On Friday and earlier today, we noted how the ARK Innovation ETF (ARKK) has been making a move below its 200-DMA and support that had been in place over the past few months thanks to a 5.23% decline in Monday’s session.  But as we also noted in an earlier tweet, there is another ETF whose chart draws a lot of parallels to ARKK: the iShares MSCI China ETF (MCHI).

Just like ARKK, MCHI ripped higher earlier this year before plummeting throughout the spring. After falling another 3% today, MCHI is also now trading below its 200-DMA for one of the first times of the past year. That drop also marked a break of support from levels earlier this spring. MCHI is now on the cusp of meeting the definition of a bear market having fallen 19.68% from its 52-week high.  ARKK is even further below having dropped 35%.  Click here to view Bespoke’s premium membership options for our best research available.

If there is any week this month that the “Sell in May” saying would apply, it would be the current one.  As shown in the screenshot of our Seasonality Tool below, the S&P 500’s median performance one week from the close on May 10th over the past ten years has been a 1.27% decline.  That ranks in the bottom 1% of all days of the year.  The only two days with worse median weekly performance over the past ten years have been March 16th’s 1.32% loss and a 1.47% loss from the week after January 21st.  Although seasonality is not on the side of the S&P 500 in the near term, performance has typically been stronger one and three months out with median gains of 0.97% and 3.2%, respectively.  That is not to say those are notably strong readings, though, as those median gains are middling versus other periods of the year.

Giving some more color to this, in the chart below, we show the 5-day performance of the S&P 500 from May 10th (or the nearest prior close in the case of years that May 10th did not fall on a trading day) for all the post-WWII years.  Again, the S&P 500 has been seasonally weak over the past decade with a median decline of 1.27%.  That seasonal weakness also extends slightly further back for the majority of the post-Great Recession era as only 2013 and 2015 saw gains for the time period in question since 2009.

Looking further back, that seasonal weakness has not necessarily been consistent though.  In 2009 and 2008, the rolling 10-year median performance sat at a polar opposite 1.3%. Looking back even further, that rolling median performance has frequently fluctuated between positive and negative performance, and is currently just bouncing off what were the most extremely negative levels in the post-WWII period.  Even after all the fluctuations, though, the median for all years since 1946 is still a negative 11 bps. In other words, while the past decade or so has been marked by seasonal weakness for the current week of the year, it has historically been far from a sure-fire bet, and as always, we would caution against purely investing based on seasonality. Click here to view Bespoke’s premium membership options for our best research available.

Bespoke co-founder Paul Hickey appeared on CNBC’s Squawk Box to discuss the Friday jobs report and what it means for the market going forward. To view the segment, click on the image below. Click here to view Bespoke’s premium membership options for our best research available.

The recent struggles of the ARK Innovation ETF (ARKK) have been well-documented, so while there’s no reason to state the obvious, the last couple of days have been notable for a couple of reasons.  ARKK broke and closed below its 200-day moving average (DMA) for the first time in over a year last week.  It then attempted to bounce on Friday, but as shown in the zoomed-in inlay on the chart, the bounce ran out of steam just at the 200-DMA (two cents above) before reversing lower.  Today, that reversal has continued to pick up steam, and ARKK is now in danger of closing below its breakout point from late 2020.

In looking at the rise and fall of ARKK over the last year, it’s interesting to note that Google Search trends for the ticker ‘ARKK’ peaked within a couple of days of the ETF’s peak.

Through Monday Morning, ARKK is already down 13% in May, which would rank as the 5th worst month since the ETF’s launch in late 2014.  Remember that it’s only May 10th!  The table below lists ARKK’s 25 largest holdings and their performance so far this month, this year, and over the last 12 months.  Tesla (TSLA) is ARKK’s largest holding, and while it’s down sharply this month, it’s actually doing better than ARKK with a MTD decline of 9%.  What really stands out on this table is the fact that all 25 of the ETF’s largest holdings are down MTD.  It’s pretty bonkers that performance has been this overwhelmingly negative especially in a month where the S&P 500 is up over 1%.  The fact that performance has been so weak relative to the rest of the market hints at the possibility that some investors are actively betting against the fund’s holdings as growth stocks fall out of favor.

With such large declines already in May, the YTD performance of ARKK’s holdings has only gotten worse.  Even with the S&P 500 up over 10% YTD, all but three of the 25 largest holdings are in the red on the year with four stocks losing more than a third of their value.  In spite of all the short-term weakness, though, the performance of ARKK’s largest holdings over the last 12 months remains strong and is one reason why investors have been willing to stick with the company’s funds up to this point.  Click here to view Bespoke’s premium membership options for our best research available.

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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Stock Drama

BlackRock Starts to Use Voting Power More Aggressively by Dawn Lim (WSJ)

The giant fund company is starting to put its proxy votes where its mouth, with a sharp increase in the number of environmental, social, and governance proposals in the first half of this proxy year versus the prior year when only a tiny fraction of those categories got support from the ubiquitous index fund provider. [Link; paywall]

Berkshire Hathaway’s Stock Price Is Too Much for Computers by Alexander Osipovich (WSJ)

The un-split A-shares of Berkshire have neared a maximum value that NASDAQ’s trading systems can handle, with shares knocking on a magic and unfortunate limit of $429,496.7295 per share. [Link; paywall]

Pandemic Culture

The Hot-Person Vaccine by Kaitlyn Tiffany (The Atlantic)

Tastemakers have landed on the Pfizer jab as the must-have injection of the vaccination season, for reasons that completely escape just about everyone. [Link; soft paywall]

New York City Is Roaring Back to Life, One Year After Its Nadir by Misyrlena Egkolfopoulou (Bloomberg)

With more than half of NYC vaccinated, the subway is going back to 24 hour service, and bars are opening up as the giant metropolis shakes off the past 13 months of cobwebs that made it a shadow of its former self. [Link; soft paywall]

Too Much Zoom

Even the CEO of Zoom Says He Has Zoom Fatigue by Chip Cutter (WSJ)

A never-ending slog of video calls is creating burnout and driving executives to push for a return to the office sooner rather than later, with even the CEO of remote work posterchild Zoom reporting fatigue over video calls. [Link; paywall]

‘I Used to Like School’: An 11-Year-Old’s Struggle With Pandemic Learning by Rukmini Callimachi (NYT)

For students that don’t have access to reliable internet, remote schooling has been an enormous burden, and one that has fallen overwhelmingly on non-white children. [Link; soft paywall]

Big Shifts

A Farmer Moved a 200-Year-Old Stone, and the French-Belgian Border by Anna Schaverian (NYT)

In Belgium, a treaty dating back to a post-Napoleonic years was violated by a farmer moving an inconvenient stone border marker to the edge of his field. [Link; soft paywall]

Microsoft is rolling out a new default font to 1.2 billion Office users after 14 years — and the designer of the old one is surprised by Jordan Novet (CNBC)

Vaunted workhorse of office documents Calibri is taking a back seat, with one of five potential replacements announced this week set to take the crown from the default font of Word, Excel, and other MS Office documents. [Link]

Demography

Births in U.S. Drop to Levels Not Seen Since 1979 by Janet Adamy (WSJ)

The number of American newborns dropped 4% in 2021 as birth rates fell to the lowest levels on record dating to at least the 1930s, with the lowest number of babies since 1979. [Link; paywall]

Renewables

Trends in electricity prices during the transition away from coal by William B. McClain (BLS)

Producer price indices for electricity in regions that use more renewable power have grown less over the long term than those in regions with less renewables generation. [Link]

Hollywood

‘A Quiet Place’ Stars Think Paramount Owes Them Money by Lucas Shaw (Bloomberg)

With studios shifting theatrical releases to streaming networks, actors are scrambling to protect their share of proceeds; contracts typically give huge names a share of box office receipts that are being skimmed off thanks to shorter theater runs. [Link; soft paywall]

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Have a great weekend!