Cathie Wood’s ARK To Add 40% Before Turning South
EWM Interactive | Jun 23, 2021 12:19AM ET
In the twelve months between the Covid crash bottom in March 2020 and February 2021, the ARK Innovation ETF (NYSE:ARKK) 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.
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.
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