Analysts are expressing caution regarding the 24/7 Nasdaq index, highlighting its behavior as more akin to a synthetic perpetual contract rather than a traditional index during after-hours trading. The index's price movements outside regular trading hours are primarily driven by leverage and liquidations, rather than underlying market fundamentals.
Without the stabilizing effects of ETF arbitrage or options activity, the index experiences significant volatility during weekends, which can act as stress tests for traders. The low volatility environment often leads to excessive leverage, increasing the risk of cascading liquidations. Analysts advise traders to be aware of the unique risk profile of this product and caution against treating it as a direct substitute for the traditional Nasdaq index.
Analysts Caution on Risks of 24/7 Nasdaq Index Trading
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