Dip Buyers Are Winning With $2.3 Billion of Leveraged Tech Bets

(Bloomberg) -- The dip-buying army has braved a brutal start to the year to lavish billions on a high-octane bet that the tech wreck is no more.

They have poured almost $2.3 billion into the ProShares UltraPro QQQ exchange-traded fund (ticker TQQQ) over five straight days of inflows through Monday, according to data compiled by Bloomberg. 

The $20.6 billion product uses options to deliver three-times the performance of the Nasdaq 100 -- and it already looks like the wager is paying off. While still down more than 8% in 2022, TQQQ has surged about 6% this week so far.

The bulk of new cash came during the height of last week’s selloff, which was sparked by the release of hawkish minutes from the Federal Reserve’s December meeting. Now tech bulls are ready to bet that richly valued large-cap equities have already found a bottom. 

The Nasdaq 100 rose alongside major benchmarks on Wednesday after the release of inflation data that met market expectations.

TQQQ’s flow data, which arrives with a one-day lag because of the way the fund settles, show that more than $600 million flooded into the fund on Monday. The ETF recovered from a 9% plunge that day to finish 0.4% higher. Fed chief Jerome Powell’s pledge that the central bank will control inflation without hampering growth spurred a 4.4% gain on Tuesday.

TQQQ continued to advance on Wednesday, climbing 1% as of 11:03 a.m. in New York even after data showed inflation accelerated at the quickest pace in nearly four decades in December. 

The dip-buying impulse was evident in more vanilla parts of the market as well. The non-leveraged $55 billion Vanguard Information Technology ETF (VGT) posted a record inflow of $706 million on Monday, a day after seeing its biggest withdrawal since November. 

©2022 Bloomberg L.P.