Trading Cathie Wood's ARKK as It Tries to Break Out Over Major Resistance

As we move through 2023, it’s clear that a handful of stocks continue to drive the bulk of the gains in the S&P 500.

We haven’t seen much inflow back into growth stocks, though this group in general He is Trading is better than it was in 2022, and some of its components have come back to life.

Specifically, names like Trade Desk (TTD) – Get a free reportShopify (Shop) – Get a free reportMongoDB (mdb) – Get a free reportTesla (TSLA) – Get a free reportOthers have done well.

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Many investors prefer using Cathie Wood’s ARK Innovation ETF (ark) – Get a free reportas a proxy for growth stocks. While Ark owns several ETFs — focusing on everything from fintech to genomics — the most popular is ARKK, which is Almost four times larger From the next largest Ark ETF.

For its part, ARKK has done well this year. Despite today’s drop of 2%, stocks are up nearly 21% so far in 2023. That slightly outpaces Nasdaq’s 18.2% year-to-date gain, which is the highest-performing US index so far this year. .

It shows investors’ lack of appetite for risk, given that growth stocks are still struggling to sustain an upside.

Buy or sell the ARKK ETF?

The chart above looks crowded, with some daily and weekly measurements. However, it does help us paint a more accurate picture of what is happening – and what could happen in the future.

Currently, the stock is struggling to close above the 200-day and 50-week moving averages, as well as resisting the downside.

If the ARKK ETF can close above $40, it will not only erase these actions, but also reclaim the 50% retracement from the recent low to the 2023 high.

In this scenario, it will open up to the $42.50 to $43 area. Above that could bring the 2023 high back into play near $45.50.

Ultimately, the longer-term bulls are looking for a move above this year’s high and rally in the $50-$53 region. That area has been important in the past and is also the 161.8% extension of the current range.

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What happens if ARKK can’t retake the 50-week and 200-day moving averages? Then it is still subject to dips.

There is a bearish gap filling level at $35.90. Below that, and the current March, April and May lows are all within a few cents of $34.80.

So if selling pressure picks up, this becomes a key area to hold. If it fails, it could create a multi-month spin to the downside, eventually activating the $31.70-$32.70 area.

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