Why Is This Nasdaq ETF Ripping Higher?

Some ETFs move higher if the market moves lower. One of them is the ProShares UltraPro Short QQQ ETF SQQQ.

The NASDAQ 100 is an index that tracks the price of the largest 100 companies on NASDAQ that aren’t in the financial sector. SQQQ is designed to move in the opposite direction of the NASDAQ 100.

This ETF also uses leverage. This makes it move three times the amount of the percentage move in QQQs. For example, if the QQQs are down by 1%, SQQQ should gain about 3%. If they’re down by 2%, SQQQ should move up about 6%, and so on.

This means if the stock market continues to head lower, SQQQ will continue to rip higher. But investors need to exercise caution.

Leverage is great if a position goes the right way, but if not, it can also lead to increased losses. If the market rallies and moves higher, SQQQ will drop by about three times the amount.

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