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(Bloomberg) — ETF merchants simply positioned a document wager towards the massive comeback in tech shares.
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Because the Nasdaq 100 Index soared late final week, some $658 million was funneled into the ProShares UltraPro Quick QQQ exchange-traded fund (ticker SQQQ). That’s the largest-ever influx for a product that goals to ship 3 times the other efficiency of the US benchmark for main know-how corporations.
The influx got here on Thursday, simply because the Nasdaq posted its largest leap in additional than two years on hopes that softer-than-expected inflation information can persuade the Federal Reserve to gradual its tempo of financial tightening.
As cash flowed to SQQQ, traders pulled $256 million from its bullish leveraged sibling, the ProShares UltraPro QQQ ETF (TQQQ). That was the biggest outflow since January, in response to information compiled by Bloomberg.
Whereas the gauge superior once more on Friday, the SQQQ inflow constitutes a large guess that the tech-led rally will show fleeting because the ETF is designed to work on an extremely short-term foundation.
Futures for the Nasdaq 100 have been down 0.6% as of 9:14 a.m. in New York.
“Instruments like SQQQ have been mainly designed for large strikes like we’ve been seeing the place traders — and possibly extra importantly hedge funds — wish to take sturdy positions counter to large strikes,” stated Dave Nadig, monetary futurist at information supplier VettaFi. Massive gamers are possible utilizing it for “fast inverse publicity to precise their lack of religion within the rally,” he stated.
The bearish inflows boosted property in SQQQ to about $3.6 billion, greater than double their stage at the beginning of 2022. In the meantime the Invesco QQQ Belief Collection 1 ETF (QQQ), a vanilla product monitoring the Nasdaq 100, acquired $1.9 billion Thursday. Its property now whole $162 billion, down from $218 billion within the early new yr because of the curiosity rate-induced rout in progress shares.
Settlement preparations for SQQQ and TQQQ imply that movement information arrives with a one-day lag.
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