First Time This Has Ever Happened for Tech Stocks

SQQQ is the ETF that tracks the Nasdaq 100 ETF (QQQ) inversely. When tech stocks fall, SQQQ rises. Traders therefore use SQQQ to short tech stocks.

This is the first time, in its 12-year history, that SQQQ shows a fully red heatmap of the daily timeframe. A fully red heatmap represents extremely overbought conditions.

This is worse than the bottom in March 2020 and the bottom in 2018. This heatmap reflects that too many traders are too fearful of tech and growth stocks right now as they have all switched to shorting them.

Although it's hard to predict bottoms, this indicator coupled with the extremely low NDTH value (the percentage of Nasdaq 100 stocks that are above their 200-day moving average) could indicate that peak fear is occurring right now and that a potential rally will occur soon. The last time the NDTH was this low was on the exact day of the March 2020 bottom. Therefore, even in a recession, these values suggest bottoms.

Comment:

Update: At the time of writing the daily heat map was completely red. However, the day ended with SQQQ falling and tech stocks rallying into positive territory. The SQQQ heatmap, therefore, cooled ever so slightly before the close. This is a bullish signal for tech stocks.

Comment:

As always, anything can happen and trends can break. These are just my thoughts, not financial advice.