David Tepper, Cathie Wood, and the rise and fall of ARKK

16 de mai. de 2023

Here's a chart and idea about the ARKK ETF founded by Cathie Wood. Like many, this was one of the most popular ETFs in existence back in 2020 and 2021. For the last 12 months it's been in free fall.

The innovation ETF! It invests in growing tech and emerging companies.

In the good times, this was the ETF to have. In the slow times, when capital is more expensive, when the economy is slowing a tad, this is not the ETF to have. The chart displays that perfectly.

However, at yesterday's 13f announcements, it turned out the famed hedge fund manager David Tepper, took a small $20 million stake in the ARKK ETF. This is just a fraction of his total billion dollar hedge fund, but what is the purpose of this.

To test the market?
Make some noise in the news?
Catch a bottom?
Exposure and hedging?

One interesting thing to observe on the chart is that the ETF is back to its 2018 and 2019 levels. Back then, it was bouncing off support. Today, the question is whether or not that support still exists or if support has become resistance.

They say never catch a falling knife.

This trading is not easy and I can't say I have done well on it myself.

But I do find it fascinating to watch in terms of market sentiment. I also plan on watching Tepper's position over the next 6-12 months.

Was it just a ploy of sorts? Will he add to his position? All of this seems worth watching and especially important for the next cycle, if it ever comes.

Note: the chart also shows a volume profile that specifically highlights the price levels that have attracted the most volume. You'll notice the red line across the chart shows that level. The price is right there now.