There was a consensus bullish signal on the Invesco QQQ Trust (QQQ) and two of the leveraged ETFs that track its movements on March 2. It makes sense that if the QQQ generated a bullish signal that the ProShares UltraPro QQQ (TQQQ) and the ProShares Ultra QQQ (QLD) would also generate bullish signals. However, Tickeron’s Trend Prediction tool shows you the confidence levels for the signals on each of the ETFs and the numbers there are not unanimous.

We see that over the next week the QQQ is expected to move lower with a bearish signal generated with a 58% confidence level, but the leveraged ETFs both have bullish signals with a 71% confidence level. That seems a bit confusing, but the monthly signals and the confidence levels are what caught my eye. Looking specifically at the signal on the QQQ, A.I. examined the last 100 monthly QQQ predictions with confidence levels similar to (buy: 89%, hold: 5%, sell: 6%) and found that the odds of success that the fund will move in a bullish direction are 90%.

The A.I. Trend Prediction tool looks at seven different technical indicators to arrive at its prediction. It then looks similar scenarios in the past in order to predict whether a stock or ETF will move higher or lower in the coming week and the coming month. Once it looks at the last 100 predictions, it arrives at a confidence level for the prediction.

With the high confidence levels for the next month being bullish for the three ETFs, I went back and looked at the last time we would have seen similar signals from the Trend Prediction tool. It was on November 2.

If we look at the daily chart for the QQQ, we see that the fund just dropped below its 50-day moving average. We also see that it is hitting potential support. The two red lines on the chart are a free hand trend channel I drew while the blue lines are a Raff Regression Channel from the low back in September through today. I actually had to drop the lower rail of the freely drawn trend channel a little, just so we could see it. That’s how closely the two were running next to one another—they were right on top of one another.

The middle line of the Raff Regression Channel is the regression line. The upper and lower rails are based on equidistant lines being drawn from the point where the fund is the farthest from the regression line. We see that for the QQQ, it is currently trading as far below the regression line as at any point over the last five and a half months.

It is also worth noting that the stochastic indicators are the lowest they have been since early November and they just made a bullish crossover in the last few days. When these three funds got the bullish signals back in November, they all three moved sharply higher in the next week and over the next month.

Measuring the Fundamentals of the Fund’s Holdings

I expressed in a previous article that I believe in using a combination of fundamental and technical analysis, the fundamentals tell us what to buy and the technical analysis tells us when to buy. With the QQQ being an ETF, we aren’t able to get the usual fundamental analysis indicators. However, we can look at the fundamental indicators of the holdings within the fund. It would be overwhelming to look at all 100 holdings in the QQQ, but the top 10 holdings represent over 50% of the assets in the fund. Those 10 holdings are listed below.

I took these 10 holdings and ran them through the Tickeron Fundamental Screener. All 10 score relatively well overall, but there are a few areas where they score extremely well. All 10 have extremely good scores in the Profit vs. Risk Rating category. In the Price Growth Rating, five of the stocks get extremely good scores and the other five get average scores. In the SMR category, only Tesla (TSLA) gets a below average score while the other nine get an average or above average score.

What all of this tells me, all the fundamental indicators, is that the overall fundamental outlook for these 10 stocks is pretty strong. They don’t show the entire picture for all the holdings, but they represent over half of the assets being held by the fund.

With the strong fundamentals and the high probability bullish signals from the technical indicators, it seems like a high reward/low risk scenario to go long any of these three ETFs. If you are more conservative, the QQQ would be the best fit in your portfolio. If you are willing to take on a more moderate level of risk, the QLD is leveraged such that it attempts to produce 2X the returns of the QQQ. If you are riskier still, the TQQQ is leveraged to try to produce 3X the return of the underlying fund. Because the leveraged funds use derivatives, the multiplier doesn’t always remain constant as time passes.