Got Wood? ARKK Crashes Into Bear Market

With momentum stocks, growth stocks, and profit-less stocks all plunging, it should not be a surprise that Cathie Wood’s flagship Ark Innovation ETF (ARKK) has crashed into its first bear market since the 45% collapse last March.

As Bloomberg notes, the fund’s tilt toward long-term growth means short-term profitability isn’t a key consideration when stocks are picked. In fact, two-thirds of its current holdings didn’t make a profit in the past year. And even after the recent losses, ARKK is still slightly up for the year.

And that’s a problem as profit-less company stocks appear to have hit a reality vacuum…

And growth stocks have been monkey-hammered relative to value, breaking key support as yields rise…

And that has weighed on the $24bn ARKK ETF. From its highs on Feb 16th, ARKK has plunged 22%…

Breaking below its 50DMA and testing its 100DMA…

“People are worried the crowded trades will lose their momentum like they did last September” when some of the biggest tech names suffered a bout of selling, said Matt Maley, chief market strategist at Miller Tabak + Co.

It looks like the early-March knife-catchers were a little premature…

“There is growing unease in the markets and whether higher-risk asset classes can continue to climb,” said Michael Purves, chief executive officer at Tallbacken Capital Advisors. “If sentiment turns, you can see substantial outflows.”

So, what will Cathie Wood do?