ARKK: four scenarios from here

ARKK is selling off harder than the market this week. It's being attributed to liquidity issues and fund outflows. But technically speaking, the issue is that the ETF is simply correcting back into longer-term channels.

Where to go from here? In the past few years, ARKK has rallied well when the RSI(7) exits oversold conditions the second time in a row. And it has seen bounces off levels on the first instance of being oversold on the RSI(7).

RSI(7) is presently oversold. Look for a bounce in the next few sessions, and then a retrace. Plan to get aggressively long same session to a few sessions after that occurrence, when it will exit oversold conditions for the second time.

Comment:

In the session of Friday 6 March, ARKK tested the green trend line (long wick) that it broke through to upside above in July 2020. It had retested that line in July, September, October, and November before the big winter 2020/2021 rally. The RSI(7) bounced out of oversold conditions the February 2021 selloff, and has since gone back into oversold. We are now looking for it to exit oversold conditions again to confirm the start of a new rally, which seems most likely to leave it in either two of the flag scenarios.

Comment:

If it bounces, look for upside resistance (purple line) in the low $130s.

If RSI(7) remains oversold, it's because we've dipped into the correction scenario.

Comment:

Ended today's session siting right at support going back to July 2020, which was an old resistance trend line on the log chart from before the Corona crash.

Comment:

If you believe in the ARK thesis, you have to be buying right now at the trend line that's held for nearly a year.