BY MARK SEBASTIAN
November 30, 2023
Ticker of the week: ARKK
Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Bill Griffo will chime in with macro analysis and Andrew Giovinazzi will then finish out the week with a volatility breakdown.
Hey Traders,
The market is always changing….depending on the circumstances we can see speculative stocks explode like in 2020….
Or we can see energy stocks move dramatically higher like in 2022…or we can have a year like 2023 where all the funds care about is profits …and names like AAPL and GOOGL move dramatically higher.
Post 2020 one of the traders/fund managers that took it on the chin was Cathy Wood.
Her funds went from high flyers to toast in extremely short order….
But I do not know if you have noticed…but ARKK…her flagship ETF has been on a run…
After hitting a low of 29.43 on December 28th 2022 the ETF has been really strong.
On the year ARKK is up 34.77%, that is a pretty nice run.
Now there are those that are critical of the way Ms Wood buys and sells…
But…her timing does not really matter, the question at hand is whether in 10 years her pics will be the winners.
Let’s break down ARKK funds and its top holdings.
ARKK’s top 10 holdings:
Coinbase has been going parabolic…coin performance is strongly tied to Bitcoin, her team clearly thinks it is going higher…BTC is in an uptrend, I’d rather own just straight bitcoin, but one could argue that from a firm perspective…Coin is the best proxy.
ROKU: I hate the stock and do not understand how they are going to ‘blow up’ streaming is becoming bigger and bigger and is more and more directly on the TV…not sure where ROKU fits.
TESLA: I can lay all the hate I want (and I have plenty) but the stock seems bullet proof…I get the buy.
ZM: Maybe the worst company to hold in here top 10, barriers to entry…little … .growth…little…prospects…low…this one seems like a stubborn hold.
PATH: Don’t know much about it.
Block: Block is zoom with more barriers to entry…the stock is probably over sold…but it is not going to explode the way the management wants.
CRSP: See Path
RBLX: My kids love this, if the team waited to buy until it got to current levels I could see this…their ownership price though is way too high, not sure it gets to 70 dollars a share anytime soon.
TWLO: good company, lots of uses, purchase price too high…see Block.
Draftkings…this is one that has entered the top 10 more recently, if there is one company outside of coin and TSLA that can blow higher it is this one.
As you can see I don’t hate most of the top 10, I just don’t like the price ARKK is at. Do I think on a high momentum year ARKK can get back to 70 bucks a share from here…
Yes I do…but I am not so certain that this is that year.. With rates higher and returns demanded…and the funds 4th largest holding being ZM…I would find somewhere else to invest…likely I would just cherry pick a few of the names and buy them.
But from a trading perspective…if you think the QQQ is going to break 400…this ETF is going to break 50…
Its the best momentum play out there frankly. So I am not against it as a trade…
Ill rely on Licia and Griff to tell us what direction this ETF is going next…
Where I do not need help on direction is in the VIX ETPS. This is why I have a position in UVIX that I think is going to at least double before February.
While I am already up 30%…it is not too late. I have 2 more trades in UVIX to lay out in the next few days that I will reveal in the trading desk…you don’t want to miss these…
Questions about that? Leave a comment below!
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Mark Sebastian
Mark Sebastian
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