Why I am Bullish on $ARKK in the Mid-term

On 11/05/2021 I uploaded an article discussing technical reasons I was bearish on $ARKK. Since posting, The ETF has broke down and is clocking in at ~$67 a share, a drop of over 40%. I am revisiting this ETF and believe it is likely bottoming out soon due to a few reasons. Firstly, Interest rates serve as a predominant discussion point for investors bearish on indices; I believe this has already been priced into $ARKK. Additionally, Crypto is experiencing massive sell-offs and could be an indicator of possible sector rotation. Lastly, $ARKK crossed below its 200 weekly moving average and may experience a bounce similar to March 2020.

Inflation and increasing interest rates have been the center of concern within $SPY threads and the general retail section. However, $ARKK has been so uncertain that Interest rates already caused panic sell offs when It fell around early-November. Whilst the indices continue to experience a correction because of the Fed, $ARKK may have the opportunity to bounce since, hypothetically, worsening interest rates should have no effect on price action. This section of my argument is purely based off what trends I have noticed on threads online and other technical analysis posts, please take this area with a grain of salt.

Along with indices seeing slight sell offs, Crypto as a general market has taken quite a hit. Below is a chart comparing $ARKK and the price of Ethereum:

Between June of 2021 and November of 2021. Ethereum went on an impressive bull run while $ARKK moved effectively sideways. Between November 2021 and YTD, $ARKK and Ethereum both fell hard. Ethereum's price returned to what out was Mid-March 2021, $ARKK patched back to Mid-June. Mid-June 2020, that is. My point being, While crypto did fairly well between June and November of 2021, $ARKK struggled, money leaked out of innovation and lumped into crypto. We might now be on the verge of sector rotation, we will see money flow out of crypto and value and get pumped into Innovation.

Finally, I'd like to discuss the strongest part of my argument; $ARKK's visit below the 200WMA. The graph below shows $ARKK's price action since October of 2020.

The lowest golden line represents the 200 week moving average. a support level we have been above since the Covid market crisis. Back in mid-March 2020, $ARKK dipped 10% below it's 200WMA and triggered the strongest bull rally it's ever had; It ran 383% in 330 days. Currently, $ARKK is trading a hair below the 200WMA, and it may repeat the old pattern. A wave of selling, check, a sizable dip below the 200WMA, check, now we wait to see if a medium term breakout occurs. Following the previous numbers, a 10% dip below the 200WMA places us around $65 before a possible bounce. Between making the chart above and writing this post, we inched a few percent closer to my PT of $64.50. Additionally, we opened a down-gap which is still open at the time of publishing, giving $ARKK 2 reasons too jump upwards; close the gap and tarde above the 200WMA.

After my last article on this ETF I have been painstakingly watching this ETF. I believe the blood shed may be finally over as we see proper pricing, sector rotation and the strongest support this ETF offers coming to the rescue. All in all, I have high hopes that we will experience a strong bull rally in the coming quarters. Remember, Bears take the elevator down and Bulls take the stairs up, and I believe we just stopped at the figurative ground floor.

Good luck to all.

Archit Joshi