BY BILL GRIFFO
December 2, 2023
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.
Have a stock YOU want us to review? Email my team here. – Mark
Hey Traders,
The Cathy Woods ARKK fund certainly has the wind at its sails … The question is, does it have staying power …
In 2021 ARKK traded as high as $150 a share, while today it sits just below $50 and it took a 43% rally to get there …
ARKK has lost an annualized 2.3% over the past 5 years and that includes a year when the S&P 500 index (Ticker:SPX) doubled!
Is it possible a flood of money will lift the ARKK again? … Find out here …
ARKK’s Charting Pattern
ARKK had a fantastic day on Friday .. +5% on higher than average volume … However, there are some very choppy waters ahead.
The volume below the bar chart shows a nice day of buying on Friday but taking out the July high will not be easy …
It did launch ETFs on Bitcoin (BTC-USD) and Ethereum (ETH-USD) in partnership with 21Shares.
Where the analysis gets dodgy is when looking at the option positioning analysis is applied ..
One of the most important indicators for forecasting trends is the absolute gamma by strike positioning. Gamma is the throttle for stock price trends …
Gamma is measured by delta notional and when there is positive gamma above the market and the stock is trending higher the positive gamma acts as a tailwind for the rally.
Notice below that ARKK literally has zero positive gamma above until you get to $56 …
No if real money accounts are buying the stock at higher prices then that can help but it really is not not a stock in demand by investors ..
For that reason I wouldn’t be a buyer here and instead, with RSI above 70 I would look for an opportunity to sell.
The one positive is the Bitcoin ETFs and piggy backing off the Bitcoin breakout …
So,if we see buyers for the fund step up and fill in the strikes above with positive call gamma then the story gets more interesting …
Let’s watch ..
Live and Trade With Passion My Friends,
Griff
Bill Griffo
Head Income Trader
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain