Is “ARK-y” an adjective or an adverb?
“ARK-y” describes the type of high-growth tech stocks ARK Invest founder Cathie Wood buys in her ARK Innovation ETF (ARKK).
Here’s the list of stocks held in the ARKK ETF:
These are the ARK-y stocks. These names are working.
And the ETF itself has more shorts than ever.
Yes, that’s right.
The short-sellers weren’t this aggressive near the top.
They’re the most abundant NOW, after these ETFs have lost so much money for investors.
I believe the shorts are too late. And everybody’s wrong.
Bull Flag Breakout
Look at Tesla (TSLA) – basically the No. 1 ARK-y stock – breaking out of this bull flag:
We know TSLA is a little more than 13% of ARKK’s holdings.
So, WTF is a bull flag…
A bull flag is a tight consolidation within an ongoing uptrend that appears like a flag pole with a waving flag at the top.
The “pole” is the original ripper in Tesla. The “flag” represents the consolidation over the past couple weeks.
The old rule of thumb is that upon completion of said “bull flag,” the ensuing move is most likely very similar to the move that got it here.
So, we take the amplitude of the initial uptrend (the pole).
Then, we add it to the breakout level upon completion of the consolidation (the flag).
That math gets TSLA back near those all-time highs from December near 480.
We Buy Flying Car Stocks
There are many examples of ARK-y stocks that are working in this environment.
We bought a flying-car company last week.
We still like Coinbase Holdings (COIN) as a bet on cryptocurrency. And COIN was just added to the S&P 500.
We’re looking at a bunch of biotechs.
It’s the rotation into high-growth stocks.
We call them ARK-y because these ARKK funds specialize in buying exactly that.
We’re buying ARK-y stocks.
Are you in?
Stay sharp,
JC Parets, CMT
Founder, TrendLabs