Traders pump record $658 million to bet on tech stocks

(Bloomberg) — ETF traders just made record bets against a big comeback in tech stocks.

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When the Nasdaq 100 index skyrocketed late last week, about $658 million went into the ProShares UltraPro Short QQQ exchange-traded fund (ticker SQQQ). That’s the biggest cash flow ever for a product that’s meant to deliver performance that’s three times higher than US standards for big tech companies.

Money poured in on Thursday, just as Nasdaq posted its biggest jump in more than two years on hopes that softer-than-expected inflation data could convince the Federal Reserve to slow down its tightening. currency.

As money flowed into SQQQ, investors withdrew $256 million from its bullish leveraged sibling, the ProShares UltraPro QQQ ETF (TQQQ). That was the largest outflow since January, according to data compiled by Bloomberg.

While this metric rebounded on Friday, the SQQQ line constitutes a sizable bet that the tech-led rally will prove to be fleeting as the ETF is designed to operate on an ultra-short-term basis. term.

Nasdaq 100 futures were down 0.6% at 9:14 a.m. in New York.

“Tools like SQQQ are essentially designed for big moves like we’ve seen with investors – and perhaps as important as that,” said Dave Nadig, financial futurist at data provider VettaFi. more important than hedge funds – want to have strong positions against big moves.” The big players are likely to use it for “rapid inverse exposure to express their lack of confidence in the rally,” he said.

Declining cash flows have boosted assets in SQQQ to around $3.6 billion, more than double from early 2022 levels. Meanwhile, the Invesco QQQ Trust Series 1 ETF (QQQ), a vanilla product under followed the Nasdaq 100, receiving $1.9 billion on Thursday. The company’s total assets now total $162 billion, down from $218 billion at the start of the new year, driven by interest-driven stock growth.

The settlement arrangements for SQQQ and TQQQ mean that stream data arrives with a one-day delay.

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