close icon

Cathie Wood’s ARK to Add 40% Before Turning South

In the twelve months between the Covid crash bottom in March 2020 and February 2021, the ARK Innovation ETF returned 385%. Bold bets on disruptive and promising, yet still money-losing companies turned fund manager Cathie Wood into an investing superstar.

However, after the fund’s staggering surge from just $33 to nearly $160 a share, it was time for a break. It only took the bears three months to erase 39% of the fund’s market value. By mid-May 2021, the shares were changing hands at sub-$100 prices. Yesterday, ARKK closed barely below $120, up over 20% from its May low, but still down 25% from the record. What lies ahead is what we are interested, though.

Can investors still trust Cathie Wood's ARK Innovation?

ARK ‘s daily chart reveals what looks like an impulse pattern with a missing fifth wave. It is labeled 1-2-3-4 so far, where wave 2 is a sideways expanding flat correction, while wave 4 is a sharp drop. If this is the correct count, we can expect more strength and eventually a new record high in wave 5.

ARK Innovation Remains in an Uptrend… For Now

On the other hand, the completion of a five-wave impulse is never guaranteed. Sometimes, a three-wave rally is all the bulls can achieve, since technical patterns is not all there is in investing. Eventually, fundamentals and valuation also play a role. So, in order to increase the odds in favor of the bulls, we need to check the structure of the recent dip to $97.22.

ARK ETF poised for a new all-time high in final fifth wave

And the structure of that decline is clearly corrective. It can be seen as a simple (a)-(b)-(c) zigzag correction, where wave (b) is a triangle. This means that the current recovery is most likely part of wave 5 up. It can be relied on to continue towards a new high near $170 or more.

However, Elliott Wave investors must not forget that every impulse is followed by a correction. Once wave 5 exceeds the top of wave 3, ARK Innovation ETF would have a complete five-wave impulse in place. A major three-wave retracement back down to $100 or lower should then be expected.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

MongoDB – Bearish Pattern Joins Nosebleed Valuation

MongoDB Inc. is a general purpose database platform developer and provider. The company was founded in 2007, but only came public ten years later – in 2017. During the following four years, the stock has risen from an IPO price of $33 to $515 a share as of last week. So, it is fair to…

Read More »

Pandora Does Things Right. Stock May Need a Breather

When we wrote our previous article on Danish jewelry maker Pandora in December, 2020, the stock was up over three-fold since March. That recovery from DKK 180 to DKK 651 didn’t not come out of the blue, though. It was the result of a bullish setup we managed to identify as early as July 2019.…

Read More »

Match ‘s SP500 Inclusion a Good Excuse to Reach $200

Match Group Inc. rose over 10% in post-market trading Friday following reports that it is going to be included in the S&P 500. The company, which owns Tinder, OkCupid and most other major dating apps in the U.S., has a market cap of over $41B. Despite the anticipated “summer of love”, though, this is not…

Read More »

Cameco Stock Seems to Have Finally Turned a Corner

Uranium spot prices are on the verge of breaking above $34/lb, up over 80% from the bottom of $18/lb reached in late-2016. Cameco, as one of the world’s top uranium producers, is now seeing its stock price rising in tandem. Yesterday, it closed at $19.16 after reaching $21.95 in June. We first covered Cameco in…

Read More »

A Fresh Look At Cigna ‘s Elliott Wave Super Cycle

In a case study article on Cigna, published in October, 2016, we examined how a fundamentally sound and undervalued stock can still drop nearly 90%. The reason for that crash didn’t lie in some company specific issue. Rather it happened to occur during the biggest financial crisis in 80 years. Nevertheless, we made the point…

Read More »

CBOE Takeover Rumor Lifts Stock to Elliott Wave Target

We first wrote about CBOE Global Markets less than eight months ago. The S&P 500 had already recouped all its COVID selloff losses and was hovering at new all-time highs. CBOE, in contrast, was still down 30% from its 2018 record, trading below $97 a share. For some reason, the market was ignoring the company’s…

Read More »

Ahead of Ulta Beauty ‘s 150% Gain Since Lockdown

Buying shares in a beauty retailer in March 2020 sounded like a crazy, stupid idea. Stock markets around the world were plunging at a record pace amid a global GDP crash resulting from government-enforced lockdowns. People were stockpiling necessities in preparations not to leave their homes in the foreseeable future. With COVID-19 cases rising everywhere,…

Read More »

More analyses