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Did Cathie Wood’s ARKK Fund Just Bottom ... Again?

Did the Ark Innovation ETF just bottom? It's certainly possible, with the way the ETF has been trading this week. Let's look at the chart and key levels now.

It has been a wild year for the Ark Innovation ETF  (ARKK) - Get ARK Innovation ETF Report.

The ETF started with a 27.5% rally to its all-time highs in mid-February. Growth names were ripping higher and stocks like Tesla  (TSLA) - Get Tesla Inc Report continued to cruise.

At that point, the ARKK ETF was up almost 400% from the 2020 lows. 

But then high-growth stocks were swept up in a brutal bear market that took ARKK down to new lows in May.

We were lucky.

Right at the lows we asked the same question: “Did ARKK Just Hit Bottom?”

From there, the fund went on a nice rally. Now bulls are wondering if we’re at that point again.

Earlier this month, Wood said her stocks were not in a bubble. I agree — or at least, I agree now that many growth stocks have fallen by 50% or more.

She hasn’t been afraid to buy the dip either, scooping up distressed growth stocks despite poor sentiment and growing doubts. 

So now we must once more, did the ARKK fund just bottom ... again?

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Trading ARKK Stock

Daily chart of ARKK stock.

Daily chart of ARKK stock.

Monday gave bulls one of the best long opportunities they’ve had in quite some time with ARKK.

The stock opened near Friday’s low at $91.66 — which came right near the 10-quarter moving average — traded down to a new low of $89.04 and then rebounded higher and reclaimed Friday’s low.

This led to an incredible trading opportunity, known as a bullish reversal.

The trade was great because bulls could be long at $91.66 with a stop at $89, risking just $2.66 a share for a potentially robust move higher.

After reclaiming Friday’s low, the next upside objective for ARKK was the prior bear-market low at $97.22.

Gapping above that level today, ARKK made a quick run to the $100 level, where it’s running into some resistance.

A slightly higher push gets the stock up to the 10-day moving average, then the $103.50 area where it finds the November low.

While the bounce is very impressive thus far — and working out as a great trade — ARKK stock is not out the woods yet.

If it can undo the monthly-down rotation by reclaiming the November low and clear the 10-day moving average, that’s when bulls could see momentum shift back in their favor.

For now, the situation is definitely getting better. However, a break of $97.22 should have bulls a bit more cautious, while a break off the $89.04 low would be very discouraging.