Officially, we’re in a bear market. The S&P 500 and NASDAQ are formally negative. Whenever the stock market indexes fall more than 21% from their recent highs, that signals a bear market. The S&P 500 had a fall of 4% on Monday with a year-to-date plunge of 21% below its January peak. The Nasdaq has also lost 26% year to date.
However, the good thing is that despite the trajectory of the stock market, you can still make massive gains. Savvy investors like myself play the long or short game. And right now, this is the best time to play the short game.
Your best bet now is going against the market since it is bearish. It’s like this: you realize the market is in a plunge, and you look for stocks that give returns that are inverse to the market. These are stocks that rise when the market is falling.
Right now, traders who know how to short sell are singing the praises of SQQQ. SQQQ is the market symbol for Proshares UltraPro Short QQQ ETF. On a forum on finance.yahoo.com, many traders say they have already made more than 150% by speculating on SQQQ. And with the recent hawkish tone by the Fed about raising interest rates, SQQQ will rise further.
A look at SQQQ
Proshares, which has so many ETFs, established SQQQ in 2010. It is an inverse-leveraged ETF tracking the Nasdaq-100 index. The Nasdaq is a tech-heavy index that has been down since this year. What SQQQ does is that whenever the market is down, it rises. So, the SQQQ has been growing since the start of this year. But this week, it gained momentum.
Since the start of this week, the SQQQ has risen 21.76%. Year-to-date, it has risen about 130%. No wonder many traders are flocking to the ETF.
What is so astonishing about how SQQQ works is that it works in the opposite direction of the index it is tracking, which is the Nasdaq. Also, its results are not weekly or monthly but focus on the underlying index's daily performance. Then it triples the result of the Nasdaq in the opposite direction. But this year, it has more than tripled Nasdaq's negative results.
Trading the SQQQ can be tricky, especially where there is the possibility that prices could rise. But in this bearish climate, the chance of stock markets climbing is still a long way off. Moreover, many of the challenges the stock market faces will take a long time to resolve.
For example, in 2020, the Fed was pumping a lot of money into the economy through stimulus packages and pandemic relief. Now we are feeling the effects of that short-term vision. Inflation is upon us. There is even some speculation that we are close to a recession. Many of the geopolitical risks that necessitated gas price increases are persisting. It will take a long time before the stock market gets out of this mess.
So now is the time to buy SQQQ. Currently trading at 63 dollars, SQQQ is still at a discount. In other words, SQQQ is performing exceptionally well. It's certain that the Nasdaq will fall further. The Nasdaq index comprises heavily-capped tech companies like Apple, Amazon, Meta, Aphabet Inc., and other companies. Most of these companies have plunged. In addition, most tech companies are facing supply chain constraints due to the slump in China. So, now is the time to invest in SQQQ and reap bountiful rewards.