iStockAnalyst thinks there is a probability of ”60% that sideways is the most likely outcome” of the NASDAQ. “Until the index breaks resistance at 2700 or falls through support at 2600, both levels are likely to act like bumper car rails”. In their view, “ the biggest July fireworks show will come from second quarter earnings and forward guidance, July’s GDP and Employment Situation reports. The trio will determine which way we go with great clarity”.
Thus they suggest a following potential plays on leveraged ETFs off the NASDAQ:
“With the market’s direction truly a flip of the coin to start the week, iStock thinks the prudent thing to do is buy a double or triple leveraged NASDAQ ETF when the index approaches support at 2610-2620ish. Sell it and buy an inverse double or triple leveraged NASDAQ ETF as it heads towards 2690. Of course, should the index start the week in the green, just turn the trading strategy upside-down and start with the short ETF first.
Leveraged ETFs that trade in the same direction as the NASDAQ:
2X NASDAQ ETF: ProShares Ultra QQQ (QLD)
3X NASDAQ ETF: ProShares UltraPro QQQ (TQQQ)
Leveraged inverse ETFs that trade in the opposite direction of the NASDAQ:
2X inverse NASDAQ ETF: ProShares UltraShort QQQ (QID)
3X inverse NASDAQ ETF: ProShares UltraPro Short QQQ (SQQQ)
SmartStops wants to remind you that when taking on a more risky play as leveraged ETFs, it is imperative that you maintain proper stop loss protection. Remember too that SmartStops does produce datapoints for ETFs that are short.