One of the, imo, most politicized stocks is ARKK, so I am excited to tackle this one!
The relationship between PRO-ARKK'ers (my term) and Anti-ARKKER's is similar to that of the relationship between democrats and republicans.
You love it or you hate it, and you vehemently oppose the contrarian to your views.
But we need to have a discussion about ARKK and its future.
Let's start with reviewing ARKK's holdings/fundamental analysis:
Fundamental analysis
ARKK's Current Largest Holdings (Holdings accounting for 55%):
TSLA (largest) @ 8.68%
ZOOM @ 6.22%
ROKU Class A @ 6.21%
Teladoc @ 6.17%
COIN @ 5.78%
EXACT Sciences @ 5.06%
UNITY @ 4.80%
TWILIO @ 4.39%
Intellia Therapeutics @ 4.27%
UiPath @ 4.13%
TSLA is the biggest holding of ARKK, followed by ZOOM (NYSE: ZM) and I think those are the two biggest things working against ARKK at this moment. TSLA saw enormous and, IMO, unsustainable growth over 2021. We are seeing that now with TSLA loosing a lot of steam and not being able to hold itself up. About a week or so ago, TSLA would frequently be able to climb its way out of the 900s/800s up to the 1,000s. Now, its no longer able to actually achieve this and has further lowered the bar to the 700s. Its only a matter of time before we see the 600s, 500s and who knows, maybe even 400s.
ZM was just way over inflated during the pandemic. People were overzealous with that one and yoloing into it without really knowing anything about ZM as a company. It naturally paid the price, trading from the 500s back down to the 100s. Will it go lower? Probably.
Roku I have nothing to say about because I am not actively engaged in trading or their fundamentals. But, to me, its just another streaming thing, just like the NFLX and AAPL. I can't honestly fundamentally see ROKU trading more than APPL, when AAPL offers AAPL TV, streaming services and is now engaging in producing shows and series? I don't know, seems suspish that ROKU would be worth more than AAPL but I admit this comes from ignorance of not knowing too much about ROKU so I will just leave it there.
Teladoc: Great idea. Not sure about the execution. Its a highly indebt company with a debt that continues to grow. Also, as a previous/current healthcare clinician, there is a time and a place for telehealth and virtual medicine. But the reality is we are trying to virtualize a profession that really should not be virtualized. To an extent, this is a good idea within reason. I think these virtual medicine companies are trying to take virtual medicine to the extreme, and its just not ready for it. Until we can have some Prometheus or Passangers or Elysium Medi-bays or Medidoc things, its just not really going to be a feasible option for long term healthcare, aside from follows ups or if you have a cold or infectious illness. Also, I can tell you as a clinician, many patients are satisficed with telemedicine. That's worth looking more into at a later date.
The rest I am impartial too. But I do want to stress, these speculative companies (which they all are) saw amongst the BIGGEST gains over 2021. 2021 was the year of recovery and optimism. However, we are entering the year of conservativism and "safety". Its clear we are heading towards a bear market. And historically, these high risk, optimistic stocks are the ones to take a huge hit during times of bearish sentiment.
From April 2020 to Feb 2021, ARKK was up over 300%!!! I don't think that that is a really healthy amount to be up for a stock in that amount of time, but yeah. Nuts. Keep in mind that we are in a highly inflationary environment. An environment known to be hostile to speculative and growth stocks such as tech.
So where do we stand now?
As expected, ARKK has been HAMPERED by this bearish run thus far. Its down almost 24% YTD.
Will it come down more? Yes. It will. I promise.
Whether it stays down is the question.
ARKK's Outlook
If you want the cliff notes summary, IMO, this is ARKK's outlook summarized:
SHORTTERM: NEGATIVE.
LONGTERM: POSITIVE.
Outlook details
Chart Analysis
ARKK's chart is looking extremely bearish. We have a bear flag formation and within that bearflag formation it looks like we also have somewhat of a double top. There are plenty of bear signs flashing right in front of your face on this chart.
Is there a possibility it can bounce back up?
Yes, of course! But not from where it is currently. I think we need to see more pullback at least until around the 66 mark minimum before we see any kind of bounce in the upward direction.
Do I think its going to happen?
Not really, no. I think we are going to see quite a bit more selling. I think honestly, this is the year of the bear and we are going to be surprised by a lot of the losses we see in some of our favorite stocks. This one included.
Mathematical Analysis
Math outlook via regression forecasting is negative short term.
The blue lines on the chart indicate key levels regression has plotted out for the next week, with 79.32 being best case scenario for ARKK's high but highly unlikely.
The green line indicates a technical area of support, not calculated through regression, just done via qualitative analysis (by me).
Probability Analysis
As always, take probability analysis with a grain of salt. They are not time specific and cannot tell you the probability that we will reach a certain point TOMORROW or in a year. Just the GENERAL probability.
But key things to keep in mind:
Probability that ARKK will reach a HIGH of EQUAL TO or OVER 79.32$ = 21.4% Chance
Probability that ARKK will reach a LOW of EQUAL to or UNDER 65.00 = 67% Chance
VERDICT
So what's my verdict on ARKK?
I think ARKK is something we should pay attention to as a longer term investment, should an ideal price of entry be reached.
What's the ideal price of entry? That's for you to decide. I have my own number that I am willing to buy ARKK at as a long term investment (hint, we aren't there yet). If it reaches, I will invest. If not, then I am unbothered.
The outlook of ARKK, as with most ETFs is positive. That doesn't mean that ARKK is going to the moon anytime soon or even in the future. Just the general power of diversification will always apply to an ETF and lead it to growth in some respect (in most circumstances), even if only a marginal amount.
It is also not a stock that I would put 100,000 of dollars. I think a modest to smaller amount would be warranted in this case. Because while it is an ETF, it is still highly speculative! Which generally contradicts the spirit of ETFs.
And whatever your take is on ARKK, I still think that ARKK should be taken more seriously than it is, because there is a great deal of growth potential in this stock. But with growth comes volatility. Despite it being an ETF, is will retain more volatility than your typical ETF owning to its emphasis in highly speculative, growth stocks with little to no hedge in more stable stocks (as we can clearly see from this year's behaviour).
BUT! This volatility makes ARKK a fun stock to day trade. It generally follows the same pattern type behaviour as other ETFs (meaning I can use quantiative measures to chart out the stock's predicted behaviour) but has tons of movement in a given day and that makes it an interesting stock to have around to trade.
Disclaimer
NOT FINANCIAL ADVICE! Not a financial planner, just enjoy learning about different stocks/fundamentals and sharing my take on them. I am a true blue day trader, so I don't generally deal with fundamentals all that much, or even care. So I enjoy doing stuff like this to really learn about a company's fundamentals. Because while I have traded ARKK many times, I never stopped to think about what it really was, other than I knew people really either hated it or loved it. Also, with us entering this bearish market, I am looking for re-investment opportunities.
I am interested in hearing other people's opinions on ARKK. What do you think about it? Love it? Hate it? Sold it? Bought it?
The relationship between PRO-ARKK'ers (my term) and Anti-ARKKER's is similar to that of the relationship between democrats and republicans.
You love it or you hate it, and you vehemently oppose the contrarian to your views.
But we need to have a discussion about ARKK and its future.
Let's start with reviewing ARKK's holdings/fundamental analysis:
Fundamental analysis
ARKK's Current Largest Holdings (Holdings accounting for 55%):
TSLA (largest) @ 8.68%
ZOOM @ 6.22%
ROKU Class A @ 6.21%
Teladoc @ 6.17%
COIN @ 5.78%
EXACT Sciences @ 5.06%
UNITY @ 4.80%
TWILIO @ 4.39%
Intellia Therapeutics @ 4.27%
UiPath @ 4.13%
TSLA is the biggest holding of ARKK, followed by ZOOM (NYSE: ZM) and I think those are the two biggest things working against ARKK at this moment. TSLA saw enormous and, IMO, unsustainable growth over 2021. We are seeing that now with TSLA loosing a lot of steam and not being able to hold itself up. About a week or so ago, TSLA would frequently be able to climb its way out of the 900s/800s up to the 1,000s. Now, its no longer able to actually achieve this and has further lowered the bar to the 700s. Its only a matter of time before we see the 600s, 500s and who knows, maybe even 400s.
ZM was just way over inflated during the pandemic. People were overzealous with that one and yoloing into it without really knowing anything about ZM as a company. It naturally paid the price, trading from the 500s back down to the 100s. Will it go lower? Probably.
Roku I have nothing to say about because I am not actively engaged in trading or their fundamentals. But, to me, its just another streaming thing, just like the NFLX and AAPL. I can't honestly fundamentally see ROKU trading more than APPL, when AAPL offers AAPL TV, streaming services and is now engaging in producing shows and series? I don't know, seems suspish that ROKU would be worth more than AAPL but I admit this comes from ignorance of not knowing too much about ROKU so I will just leave it there.
Teladoc: Great idea. Not sure about the execution. Its a highly indebt company with a debt that continues to grow. Also, as a previous/current healthcare clinician, there is a time and a place for telehealth and virtual medicine. But the reality is we are trying to virtualize a profession that really should not be virtualized. To an extent, this is a good idea within reason. I think these virtual medicine companies are trying to take virtual medicine to the extreme, and its just not ready for it. Until we can have some Prometheus or Passangers or Elysium Medi-bays or Medidoc things, its just not really going to be a feasible option for long term healthcare, aside from follows ups or if you have a cold or infectious illness. Also, I can tell you as a clinician, many patients are satisficed with telemedicine. That's worth looking more into at a later date.
The rest I am impartial too. But I do want to stress, these speculative companies (which they all are) saw amongst the BIGGEST gains over 2021. 2021 was the year of recovery and optimism. However, we are entering the year of conservativism and "safety". Its clear we are heading towards a bear market. And historically, these high risk, optimistic stocks are the ones to take a huge hit during times of bearish sentiment.
From April 2020 to Feb 2021, ARKK was up over 300%!!! I don't think that that is a really healthy amount to be up for a stock in that amount of time, but yeah. Nuts. Keep in mind that we are in a highly inflationary environment. An environment known to be hostile to speculative and growth stocks such as tech.
So where do we stand now?
As expected, ARKK has been HAMPERED by this bearish run thus far. Its down almost 24% YTD.
Will it come down more? Yes. It will. I promise.
Whether it stays down is the question.
ARKK's Outlook
If you want the cliff notes summary, IMO, this is ARKK's outlook summarized:
SHORTTERM: NEGATIVE.
LONGTERM: POSITIVE.
Outlook details
Chart Analysis
ARKK's chart is looking extremely bearish. We have a bear flag formation and within that bearflag formation it looks like we also have somewhat of a double top. There are plenty of bear signs flashing right in front of your face on this chart.
Is there a possibility it can bounce back up?
Yes, of course! But not from where it is currently. I think we need to see more pullback at least until around the 66 mark minimum before we see any kind of bounce in the upward direction.
Do I think its going to happen?
Not really, no. I think we are going to see quite a bit more selling. I think honestly, this is the year of the bear and we are going to be surprised by a lot of the losses we see in some of our favorite stocks. This one included.
Mathematical Analysis
Math outlook via regression forecasting is negative short term.
The blue lines on the chart indicate key levels regression has plotted out for the next week, with 79.32 being best case scenario for ARKK's high but highly unlikely.
The green line indicates a technical area of support, not calculated through regression, just done via qualitative analysis (by me).
Probability Analysis
As always, take probability analysis with a grain of salt. They are not time specific and cannot tell you the probability that we will reach a certain point TOMORROW or in a year. Just the GENERAL probability.
But key things to keep in mind:
Probability that ARKK will reach a HIGH of EQUAL TO or OVER 79.32$ = 21.4% Chance
Probability that ARKK will reach a LOW of EQUAL to or UNDER 65.00 = 67% Chance
VERDICT
So what's my verdict on ARKK?
I think ARKK is something we should pay attention to as a longer term investment, should an ideal price of entry be reached.
What's the ideal price of entry? That's for you to decide. I have my own number that I am willing to buy ARKK at as a long term investment (hint, we aren't there yet). If it reaches, I will invest. If not, then I am unbothered.
The outlook of ARKK, as with most ETFs is positive. That doesn't mean that ARKK is going to the moon anytime soon or even in the future. Just the general power of diversification will always apply to an ETF and lead it to growth in some respect (in most circumstances), even if only a marginal amount.
It is also not a stock that I would put 100,000 of dollars. I think a modest to smaller amount would be warranted in this case. Because while it is an ETF, it is still highly speculative! Which generally contradicts the spirit of ETFs.
And whatever your take is on ARKK, I still think that ARKK should be taken more seriously than it is, because there is a great deal of growth potential in this stock. But with growth comes volatility. Despite it being an ETF, is will retain more volatility than your typical ETF owning to its emphasis in highly speculative, growth stocks with little to no hedge in more stable stocks (as we can clearly see from this year's behaviour).
BUT! This volatility makes ARKK a fun stock to day trade. It generally follows the same pattern type behaviour as other ETFs (meaning I can use quantiative measures to chart out the stock's predicted behaviour) but has tons of movement in a given day and that makes it an interesting stock to have around to trade.
Disclaimer
NOT FINANCIAL ADVICE! Not a financial planner, just enjoy learning about different stocks/fundamentals and sharing my take on them. I am a true blue day trader, so I don't generally deal with fundamentals all that much, or even care. So I enjoy doing stuff like this to really learn about a company's fundamentals. Because while I have traded ARKK many times, I never stopped to think about what it really was, other than I knew people really either hated it or loved it. Also, with us entering this bearish market, I am looking for re-investment opportunities.
I am interested in hearing other people's opinions on ARKK. What do you think about it? Love it? Hate it? Sold it? Bought it?
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