Cathie Wood's ARK Innovation ETF ( ARKK) is often in the news. In recent days the fund has been buying large amounts of shares of Tesla ( TSLA) as shares of the EV maker slide lower and lower.
Regular readers of my Kamich's Korner on Real Money should know that I prefer a strategy of buying strength instead of buying weakness. I like to see a stock go up to tell me I am trading in the right direction. I also do not recommend buying more shares of a company on weakness.
With that said, let's check out the charts of ARKK. 
In the daily bar chart of ARKK, below, I can see a downtrend the past 12 months. Prices are trading below the declining 50-day moving average line and below the declining 200-day line. The daily On-Balance-Volume (OBV) line is in a downward trend, telling us that sellers of ARKK are more aggressive than buyers as there is more volume being traded on days when ARKK closes lower than when it closes higher.
The Moving Average Convergence Divergence (MACD) oscillator is bearish too.
In the weekly Japanese candlestick chart of ARKK, below, I went back five years to gain some additional perspective. The most important thing I see in this chart below is that anyone who has bought the ARKK ETF in the past five years has a loss. The shares are in a longer-term downtrend as they trade below the declining 40-week moving average line.
The weekly OBV line is bearish and even though price momentum has been improving it has not translated into a rally.
In this daily Point and Figure chart of ARKK, below, I can see a downside price target in the $26 area.
In this weekly Point and Figure chart of ARKK, below, I can see a price target in the $22 area.
Bottom-line strategy: Some financial journalists may be focussed on Cathie Wood's purchases of Tesla, which is still in a downtrend (see my last review of TSLA on December 14) but maybe they should focus on the top four largest holdings -- Exact Sciences ( EXAS) , Zoom Video ( ZM) , Block, Inc. ( SQ) and UiPath ( PATH) . Only EXAS is in a near-term uptrend. TSLA could make an oversold bounce but that may not be enough to lift shares of ARKK.
One problem with being a visionary is being early, so paying attention to trends is important. What do you think?
