While the Nasdaq 100 (QQQ) is down 0.3% on Friday's close, Cathy Woods Ark Innovation ETF (ARKK) closed over 6% on the day. Additionally, ARKK made a strong close over yesterday's high, showing added strength when compared to the major indices. With that said, this could be a potential turnaround situation for the fund, which has been trending lower for the past month and a half.
While we could invest in the ARKK fund, we can also review its top holdings as ideas for picks heading into 2022. One interesting company is Unity Software (U). Unity is a game engine used to create video games across multiple platforms such as gaming consoles and phones. What gives Unity a large amount of potential is its use for creating worlds in the metaverse/virtual reality space. However, from a technical standpoint, U has come far off its highs around $210 and needs to form a stronger base or begin to clear the $150 price area before it looks ready to run higher.
Another big trend is crypto trading. Currently, Coinbase (COIN) has a tight grip on the crypto app space, since it is widely used and considered a safe place to trade. Like U, it has come off highs and will need to hold over $220 if it's going to stop the bleed to the downside. $220 is also near the bottom of its trading range, making it a clear area to watch.
Tesla is one of ARKKs biggest holdings and, while it has historically done very well for Cathy Wood, it has gone through some recent trials. Right now, Tesla (TSLA) is interesting if it continues to hold over $910. If it breaks lower, it will need to find a support level before its ready to trade.
One thing to note is that if Tesla is going to increase sales next year, supply chain issues with semiconductors will need to improve, as all car manufactures have been struggling to source enough semi-chips for their factories. Nonetheless, since these companies are currently trending lower, we will need to see them hold key areas or form reversal patterns worth trading.
Right now, overall market volatility makes timing trades much tougher, and with Christmas almost upon us, the rest of the year could easily stay choppy. Therefore, keep these on the watchlist, but always remember that even symbols with great potential can break down if the general market isn't holding.
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On the latest edition of StockCharts TV's Mish's Market Minute, Mish takes another deep dive into the macro and prepare you for what could come at you in 2022. Watch to find out what the "Grinch" is and what is doing to the Christmas rally on the last new edition of 2021.
ETF Summary
- S&P 500 (SPY): Very choppy. Watching to for either consolidation or a large break under the 50-DMA at 459.45.
- Russell 2000 (IWM): 211.08 low to hold.
- Dow (DIA): 346 next main support area.
- Nasdaq (QQQ): Watching for second close under the 50-DMA.
- KRE (Regional Banks): 67.97 200-Day moving average support.
- SMH (Semiconductors): 289.33 next big support the 50-DMA.
- IYT (Transportation): Watching to hold over 260.89 the 200-DMA.
- IBB (Biotechnology): Strong close but did not close over the 50-DMA at 154.96.
- XRT (Retail): Trending lower without any obvious support to lean on.
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
