Stockchase Opinions

Jim Cramer - Mad Money ARK Innovation ETF ARKK-N BUY Dec 08, 2021

Volatility notes by Mark Sebastian, technical analyst Usually the VIX and S&P trade in opposite directions. When this pattern breaks, it signals the market is changing course. On Oct. 21, the VIX bottomed at 15 while the S&P was at 4,550. In November, the S&P continued to rally. Strangely, the VIX rallied too, a classic sign that the market was getting too hot and headed for a beat-down. A few weeks later, the S&P peaked and the VIX exploded. On the Nov. 18 peak to last week's lows, the S&P fell only 4%, while the VIX shot up 17.59 to 31, because the sell-off was concentrated in the high-growth tech Nasdaq rather than the wider S&P. In the same time period, it took only 10 days for ARKK to put a top out after the VIX bottomed on Oct. 21, then ARKK gradually sank from 4125 to $107 as the VIX rose from 16 to almost 20. is down 17% YTD. When Omicrom hit headlines on Black Friday, the VIX exploded and ARKK rolled over as the market liquidated all manner of stocks. Investor sell tech stocks, which triggers people to sell ARKK, which further depresses the stocks in that ETF. However, now ARKK is recovering as the VIX declines and calms. The VIX says this market recovery is indeed real. Today, the S&P was flat, but the VIX sank rapidly; to Sebastian this means that as long as the VIX keeps falling it will lead to the Santa Claus rally. The S&P could rise as high as 5,000. He agrees.
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BUY
That ETF is a benchmark for growth risk. Downgrade of COIN today had a big impact. Recently added some to his long-term growth portfolio.
BUY
A benchmark for growth risk in the economy. Vast majority of market correction is priced into this fund (exception of Tesla). Still risk in this fund even though Cathie Wood does excellent job. Current price is presenting buying opportunity.
SELL

Sell ARKK to add to ZQQ? Good idea. ZQQ is a broader universe. ARKK is more of an innovator-type fund, lots more risk. Whole semi side is very difficult. Oversupply and under-demand, and so the price of memory chips is coming down. He'd recommend trading the ZQQ.

SELL

Down 77% since highs. Disruptive names that were the flavour of the day, but now affected by rising rates. Names with high multiples, high growth. Can only perform well in a falling interest rate environment. Possible tax-loss sale.

BUY
Good research into tech and believes is a quality fund. Long term will be good investment. Short term, is tricky to value with many names without cash flow. Investors should expect lots of volatility.
WEAK BUY

ARKK vs. FNND Such growth stocks are vulnerable to inflation and the discount rate. They will struggle and have already declined a lot, and shares are still not cheap. There's not much difference between these ETFs. ARKK has performed better this year, so he skews towards that.

BUY ON WEAKNESS
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research.

 The ARK funds have likely bottomed, on the basis that interest rates and inflation have peaked. Although, even if the fund has truly bottomed, it may trade sideways for longer than an investor can wait, and we would not expect the parabolic action that it saw in 2020 to occur anytime soon. The underlying companies in the fund are growing fast, but valuations are still on the high end, and we feel it will take a substantial shift in market sentiment to a 'risk-on' environment to see material gains in the name. With that said, we think the name can do well over a long timeframe, and we think investors will need to be patient here.  
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DON'T BUY

She was the world's greatest stockpicker in 2020 when tech ruled. Not so these days. Why? Her portfolio lacks diversification, concentrated in only a few names.

DON'T BUY
Trading advice

ARKK went all-in into high-growth, high-risk tech stocks, but these trade as a group. So, in 2020 ARKK was the number-one fund, but struggled in 2021 and was far from the best in 2022. A fund or collection of stocks that is not diversified will eventually stumble.

SELL
Sell or hold? ARKK doesn't hold NVDA.

Had its day in the sun a few years back. A disruptive ETF, not like your typical large-cap ETF. A lot of the names are expensive; average price to sales is 5.3x, pricey. Compare that to the S&P trading at just under 3x price to sales.