Why I'm bearish on $ARKK on the short term.

$ARKK Graph, After hours 11/05/2021

$ARKK is Ark Invest’s Innovation ETF which prioritizes breakthrough technology and is an aggressive diversification tool. The ETF has been the topic of discussion within the market, from Crypto NFT teens praising its refreshing strategies whilst bears are worried about the future of multiple involved sectors. I am conservatively bullish on this ETF in the long term and even held it in my portfolio for an extensive amount of time, until 11/05/2021 when I sold out because of multiple bearish signals.

$ARKK saw all-time highs on 2/16/2021 at $159.70 per share, a whopping 60% increase compared to it’s YTD lows. Unfortunately, the aggressive ETF has had a rocky year. After the early-year tech sector sell offs, $ARKK has moved effectively sideways whilst the S&P 500 has crushed ATHs after ATHs. I see great potential in this actively-managed ETF, but I think it’s time to sound the alarms for the short term.

As the Fed raises concerns on the future of the market, bearish sentiment seems to be growing regularly on this ETF. $TSLA is $ARKKs biggest holding and has been running parabolically, finally cooling down. As we see $TSLA stabilizing, $ARKK can no longer stay above the water based on a blow-off-top rally from it’s largest holding. The primary concern I have is that $ARKK has a confirmed double top pattern, topping out at approximately $126.34, It came tumbling down and bounced off of support at $106.35. On 11/04/2021, $ARKK hit $125.86 and started descending rapidly. I believe that this is the short-term top, which means the ETF is seeing lower highs, a bearish signal. If my assumption is that $125.86 is the third top, $ARKK is in a triple-top pattern and should return to the neckline at about $113.44. Additionally, $ARKK left a sizable gap created on 10/14/2021, $113.58-$114.59. $ARKK has two major obligations to descend to mid $113s, the neckline for the triple top as well as the gap fill. Additionally, the last time $ARKK went below the neckline at $113, it came crashing down to approximately $106.35. If $ARKK repeats it’s previous pattern, we can assume it comes down to $106.35 and use momentum to close the $103.25-$104.00 gap created all the way back on 5/20/2021.

All in all, there are many indicators that paint $ARKK to be very bearish in the near future. With $TSLA cooling down, $ARKK is due for a correction and might fall into a triple top causing it to close all previous gaps. Good luck to all.

Archit Joshi