be an option. However, be prepared for significant volatility and potential further losses.
2. Diversify: To mitigate risk, consider diversifying your portfolio with less volatile investments. This can provide a hedge against the potential downside in TQQQ.
3. Monitor Key Levels: Keep an eye on the support around $57.00 and resistance near $60.72. A breach of these levels could indicate future price direction.
4. Use Stop-Loss Orders: Setting stop-loss orders can help manage risk and protect against substantial losses.
Hey Tiger Traders, would you hold TQQQ given its high leverage and current indicators, or would you cut losses and look for safer opportunities?
@TigerGPT , what strategies can be employed to mitigate risks when holding highly leveraged ETFs like TQQQ for the long term?
Wishing you all the very best to navigate your decision!
Happy trading ahead. Cheers, BC π
@Tiger_comments @CaptainTiger @TigerPM @TigerStars @All_In_TQQQ @koolgal @Shyon
Comments
I'm glad you found my post helpful & to the point! π It's great to hear that youβre still optimistic about tech stocks and are considering holding onto TQQQ for the long term.
October and November could indeed bring some positive changes! After all, every bear needs to take a break eventually, right? π»β‘οΈπ Just remember to keep an eye on those indicators ππππΉ
I totally get your β΄οΈ about missing out on other opportunities. But hey, we canβt win them all, right? If trading was always easy, we'd all be sipping cocktails on a tropical island π€£πΉποΈ
As a fellow tech lover, I completely understand your passion, especially when it comes to my very dear and favourite Nvidia! The market leader and tech leader! ππ
August, being a bear market, is extremely tough to trade. Iβll be posting some ideas later in the weekend that may be of help, so keep your ποΈ out!
βΌοΈ$NVIDIA Corp(NVDA)$
Once it reaches oversold conditions, expect an upward move as we approach the report. Patience is π π
See the attached image which perfectly captures my sentiment!
Wishing you all the best Happiness. with your trades, and I'm very much looking forward to some warmth as we I long for our summer temperatures here in NZ! If you need any more help, you know where to find me!
Happy trading! Cheers, BC π
Best Sister @@Barcode
wwwwow....I'm impressed.[Bless] [Heart]
Thank you so much sis... [Love] [Love] [Love] [Love] The post is super with very clear explanation and to the point.. I would check the indicator and manage my loss next week. [Heart] [Serious]
Definitely Tech stock is my all time favorite and long term hold. I take that into Tqqq investment. Seeing the performance from prevous year (of course history is not always repeating; but giving me an idea), I believe it would be better in October and Novemember. The great thing is that I don't need my fund; worse thing is that I lost opportunity to earn during these time and it can occur higher losses in the future(which I accept when trading - profit and loss come and go) . [USD] [Heartbreak]
I appreciate your wonderful help.. I wish you the best time trading in Summer (usa) and Winter (here NZ) [DOGE]
Best Sister @@Barcode
wwwwow....I'm impressed.[Bless] [Heart]
Thank you so much sis... [Love] [Love] [Love] [Love] The post is super with very clear explanation and to the point.. I would check the indicator and manage my loss next week. [Heart] [Serious]
Definitely Tech stock is my all time favorite and long term hold. I take that into Tqqq investment. Seeing the performance from prevous year (of course history is not always repeating; but giving me an idea), I believe it would be better in October and Novemember. The great thing is that I don't need my fund; worse thing is that I lost opportunity to earn during these time and it can occur higher losses in the future(which I accept when trading - profit and loss come and go) . [USD] [Heartbreak]
I appreciate your wonderful help.. I wish you the best time trading in Summer (usa) and Winter (here NZ) [DOGE]
Hi BC,
Thank you for sharing your analysis of TQQQ and providing some insights into the current market context. I understand that you are not a financial adviser, and I appreciate your views. Here are some strategies that can be employed to mitigate risks when holding highly leveraged ETFs like TQQQ for the long term:
Understand the Risks: It's important to fully understand the risks associated with highly leveraged ETFs. These ETFs aim to provide amplified returns based on the performance of an underlying index, but they can also magnify losses. Make sure you are aware of the potential volatility and downside risks.
Diversify Your Portfolio: Diversification is key to managing risk in any investment portfolio. By spreading your investments across different asset classes, sectors, and geographies, you can reduce the impact of any single investment, including highly leveraged ETFs. Consider including a mix of stocks, bonds, and other asset classes in your portfolio.
Regularly Monitor and Rebalance: Keep a close eye on your portfolio and regularly rebalance it to maintain your desired asset allocation. This involves selling assets that have performed well and buying assets that have underperformed. By doing so, you can ensure that your portfolio remains aligned with your risk tolerance and investment goals.
Set Realistic Expectations: Highly leveraged ETFs are designed for short-term trading and may not be suitable for long-term buy-and-hold strategies. Understand that the compounding effect of leverage can lead to significant deviations from the underlying index's performance over time. Set realistic expectations and be prepared for potential volatility and fluctuations in the ETF's value.
Consider Risk Management Tools: Utilize risk management tools such as stop-loss orders to limit potential losses. These orders automatically sell the ETF if it reaches a predetermined price level, helping to protect your investment from significant declines. However, keep in mind that stop-loss orders are not foolproof and may not always execute at the desired price.
Stay Informed: Stay updated on market trends, economic indicators, and news that may impact the performance of highly leveraged ETFs. This will help you make informed decisions and adjust your investment strategy accordingly.
Remember, investing in highly leveraged ETFs like TQQQ involves a higher level of risk compared to traditional ETFs. It's essential to carefully consider your risk tolerance, investment goals, and time horizon before making any investment decisions.
Please note that the information provided is for reference purposes only and should not be considered as investment advice. It's always recommended to consult with a qualified financial advisor or professional before making any investment decisions.
Best of luck with your trading endeavors!
Cheers,TigerGPT