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It's time to talk about ARKK One of the, imo, most politicized stocks is ARKK, so I am excited to tackle this one! The relationship between PRO-ARKK'ers (my term) and Anti-ARKKER's is similar to that of the relationship between democrats and republicans. You love it or you hate it, and you vehemently oppose the contrarian to your views. But we need to have a discussion about ARKK and its future. Let's start with reviewing ARKK's holdings/fundamental analysis: Fundamental analysis ARKK's Current Largest Holdings (Holdings accounting for 55%): TSLA (largest) @ 8.68% ZOOM @ 6.22% ROKU Class A @ 6.21% Teladoc @ 6.17% COIN @ 5.78% EXACT Sciences @ 5.06% UNITY @ 4.80% TWILIO @ 4.39% Intellia Therapeutics @ 4.27% UiPath @ 4.13% TSLA is the biggest holding of ARKK, followed by ZOOM (NYSE: ZM) and I think those are the two biggest things working against ARKK at this moment. TSLA saw enormous and, IMO, unsustainable growth over 2021. We are seeing that now with TSLA loosing a lot of steam and not being able to hold itself up. About a week or so ago, TSLA would frequently be able to climb its way out of the 900s/800s up to the 1,000s. Now, its no longer able to actually achieve this and has further lowered the bar to the 700s. Its only a matter of time before we see the 600s, 500s and who knows, maybe even 400s. ZM was just way over inflated during the pandemic. People were overzealous with that one and yoloing into it without really knowing anything about ZM as a company. It naturally paid the price, trading from the 500s back down to the 100s. Will it go lower? Probably. Roku I have nothing to say about because I am not actively engaged in trading or their fundamentals. But, to me, its just another streaming thing, just like the NFLX and AAPL. I can't honestly fundamentally see ROKU trading more than APPL, when AAPL offers AAPL TV, streaming services and is now engaging in producing shows and series? I don't know, seems suspish that ROKU would be worth more than AAPL but I admit this comes from ignorance of not knowing too much about ROKU so I will just leave it there. Teladoc: Great idea. Not sure about the execution. Its a highly indebt company with a debt that continues to grow. Also, as a previous/current healthcare clinician, there is a time and a place for telehealth and virtual medicine. But the reality is we are trying to virtualize a profession that really should not be virtualized. To an extent, this is a good idea within reason. I think these virtual medicine companies are trying to take virtual medicine to the extreme, and its just not ready for it. Until we can have some Prometheus or Passangers or Elysium Medi-bays or Medidoc things, its just not really going to be a feasible option for long term healthcare, aside from follows ups or if you have a cold or infectious illness. Also, I can tell you as a clinician, many patients are satisficed with telemedicine. That's worth looking more into at a later date. The rest I am impartial too. But I do want to stress, these speculative companies (which they all are) saw amongst the BIGGEST gains over 2021. 2021 was the year of recovery and optimism. However, we are entering the year of conservativism and "safety". Its clear we are heading towards a bear market. And historically, these high risk, optimistic stocks are the ones to take a huge hit during times of bearish sentiment. From April 2020 to Feb 2021, ARKK was up over 300%!!! I don't think that that is a really healthy amount to be up for a stock in that amount of time, but yeah. Nuts. Keep in mind that we are in a highly inflationary environment. An environment known to be hostile to speculative and growth stocks such as tech. So where do we stand now? As expected, ARKK has been HAMPERED by this bearish run thus far. Its down almost 24% YTD. Will it come down more? Yes. It will. I promise. Whether it stays down is the question. ARKK's Outlook If you want the cliff notes summary, IMO, this is ARKK's outlook summarized: SHORTTERM: NEGATIVE. LONGTERM: POSITIVE. Outlook details Chart Analysis ARKK's chart is looking extremely bearish. We have a bear flag formation and within that bearflag formation it looks like we also have somewhat of a double top. There are plenty of bear signs flashing right in front of your face on this chart. Is there a possibility it can bounce back up? Yes, of course! But not from where it is currently. I think we need to see more pullback at least until around the 66 mark minimum before we see any kind of bounce in the upward direction. Do I think its going to happen? Not really, no. I think we are going to see quite a bit more selling. I think honestly, this is the year of the bear and we are going to be surprised by a lot of the losses we see in some of our favorite stocks. This one included. Mathematical Analysis Math outlook via regression forecasting is negative short term. The blue lines on the chart indicate key levels regression has plotted out for the next week, with 79.32 being best case scenario for ARKK's high but highly unlikely. The green line indicates a technical area of support, not calculated through regression, just done via qualitative analysis (by me). Probability Analysis As always, take probability analysis with a grain of salt. They are not time specific and cannot tell you the probability that we will reach a certain point TOMORROW or in a year. Just the GENERAL probability. But key things to keep in mind: Probability that ARKK will reach a HIGH of EQUAL TO or OVER 79.32$ = 21.4% Chance Probability that ARKK will reach a LOW of EQUAL to or UNDER 65.00 = 67% Chance VERDICT So what's my verdict on ARKK? I think ARKK is something we should pay attention to as a longer term investment, should an ideal price of entry be reached. What's the ideal price of entry? That's for you to decide. I have my own number that I am willing to buy ARKK at as a long term investment (hint, we aren't there yet). If it reaches, I will invest. If not, then I am unbothered. The outlook of ARKK, as with most ETFs is positive. That doesn't mean that ARKK is going to the moon anytime soon or even in the future. Just the general power of diversification will always apply to an ETF and lead it to growth in some respect (in most circumstances), even if only a marginal amount. It is also not a stock that I would put 100,000 of dollars. I think a modest to smaller amount would be warranted in this case. Because while it is an ETF, it is still highly speculative! Which generally contradicts the spirit of ETFs. And whatever your take is on ARKK, I still think that ARKK should be taken more seriously than it is, because there is a great deal of growth potential in this stock. But with growth comes volatility. Despite it being an ETF, is will retain more volatility than your typical ETF owning to its emphasis in highly speculative, growth stocks with little to no hedge in more stable stocks (as we can clearly see from this year's behaviour). BUT! This volatility makes ARKK a fun stock to day trade. It generally follows the same pattern type behaviour as other ETFs (meaning I can use quantiative measures to chart out the stock's predicted behaviour) but has tons of movement in a given day and that makes it an interesting stock to have around to trade. Disclaimer NOT FINANCIAL ADVICE! Not a financial planner, just enjoy learning about different stocks/fundamentals and sharing my take on them. I am a true blue day trader, so I don't generally deal with fundamentals all that much, or even care. So I enjoy doing stuff like this to really learn about a company's fundamentals. Because while I have traded ARKK many times, I never stopped to think about what it really was, other than I knew people really either hated it or loved it. Also, with us entering this bearish market, I am looking for re-investment opportunities. I am interested in hearing other people's opinions on ARKK. What do you think about it? Love it? Hate it? Sold it? Bought it?
AMEX:ARKK
by Steversteves
6
Lets Talk ARKK Weekly Baby! Capitulation! One of the most important chart patterns is the buying and selling climax. A classic example of the pattern, in the form of a potential selling climax (S/C) is showing up in the daily and weekly charts of ARKK. Climaxes are exhaustion patterns, they develop as the last needful seller (weak hands) capitulates and hits the bid. Sellers are essentially exhausted. 1) Selling climaxes exhaust the available supply and often mark an important change in the market state. a. Even if they don't mark the end of a trend, they often lead to a period of consolidation. It is not unusual to see a trading range develop after the completion of the secondary test. b. Climaxes are fractal, appearing in literally every time frame. c. Climaxes appear after a long period of trend. 2) Climaxes typically appear concurrently with terrible news flow. a. Late last week I overheard an obviously frustrated fund manager on Bloomberg state that "I'm liquidating and going back to the real fundamentals." Down nearly 60% over the course of the last year he, and many other investors were finally throwing in the towel. 3) Climax patterns occur on extremely heavy volume. a. A clear reversal bar (often a key reversal) is typically evident. b. But modern climaxes can take several days to complete. c. Often the liquidated shares are distributed from weak hands, to strong hands. d. The new buyers are not necessarily long term investors and they often take advantage of the reaction rally to take trading profits. 4) There is often a sharp rally just prior to the selling climax. Wyckoff labeled this as preliminary demand (P/D), a point where strong handed longs are beginning to accumulate shares. The P/D is an alert to begin monitoring for a selling climax. In the case of ARKK, this P/D warning did not occur. 5) Immediately following the S/C is the automatic rally (A/R). Since sellers have been exhausted, the A/R can often cover significant ground. Buyers of the selling climax often use this rally to sell a portion of the position built during the climax. 6) In the case of ARKK, there is a micro test of the S/C. The successful test set the stage for the A/R. 7) A much larger secondary test separated in time must be completed before the S/C can be trusted. Its important to note WHERE the behavior is occurring. In past entries, I have talked about building confluences of support and resistance to create zones. These zones can then be monitored for patterns that are consistent with a change in trend. 1) Price is resting at the bottom of both short term and intermediate trend channels. I generally view channel tops and bottoms as more reliable indicators of overbought and oversold than most of the momentum suite of indicators. The two channel bottoms formed a support confluence in the 61.81 to 63.63 area. 2) There is a clear three wave move (A-B-C) that can be used to generate Fibo extension targets. I use the A-B-C pattern to generate three targets, 1, 1.382, 1.618%. The distance is then projected from the top of C. In this case the tool generated equality with the first wave at 63.38. You can use the Trend Based Fib Extension tool in MV to generate the calculation. 3) The three levels (two channels and 1 Fibo) produce a support confluence in the area between 61.81 and 63.38. This is the zone where the S/C occurred. Most momentum oscillators are deeply oversold. I have included the weekly RSI to illustrate. Note the curl higher. Odds are good that the selling in ARKK is essentially exhausted now. My guess, given the broader backdrop, is that it will form a trading range lasting several weeks, maybe months that will allow strong hands to redistribute shares before beginning a fresh markdown. But, opinion not withstanding, I will follow the evidence and clues as they build. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:ARKKEducation
by CMT_Association
92
ARKK Clarification and UpdateAfter reading the comments in yesterday's ARKK post I realized that I needed to clarify the post, particularly in light of what, in retrospect, was an overly enthusiastic title. I had hoped to call attention to the anatomy of an important price behavior that is important across a wide variety of assets and time frames. I also intended to highlight how I use charts to approximate where these structures might develop. Instead I gave some the impression that I thought the selling climax would mark a long term low. That was not my intent. I will be more precise in the future. Finally, while I think ARKK represents a great example of how a selling climax develops, I don't think it's bear market is over. I made that point in the final paragraph. ARKK has a tremendous amount of work to do before the trend could be changed from bearish to bullish. Thanks to all who posted in the comments. There are some great observations and questions. I would encourage you to read them. The community here is (for the most part) pretty cool with many very knowledgeable participants. Clarifications: 1) Selling climaxes clear out the immediately available supply. This does not mean that new supply can't come out. 2) Selling climaxes typically stall the market for a period of time, and often result in a trading range. But they can fail, and when they fail rapidly, which they often do in bear markets, the failure says very bad things about the asset. 3) This is why climax structures MUST BE SUCCESSFULLY TESTED before they represent anything other than short term capitulation. A micro test isn't enough for more than a few days, perhaps a quick trade. This was point 7 in the post. In retrospect, I should have made it point 1. 4) A successful test must be well separated in time from the initial selling climax. I prefer to see them play out over several weeks. 5) In other words, the huge volume and the reversal bar are only a warning that things may be changing. But, without the completed test, it is only conjecture and does not constitute (at least in my opinion) it’s a data point, not a tradable event. 6) In short, YOU MUST HAVE A COMPLETED TEST before deciding that a low of any consequence has been made. 7) I ended the piece by stating that the selling in ARKK is essentially exhausted now. I should have written it…. Essentially exhausted FOR now. 8) Finally, the only reason I monitor ARKK is the individual names in the portfolio. Funds are made up of many individual assets. Individual assets may be in very different positions in their trends than a given fund, index or market. ARKK holds many names that might eventually hold interest for me. A final point, I think the fundamental/macro influences on equity are quite negative (just my opinion, but I am wrong a lot). Given that, its difficult for me to believe that the risk reward for a long position in ARKK is advantageous or that it will survive the testing process. But, I will follow the evidence and reevaluate if a successful test of the selling climax and subsequent bullish behavior develops. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:ARKK
by CMT_Association
5
Trading Psychology 101If you're new to the stock market like me, you will quickly learn this lesson if you haven't already. My lesson was a little more violent when VIAC took a nose dive. I went straight from Euphoria directly to Capitulation. That was fun. One could argue that Woods has been targeted by Wallstreet Elite, very similar to the legendary degen Bill Hwang. But I quickly learned that was just my Despondence and Depression. If your in the same boat (titanic) as I was. Don't get down on yourself too much or you will miss the best opportunity yet to come. Biggest problem facing new investors (including myself) is finding the bottom or learning to trade down. Good luck out there. Trade safe.
AMEX:ARKK
by SPYvsGME
2