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The Street
The Street
Bret Kenwell

Did Cathie Wood’s ARKK Fund Bottom Last Week?

It’s been a wild couple of years, as we’ve seen explosive rallies and soul-crushing declines in some of the market’s hottest assets.

Those include cryptocurrencies like bitcoin, growth stocks and of course, the money manager that combined them both: Cathie Wood.

Wood rose to notoriety with her large position in Tesla (TSLA). Then being positioned in high-octane growth stocks, she rode the wave of financial fame — and profits — as “risk-on” assets soared following the covid-19 selloff in the first quarter of 2020.

The most well-recognized fund from Wood is the ARK Innovation ETF (ARKK).

Despite the decimation in growth stocks over the last few months, this fund had actually done a pretty good job of avoiding the lows it set in mid-May.

However, recent weakness in its top holdings — including Tesla, Zoom Video (ZM) and Roku (ROKU) — eventually toppled ARKK and sent the ETF to new lows.

Now the question is, has ARKK bottomed for good?

Trading ARKK Stock

Daily chart of the ARKK ETF.

Chart courtesy of TrendSpider.com

The stock market enjoyed a powerful rally on Thursday and Friday, with the S&P 500 and Nasdaq rallying 6.75% and 9.4%, respectively.

ARKK steamrolled higher too, climbing 14.5% and 8.3%, respectively.

The two-day burst came after the ETF made new 2022 lows on Wednesday. However, it sent ARKK above the 10-week and 50-day moving averages, two measures it’s holding despite Monday’s mild dip.

Bulls want to see ARKK stay above these measures going forward. It’s healthy to see a pause today, but investors don’t want to see ARKK give back too much of its gain.

If it loses the 50-day and 10-week moving averages, we could see a test of the 10-day and 21-day moving averages near $37.

As for the upside, keep an eye on $40.93. That’s the high from Friday and last week’s high as well.

If we see a rally above that mark this week, it creates a weekly-up rotation. It would be a big move, but if that scenario were to play out, it would open the door up to the $45.50 to $46 area.

There we have a huge pivot level from the last several quarters, as well as the 61.8% retrace of the current range.

Above that opens the door to $50 and the declining 200-day moving average.

As for whether ARKK has seen the low, I would feel confident with that thesis so long as the stock can stay above $35. While that’s only about 6.5% above the 2022 low, we can always raise that “line in the sand” level if ARKK can push higher. 

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