In today’s report, we want to highlight the constructive technical setup we are seeing in the ARK ETFs. Most have not forgotten the excellent performance of Kathy Wood’s funds in 2020, nor the rapid fall from grace in early 2022, but the ARK Fintech Innovation ETF has been a steady outperformer in this bull market and the ARK Innovation ETF is just starting to show signs of life that look attractive to us.
ARKF—Break-out above the $39 level measures to a price target above $50
The ARKF Relative curve (chart, panel 2) has been in bullish reversal since the end of 2022 and has traced out a basing pattern over the past 3 years. These price structures are generally supportive of sustained bullish trends once animal spirits are aroused. We’ve seen clear overbought readings on daily and weekly RSI oscillators which are typically indicators of sustainable bullish trend change as well.
ARKK-Just starting to turn higher
The ARK Innovation fund appears to just be getting its own bullish reversal underway. We think there is potential upside to near the $100 level based on the chart and the continuing bull trend for equities.
The weekly RSI here falls just short of our high momentum buy signal, but the MACD study is on a buy and price has clearly broken through a long-term resistance level on the chart above $54.
In addition to the technical of the ARK funds themselves, we have seen investors begin to move away from the themes that have motivated this bull market so far. The Mag7 is still posting competitive performance, but those stocks are no longer lapping the field. The SOX Index has corrected as the NVDA halo effect has diminished across the industry. We mention this to point out that investors are likely looking for new themes as this bull market persists.
Interest Rates Rolling Over: Supportive of Growth in the Context of a Bull Market for Equities
Cyclicals took the leadership baton in the wake of the Presidential Election and rates moved higher as investor risk-appetite increased. However, we’ve seen rates roll-over entering September with commodities prices also soft. If rates do resume lower, a tailwind for Growth could re-emerge.
Data sourced from FactSet Research Systems Inc.
