Have a hunch? ARK Innovation fund has limited risk

Have a hunch and want to be in the riskier stocks? Bet a bunch. Buy the ARKK

The ARK Innovation fund – managed by Cathie Wood – moved to a low of $33.74 on October 13. Yesterday the low reached $34.06. Today the price is up $2.30 or 6.45%. That is pretty a good move but moves in this ETF are quite volatile.

So what is the chart saying?

Looking at the daily chart above, the recent lows in October have nearly fully retraced the move up from Covid 2020 lows. That move higher, took the price from $33.00, all the way up to $159.70 (in February 2021), before the tide turned and the price started to move down and down and down and down some more.

Overall, the price of ARKK retraced all but $1.06 of the move higher from the Covid low.

What now?

Traders who are risk focused and want to take a flyer that the low is in, have the opportunity to buy the low against the $33.00 level and hope for a rebound “just because”.. The “just because” is the risk can be defined and limited against the 2020 Covid low at $33.00.

Stay above $33.00 is more bullish. Move below $33.00 and get out.

If you bought at the current level of $37.65, and put a stop below $33, you are risking $4.65.

Now that is still a 12.35% risk. However, IF the bottom is in – and the price can get above the 100 day MA at $42.66 – that would be a gain of $5.01 (more than the risk).

Move above the 100 day MA, and traders would look toward the 200 day MA at $51.79. Getting to that MA, and the gain comes in around $14.00 or is 37.5%. Would you risk $4.65 to maybe make $5.00 or $14.00 at the two topside main MA targets?

When you look the chart, a move to the 200 day MA (green line) is just a blip of the the move down from 159.70. It is also near the August high. Of course it would also require a change in attitude toward the riskiest of the risky stocks. That also requires rates going lower and hopes that multiples move higher again as the stocks in the fund are still high risk with relative high valuations (with no earnings
Earnings

A company’s earnings represent its profits or net benefits as a result of its operation.Earnings are the net benefits of a corporation’s operation. Earnings can be calculated as EBIT, i.e. earnings before interest and taxes, and EBITDA, i.e. earnings before interest, taxes, depreciation, and amortization.Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share prices, while unexpectedly bad earnings can risk declines in share prices. Using Earnings to Better Inform Investment DecisionsMany analysts also use other measures such as earnings per share (EPS) as a way to compare the earnings of multiple companies.EPS is calculated by the remaining earnings leftover for shareholders, divided by the number of shares outstanding. This is a more fine-tuned measure for investors and analysts given each company has a different number of shares owned by the public.Only comparing companies’ existing earnings does not accurately indicate how much money each company has for each of its shares over a specific period.As a result, EPS is routinely used to make better-informed comparisons and forecasts.In the US, all companies are obligated to report quarterly earnings to the public, which informs on the state of any publicly traded company. These events are very monitored and important, especially for large corporations.In addition, several companies are used as barometers for the state of the overall market or US economy, lending further weight to these metrics.Ultimately, earnings are an integral element of the US stock market and ensure companies disclose their financials in ways that do not leave investors or the public in the dark.

A company’s earnings represent its profits or net benefits as a result of its operation.Earnings are the net benefits of a corporation’s operation. Earnings can be calculated as EBIT, i.e. earnings before interest and taxes, and EBITDA, i.e. earnings before interest, taxes, depreciation, and amortization.Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share prices, while unexpectedly bad earnings can risk declines in share prices. Using Earnings to Better Inform Investment DecisionsMany analysts also use other measures such as earnings per share (EPS) as a way to compare the earnings of multiple companies.EPS is calculated by the remaining earnings leftover for shareholders, divided by the number of shares outstanding. This is a more fine-tuned measure for investors and analysts given each company has a different number of shares owned by the public.Only comparing companies’ existing earnings does not accurately indicate how much money each company has for each of its shares over a specific period.As a result, EPS is routinely used to make better-informed comparisons and forecasts.In the US, all companies are obligated to report quarterly earnings to the public, which informs on the state of any publicly traded company. These events are very monitored and important, especially for large corporations.In addition, several companies are used as barometers for the state of the overall market or US economy, lending further weight to these metrics.Ultimately, earnings are an integral element of the US stock market and ensure companies disclose their financials in ways that do not leave investors or the public in the dark.
Read this Term).