The AARK Fund price is testing a critical trend line. The pressure is mounting for Cathie Wood’s Ark innovation ETF, as Archegos comparisons are drawn.
The was a time when Cathie woods could do no wrong. Her concentrated bets in Tech names saw the ARKK Fund price increase 380% from its 2020, $33.00 low. The price topped out in February, at $153.51, and has been descending ever since.
The current price of $109.72 has the fund down -15.6% in 2021 and -33% from its high.
The recent drop in the ARKK fund price comes as some troubling comparisons are drawn with the fallen Archegos fund.
The $20 Billion Archegos fund, which famously collapsed in March, sent shock waves across financial markets when they failed to meet a multi-Billion Dollar margin call.
In a race to get out first, exposed investment banks flooded the market with huge volume stock sales. However, the resulting melee left many of the prime brokers nursing substantial losses.
I’m not suggesting that ARK funds are about to suffer a similar fate, however, the ARK fund price is telling us that investors may have serious concerns.
Woods and Hwang Connection
It has long been known that Wood and Hwang are friends. When Wood appeared on CNBC Friday, we learned just how deep the connection goes.
During the interview, Wood revealed that Hwang had provided the initial seed capital for Ark Invest’s first four ETF’s. This news sent the ARKK fund price lower to $105.68 and further below the key 200-Day Moving Average.
ARKK Fund Price Outlook
The daily price chart shows us that the current $109.72 trades below the key 50, 100, and 200-Day Moving averages. This indicates the long-term momentum has a negative bias.
The low price of Friday tested an important trend line at $105.68. The line links Fridays’ low with the March low and two previous highs in October and November 2020.
The ARKK Fund price will be open to a steeper decline on a break of the horizontal support line. This event should see the price target the October 2020 low at $89.39.
If the market can reclaim the 200-Day Moving Average at $113.13, the immediate downside threat would diminish, and the price may push higher to 50-Day at $121.56.
As a large holder of growth stocks, The ARKK fund price is intrinsically linked to the Nasdaq 100 and vice-versa. When the Index futures start trading tonight, we may get an idea of what is in store for ARKK next week.