QQQ Could Move Much Lower

(7min)

Summary

  • QQQ has rallied since April and is up 1.9% year-to-date; I recommend exiting positions due to technical and valuation concerns.
  • The ETF is highly concentrated, with the top 10 names making up 50% of the index.
  • Valuations for the largest QQQ holdings are historically high, with average enterprise value to EBITDA multiples above 27x and slowing growth rates.
  • I am short QQQ via SQQQ and expect a significant decline, potentially testing late 2022 lows, given macro risks and stretched valuations.
  • Looking for a portfolio of ideas like this one? Members of 420 Investor get exclusive access to our subscriber-only portfolios. Learn More »

Risk reward ratio / risk management concept : Risk and reward bags on a basic balance scale in equal position, depicts investors use a risk reward ratio to compare the expected return of an investment

William_Potter

The NASDAQ 100 (NASDAQ:QQQ) has rallied sharply after taking a big hit in April following Liberation Day, and it is up 1.9% now year-to-date. Those that own it should exit in my view.

A Look at QQQ

The

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Alan Brochstein, CFA, is one of the first investment professionals to focus exclusively on the cannabis industry. Alan got his start as a financial professional in the securities industry in 1986, managing investments in institutional environments until he founded AB Analytical Services in 2007 in order to provide independent consulting to registered investment advisors. He is also the managing partner of New Cannabis Ventures, a leading provider of relevant financial information in the cannabis industry since 2015.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of SQQQ, TSLZ, NVD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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