The ProShares UltraPro Short QQQ ETF (NASDAQ: SQQQ) stock price has fallen 66.21% since the year started as the underlying Nasdaq index rallied higher. Investors who bought the SQQQ stock at the beginning of the year and held it up to today would have lost 66% of their value. testt
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
Still, despite being a stock with a habit of eroding investor value, SQQQ stock finds buyers in all market scenarios as professional investors use it as a hedge against other positions where they may have long positions in ETFs that track the underlying Nasdaq index, which has risen 35% since the year began.
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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
The ProShares SQQQ ETF seeks to achieve three times the inverse of the price moves in the underlying Nasdaq index daily. Therefore, its returns over an extended period may not be exactly -3x the returns of the Nasdaq index since it is more focused on generating a daily return than a long-term return.
The SQQQ stock has been falling as the Nasdaq rallied higher, boosted by rallies witnessed in the Magnificent 7 stocks, which are the large tech companies such as Microsoft, Tesla, Nvidia, Alphabet and Meta. These stocks have rallied higher since the year began, driving the Nasdaq higher, but some are worried that the rally phase might be over.
If the rally in tech stocks is finally over, we could see the Nasdaq start falling, resulting in the SQQQ stock rallying higher, given its inverse correlation with the Nasdaq index. However, there is no guarantee that we are near a top in the tech stocks rally as markets are looking forward to the Fed pausing rate hikes, which would be bullish for tech stocks.
Tech stocks have been rallying higher despite the lack of cheap credit usually associated with rallies in tech stocks, many of which rely on cheap financing to fund their operations. However, the rally has been driven mainly by mature tech companies with significant profits, not the typical tech firms.
Therefore, we could see a further decline in SQQQ stock if the Nasdaq continues increasing on the much-awaited Fed rate hike pause. Most investors should generally avoid the SQQQ ETF due to its long-term effect of eroding investor value.
SQQQ stock price.
The SQQQ stock price has fallen 66.21% since the year began as the Nasdaq index has rallied higher.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.