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!

After struggling for most of the past couple months, momentum and Tech stocks are broadly outperforming today as the Nasdaq is up 1.25% compared to a 0.78% gain in the S&P 500.  The ARK Innovation ETF (ARKK) has been a poster child of the momentum theme over the past year.  After a 383.9% gain from the March 2020 low to its high in mid-February, ARKK has fallen around 30% in the months since then.  For most of that time, the ETF consolidated between its 50 and 200-DMA. After a failed attempt to break above its 50-DMA at the end of April, it has taken a leg lower, falling below its 200-DMA for the first time in a year in the process. While ARKK has yet to move back above its 200-DMA, it has found support around $105 which traces back to the lows earlier this spring and the highs from the fall. In other words, from a technical perspective ARKK, as well as some of its holdings, still have plenty of technical hurdles including moving back above its moving averages and breaking the past few months’ downtrends. At least for the time being, the group has found some respite in the move higher today.

As for the individual holdings of the ARKK ETF, below we show the 25 largest which accounts for approximately three-quarters of net asset value.  For the most part, these stocks continue to sit on huge gains from the past year (or since their market debut for those that have IPO’ed in the past year; bolded and bordered rows in the table below) with only a small handful in the red: Teladoc (TDOC), Coinbase (COIN), and Iovance Biotherapeutics (IOVA). Even though the 25 largest ARKK holdings are on average up 117% over the past year, they have certainly been a pain trade recently. Most of these names are deeply oversold at the moment, and relative to their 52-week highs, they are down 35% on average.  In fact, of all 58 holdings, there are only four—Intercontinental Exchange (ICE), TuSimple (TSP), Trimble (TRMB), and PACCAR (PCAR)—that are less than 10% below their 52-week highs, and none of these break into the top 25 largest holdings (as such they are not pictured below).

While ARKK holdings have generally been weak over the past few months, in recent days there have been some notable developments in the charts of these names. Some of these like CRISPR Therapeutics (CRSP) and EXACT Sciences (EXAS) have fallen below the long-term 200-DMA. Other names in the ETF broke below their 200-DMA a while ago now, and their charts do not look much better. Stocks like Invitae (NVTA), Materialise (MTLS), and Teladoc (TDOC) collapsed below their long-term moving averages earlier this spring and this week’s moves lower have resulted in breaks of critical support levels. For TDOC and MTLS, those levels have previously marked support at multiple points in the past year. One other interesting name in terms of performance today is Regeneron (REGN).  Unlike many other ARKK stocks, REGN has actually been trending higher since March, albeit that is in the context of a much longer-term downtrend than many other ARKK holdings. Regardless, that recent rally has resulted in the stock to run right up to its long-term downtrend. In another move that is out of sync with its peers, today it has reversed lower, failing to break out from that downtrend.

While most names have pulled back sharply and continue to trend lower to sideways at best, that is not to say all ARKK stocks have entirely negative charts. Similar to the ETF’s chart, there are several names that have found support in the past couple of days.  For example, DocuSign (DOCU), Iovance Biotherapeutics (IOVA), Palantir (PLTR), and Spotify (SPOT) are all bouncing off critical support levels of the past year. For others like Fate Therapeutics (FATE), Iridium (IRDM), PagerDuty (PD), PACCAR (PCAR), and Synopsis (SNPS), those support levels have also coincided with their moving averages. PACCAR is also notable in that it is even breaking back above its 50-DMA today. Similarly, Novartis (NVS) is attempting to move back above its 200-DMA. Perhaps one of the most technically strong stocks of these has been Sea Ltd (SEE).  Over the past year, the 50-DMA has consistently provided reliable support. After a brief dip back below in March, in April it moved back above its 50-DMA and has once again successfully retested in the past week.

In order to keep track of the ARK Innovation ETF’s (ARKK) holdings, we created a custom portfolio that members can add here.  Please note that this does not update real time and is only based on ARKK’s holdings as of 5/6/21.

As always, investors should do their own research before buying or selling any securities, and this chart analysis is in no way meant to be a buy or sell recommendation.  Click here to view Bespoke’s premium membership options for our best research available.