Here’s how you trade $ARKK – August 23, 2021ARKK QQQ
ARK ( NYSEARCA: ARKK ), this is starting to look like a pretty good setup. Here’s the weekly chart and you can see where the stock is pinching, right? On the daily chart you can see kind of a similar situation; don’t pay attention to the moving averages as they were on that weekly that I just showed you. This would be kind of more where they really are, the 200-day moving average or the 40-week down here.
Here’s a momentum indicator and there are a lot of them out there you don’t have to use this one, you can’t use this one, I just kind of made it up, but you can use any momentum indicator and you can see, this stock doesn’t really have any momentum. So on the daily chart too, the same thing, it really does not have any momentum. You can look at MACD, rate of change (ROC), any of that stuff, it’s all pretty flat.
But what I like about this is, it is kind of giving you a low risk, a defined risk entry. And this is how you do that, you look and say this is where the lows are down here. And so if I like ARK ( NYSEARCA: ARKK ), even though I know that last year a lot of this was due the manufactured gamma squeezes by SoftBank ( TYO: 9984 ) as well as that dude Hwang, Wong, whatever it is, that blew up his fund, so this was kind of orchestrated.
However, you can’t argue with the price. To look at a price like this, a stock chart like this, and say, well, that doesn’t matter because they kind of manipulated the Options Market and they created a squeeze. Whatever, price is price. I don’t care why a stock goes up. If it’s going up I want to be in it. I don’t care if it was a barking chicken riding on a blind dog and people decided to buy it. I don’t care. If a stock is going higher then I am a buyer, that’s just the way it is. So all during this last run here last year, you can’t argue with that.
With that said though, that game is pretty much over. And this is an actively traded ETF. So while ARK ( NYSEARCA: ARKK ) has been floundering the QQQ’s ( NASDAQ: QQQ ), which aren’t actively traded, the QQQ’s ( NASDAQ: QQQ ) have just kind of kept going higher. And hence, this idea that an actively traded fund is just going to go up and up and up is silly,. because it is actively traded and I don’t mean the actual ETF itself, I mean the underlying stocks. One day they added 5 percent of Tesla ( NASDAQ: TSLA ), the next day they sold 8 percent of SnapTwit or any of that stuff. It is a rotating flowing thing, it’s money flow in and out and back and forth.
Want really makes this thing go is not the holdings that it has, it’s the money that is actually buying ARKK ( NYSEARCA: ARKK ). And then the money that i.s selling ARKK ( NYSEARCA: ARKK ). As there is more demand ARKK ( NYSEARCA: ARKK ) runs higher. When supply starts to outstrip demand ARKK ( NYSEARCA: ARKK ) falls lower. It doesn’t matter what’s in it, what’s in it doesn’t impact anybody because this stock trades on the perception of the public. So let me get back on track, the perception of the public. Back here Cathie Wood can do no wrong. I think she is almost like the Elliott Wave now or Fibonacci, for that matter, it’s a religion, and that’s the way it is with this stock.
But what I am looking at is just pure and simple, the price action. Last year was last year, it’s not this year. And so when I look at this and I see flat momentum on the daily chart. And then I see on the weekly chart, pretty flat momentum too, with a little bit of upward bias with the stock just resting a little bit below the 200-day, a little bit below the 50-day moving average, that’s the red line here. So this stock on the daily chart is below the SMA. And by the way, you could say, why don’t you use the exponential moving average, it’s faster? Dude, I don’t want it to be faster, I want it to be the average price of stocks over the last 200-days, not less than that. Not give more weight to the recent prices, that’s what I want to do. Dude, do that on the 8-day moving average. But the 200-day moving average, completely and totally irrelevant. So it’s simple, there, I digress.
The bottom line though is, this is now below the 50-day and the 200-day moving average but not by that much. And it is kind of setting up into this little wedge pattern. So what you may want to do is, you may want to watch this stock. Frankly, even if you took a little bit right now you can put a stop, maybe even 5.5, perhaps 6 percent below that level and you are okay. But the idea is, you want to see the stock break out. You want to see it break out above say, 125.00 on some pretty good volume. And if it is here and then it’s up to 125.00, that’s 5 percent above where it is right now.
So again, you could take a little position in this stock now and then buy more when or if it breaks out. I think it ultimately will, that just seems to be the way this religion goes. And so you want to be in it a little bit before that happens. That way even though you are buying more at 125.00 or 126.00 your average cost basis is below that because you got in at 119.00. Anyway, that’s the way that I would be trading ARK ( NYSEARCA: ARKK ).