Tic Toc Weekly Plan 2/20 '22
ARKK, COIN, Truth Social
Traders-
So much to talk about..
Let us start with ARKK as this is the name that surprised me the most in terms of it’s price action, as well the actions of it’s managers. I have been bearish on ARKK long term since $123. I was briefly bullish on this at 96 dollars as I expected a short term bounce in it to target 110/112 with my LIS at $91. That is old news now as the ETF makes new 52 week lows now at 65.
ARKK in my opinion is the harbinger of what is to come in so many things.. .I think it is a leading indicator of:
a) where the general speculative names and $QQQ may be headed.
b) I think it can predict where crypto and nft like Bitcoin are headed.
c) I think it is a leading indicator of where the rates in the short term may be headed. It is an important leading indicator when it comes to market action in a range of assets.
On Thursday, we had the ARKK Fund manager on TV where she made an impassioned plea that how this ETF is long term oriented and gave some good arguments on how the future growth will be realized. But her actions betrayed her words. Why?
1. She talks about long term, but ARKK turnover is 70%! This fall very much in category of active trading. That turnover is perhaps more than that of an average short term trader. Compare this to a 2% turnover in a name like SPY. May be not strictly an apples to apples comparison, but still!
2. On top of the quantity of trading , there is also the issue of quality of trading ! I have seen them not once but on multiple times to buy an asset at all time highs and sell it at the 52 week lows. They sell names like PLTR and plow into the likes of ROKU which fell 25% after earnings. Then they may keep ROKU for a bit as it either languishes or goes down some more , only to sell ROKU a few weeks later to may be buy HOOD which fell 30% after earnings. They repeat this cycle. This is not a hallmark of a long term investor. But some one flying by the seat of their pants.
Now this blurb is not a judgment on quality of the ARKK holdings, which is a different conversation altogether. I have my reservations on this when you hold a name like HOOD and ROKU and DKNG in your main innovation fund - TBH I fail to see any innovation in either HOOD or DKNG. This is about the quality of trading prowess and the questions it raises for me - is ARKK now a good buy at 65 - and if not what does it mean for the likes of Bitcoin, Nasdaq, NFT!
Some one may even argue these short term decisions could indicate redemption issues at ARKK. To alleviate this, about a 100-200 M have flown into the ETF last month, though how much of it flew out on Friday, I do not know yet. Personally, I do not think it is going to be a Bill Hwang 2.0 but I think with Friday’s close at 65, I think there is more downside now opened up.
Let us look at tech chart.
Chart A: ARKK Daily.
See how ARKK has now not only gapped down but nicely settled on the lows. This has 2 implications IMO:
Rallies may be sold.
It could be going much lower.
Though no one can predict how low it will go, I think a 50-52 number which was my target originally when I became a bear at 125 bucks is not entirely out of the realm.
Now this has implications for ARKK main holdings, which are TSLA, ROKU. ZM, SQ etc . Or we could say what happens to them over next few weeks has implications for ARKK.
It closed at 65 on Friday. What do you guys think? Do you agree with my thoughts? Leave a comment below to let me know.
Now while ARKK looks a bit weak here, COIN is it’s TOP 5 holding (about 6 %). Looking at COIN , I think short term bounce can not be ruled out. I think it may find sellers reenter at higher prints into 217-222 prints. Friday close was at 189 bucks.
How are you positioned for COIN ER next week? Let me know below. I do have some thoughts about Square SQ and Teladoc TDOC as well but will share in next post.
To balance any upside that may come out of COIN for ARKK, I know they have been buying RBLX Roblox. I personally think RBLX remains under a little more pressure as long as it does not close back above 52 which was the Value Area Low (VAL) from prior 2 sessions. Friday close was 50.
Let me now do a deeper dive on S&P500, and what it has been up to of late.