The 2024 ETF space is already marked by unpredictability with Cathie Wood’s ARK Innovation ETF (ARKK), one of the largest and most successful funds in 2023, down 12.5% at press time.
Leading ARKK’s slump are two key companies — Tesla and Coinbase Global — pulling down the valuation levels by 26.4% and 30.5%, respectively, at the time of writing.
Trading.biz analyst Rahul Nambiampurath mentions that the portfolio anchors in TSLA and COIN aren’t just dipping, but showing aggressive signs of correction, led by weak numbers and even weaker sentiments.
“Notably, TSLA and COIN have 7.77% and 8.30% weights in the ARKK portfolio, shaving $473 million cumulatively from the ARKK valuation as of 2024,” mentions Rahul.
Also, other components of this Innovation ETF haven’t exactly been bullish either. Here is a list of other large ARKK components and their year-to-date price changes:
- Roku (ROKU) is down 3.2%: Weight (7.70%)
- Zoom Video (ZM) is down 6.1%: Weight (7.42%)
- UiPath (PATH) is down 8.1%: Weight (6.57%)
- Block (SQ) is down 19.3%: Weight (5.97%)
ARKK’s technical analysis: What might be ahead?
Despite the price drop, the trading volumes related to ARKK have been holding steady in January 2024. However, the price dip from almost $55 to the present level of $46 wasn’t entirely unexpected from the price chart.
Rahul identified ARKK breaking the pennant pattern in early January. Since then, the prices have corrected rather aggressively.
The daily ARKK chart shows that the 200-EMA (blue) line provides much-needed support. If TSLA or COIN corrects, ARKK can drop to $43.63 levels quickly. The only optimistic sign is the formation of higher lows, both price and RSI, which might lead to some positive action.
But then, ARKK has to keep trading above the crucial resistance of $47.80 for the bearish trends to buck for a while.
Which are the winning ETFs?
Another key finding has to be how the winning funds are performing. For instance, the iShares MTUM or the MSCI USA Momentum Factor ETF is up over 6% in 2024. And the primary reason has to be the inclusion of two powerful and surging AI/Tech stocks — Nvidia (NVDA) and Microsoft (MSFT). For MTUM, Nvidia and Microsoft comprise 5.4% and 4.8% of the total portfolio.
Even other funds like the TCHP or the T.Rowe Price Blue Chip Growth ETF are up close to 5% in 2024, with MSFT forming 13.4% of the entire portfolio. But then, despite the initial slump, it wouldn’t be wise to rule out ARKK, as the fund has a habit of throwing surprises. Key components like Roblox (RBLX) and CRISPR Therapeutics (CRSPR) might just have the legs to reverse the fate of Cathie Wood’s fund in 2024.
