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Lets Talk ARKK Weekly Baby! Capitulation! One of the most important chart patterns is the buying and selling climax. A classic example of the pattern, in the form of a potential selling climax (S/C) is showing up in the daily and weekly charts of ARKK. Climaxes are exhaustion patterns, they develop as the last needful seller (weak hands) capitulates and hits the bid. Sellers are essentially exhausted. 1) Selling climaxes exhaust the available supply and often mark an important change in the market state. a. Even if they don't mark the end of a trend, they often lead to a period of consolidation. It is not unusual to see a trading range develop after the completion of the secondary test. b. Climaxes are fractal, appearing in literally every time frame. c. Climaxes appear after a long period of trend. 2) Climaxes typically appear concurrently with terrible news flow. a. Late last week I overheard an obviously frustrated fund manager on Bloomberg state that "I'm liquidating and going back to the real fundamentals." Down nearly 60% over the course of the last year he, and many other investors were finally throwing in the towel. 3) Climax patterns occur on extremely heavy volume. a. A clear reversal bar (often a key reversal) is typically evident. b. But modern climaxes can take several days to complete. c. Often the liquidated shares are distributed from weak hands, to strong hands. d. The new buyers are not necessarily long term investors and they often take advantage of the reaction rally to take trading profits. 4) There is often a sharp rally just prior to the selling climax. Wyckoff labeled this as preliminary demand (P/D), a point where strong handed longs are beginning to accumulate shares. The P/D is an alert to begin monitoring for a selling climax. In the case of ARKK, this P/D warning did not occur. 5) Immediately following the S/C is the automatic rally (A/R). Since sellers have been exhausted, the A/R can often cover significant ground. Buyers of the selling climax often use this rally to sell a portion of the position built during the climax. 6) In the case of ARKK, there is a micro test of the S/C. The successful test set the stage for the A/R. 7) A much larger secondary test separated in time must be completed before the S/C can be trusted. Its important to note WHERE the behavior is occurring. In past entries, I have talked about building confluences of support and resistance to create zones. These zones can then be monitored for patterns that are consistent with a change in trend. 1) Price is resting at the bottom of both short term and intermediate trend channels. I generally view channel tops and bottoms as more reliable indicators of overbought and oversold than most of the momentum suite of indicators. The two channel bottoms formed a support confluence in the 61.81 to 63.63 area. 2) There is a clear three wave move (A-B-C) that can be used to generate Fibo extension targets. I use the A-B-C pattern to generate three targets, 1, 1.382, 1.618%. The distance is then projected from the top of C. In this case the tool generated equality with the first wave at 63.38. You can use the Trend Based Fib Extension tool in MV to generate the calculation. 3) The three levels (two channels and 1 Fibo) produce a support confluence in the area between 61.81 and 63.38. This is the zone where the S/C occurred. Most momentum oscillators are deeply oversold. I have included the weekly RSI to illustrate. Note the curl higher. Odds are good that the selling in ARKK is essentially exhausted now. My guess, given the broader backdrop, is that it will form a trading range lasting several weeks, maybe months that will allow strong hands to redistribute shares before beginning a fresh markdown. But, opinion not withstanding, I will follow the evidence and clues as they build. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
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AMEX:ARKKEducation
by CMT_Association
92
ARKK Clarification and UpdateAfter reading the comments in yesterday's ARKK post I realized that I needed to clarify the post, particularly in light of what, in retrospect, was an overly enthusiastic title. I had hoped to call attention to the anatomy of an important price behavior that is important across a wide variety of assets and time frames. I also intended to highlight how I use charts to approximate where these structures might develop. Instead I gave some the impression that I thought the selling climax would mark a long term low. That was not my intent. I will be more precise in the future. Finally, while I think ARKK represents a great example of how a selling climax develops, I don't think it's bear market is over. I made that point in the final paragraph. ARKK has a tremendous amount of work to do before the trend could be changed from bearish to bullish. Thanks to all who posted in the comments. There are some great observations and questions. I would encourage you to read them. The community here is (for the most part) pretty cool with many very knowledgeable participants. Clarifications: 1) Selling climaxes clear out the immediately available supply. This does not mean that new supply can't come out. 2) Selling climaxes typically stall the market for a period of time, and often result in a trading range. But they can fail, and when they fail rapidly, which they often do in bear markets, the failure says very bad things about the asset. 3) This is why climax structures MUST BE SUCCESSFULLY TESTED before they represent anything other than short term capitulation. A micro test isn't enough for more than a few days, perhaps a quick trade. This was point 7 in the post. In retrospect, I should have made it point 1. 4) A successful test must be well separated in time from the initial selling climax. I prefer to see them play out over several weeks. 5) In other words, the huge volume and the reversal bar are only a warning that things may be changing. But, without the completed test, it is only conjecture and does not constitute (at least in my opinion) it’s a data point, not a tradable event. 6) In short, YOU MUST HAVE A COMPLETED TEST before deciding that a low of any consequence has been made. 7) I ended the piece by stating that the selling in ARKK is essentially exhausted now. I should have written it…. Essentially exhausted FOR now. 8) Finally, the only reason I monitor ARKK is the individual names in the portfolio. Funds are made up of many individual assets. Individual assets may be in very different positions in their trends than a given fund, index or market. ARKK holds many names that might eventually hold interest for me. A final point, I think the fundamental/macro influences on equity are quite negative (just my opinion, but I am wrong a lot). Given that, its difficult for me to believe that the risk reward for a long position in ARKK is advantageous or that it will survive the testing process. But, I will follow the evidence and reevaluate if a successful test of the selling climax and subsequent bullish behavior develops. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
AMEX:ARKK
by CMT_Association
5
Trading Psychology 101If you're new to the stock market like me, you will quickly learn this lesson if you haven't already. My lesson was a little more violent when VIAC took a nose dive. I went straight from Euphoria directly to Capitulation. That was fun. One could argue that Woods has been targeted by Wallstreet Elite, very similar to the legendary degen Bill Hwang. But I quickly learned that was just my Despondence and Depression. If your in the same boat (titanic) as I was. Don't get down on yourself too much or you will miss the best opportunity yet to come. Biggest problem facing new investors (including myself) is finding the bottom or learning to trade down. Good luck out there. Trade safe.
AMEX:ARKK
by SPYvsGME
2
Rolled: ARKK March 18th 103.22 Short Put to April 14th 103... for a .10 credit. Comments: Rolling this out on strength to lock in the gain experienced by the 103.22 (which it quickly gave up during the day), improve the strike slightly, and to keep some extrinsic in it. I'm still looking at the deep in-the-money short put as functionally long stock that I'm short strangling with the March 18th 59.22/81.22 to reduce cost basis. I've collected a total of 22.68 in credits, so my break even is 103 (the short put strike) minus 22.68 (total credits collected) or 80.32 relative to where the stock closed today at 69.03, so I still have some cost basis reduction work to to do.
AMEX:ARKKLong
by NaughtyPines
Be on the right side of change. Tuesday, Jan. 25 ARK sumitBe on the right side of change is a fancy title for an investment company that lost 23-25% of the value of their 4 main funds in the past 16 trading days! No need to say that these funds had lost 17-34% of their values in 2021. I think it is crucial to be on the right side of the change, otherwise...! One of my favorite Youtubers is Ozzy man, he has a series called Destination F..! It is a compilation of failures, he usually says: Someone is definitely ending up in destination F regarding their employment status over this. (being on the wrong side of the change) Market sentiment has changed a lot and those who are on the right side of the change are sitting on piles of cash or shorted the market..! Each candle shows 1 year.
AMEX:ARKKShort
by Moshkelgosha
5
Do you know how hard is to revrse a 55% decline?I have written more than 20 analyses on ARKK since 2021, none were Bullish! I even compare it to the NET NET fund during the .com Bubble..! To all those who are loyal to ARK, now you need +122% to get to the same level Of February 2021..! This number will be increased to 200-300% in the next 2 months which makes it almost impossible! The celebrity fund manager will soon be overthrowing..! It pretty much smells like 2008..! Reviewing the comments below my previous ark post will be fun these days..! I might have limited knowledge about the market, but I'm confident that I understand 2 things: 1- Bubble 2- Turning points Best, Moshkelgosha DISCLAIMER I’m not a certified financial planner/advisor, a certified financial analyst, an economist, a CPA, an accountant, or a lawyer. I’m not a finance professional through formal education. The contents on this site are for informational purposes only and do not constitute financial, accounting, or legal advice. I can’t promise that the information shared on my posts is appropriate for you or anyone else. By using this site, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information found on this site.
AMEX:ARKKShort
by Moshkelgosha
3
Opening: ARKK March 18th 59.22 Short Put... for a 1.83 credit. Comments: Here, I'm basically treating the deep ITM 103.22 short put as stock with the 81.22 short call making that aspect of the setup -- the 103.22P/81.22C -- functionally a March 18th 81.22 covered call. I don't want to widen the inverted strangle further by rolling down the short call, since that would be the functional equivalent of selling a call below my cost basis, which I generally don't like to do. In essence, I'm converting this into a March 18th 59.22/81.22 covered strangle with the 103.22P standing in as my stock. I've collected a total of 22.58 in credits which makes my cost basis in my "synthetic stock" 103.22 - 22.58 or 80.64. The downside of doing this is that this makes the setup more net delta long, which will make for additional discomfort if this POS can't find a bottom somewhere.
AMEX:ARKKLong
by NaughtyPines
2