Cathy Wood’s ARKK Fund Crashes Into Oversold Zone

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Cathy Wood is feeling the heat as her flagship fund languish. The Ark Innovation Fund (ARKK) stock price has retreated to the lowest level since October 6. It is languishing about 34% below its year-to-date high. This means that her investors have lost substantial amount of money since the S&P 500, Dow Jones, and Nasdaq are nearing their all-time high.

Why has ARKK underperformed: The main reason why the Ark Innovation Fund has lagged is that gains in key companies like Tesla and Shopify have not been enough to offset losses in other companies. Tesla stock has risen by more than 60% this year while Shopify has jumped by more than 50%.

Looking at the laggards, we see that some of the biggest stocks in the index have slumped. For one, Cathy Wood has taken a big hit after the Zillow stock price crashed. The fund now holds just $50,000 shares of Zillow.

Teladoc, the second-biggest constituent has fallen by more than 63% from the YTD high. Similarly, Coinbase has fallen by more than 27% while Roku has crashed by more than 53%. Zoom is down by more than 50% while the Spotify stock price has crashed by more than 30%. 

Square is in a multi-month low while Palantir stock has fallen by more than 55% from its highest level this year. Other companies that have crashed include Twilio, Beam, Twitter, and Draftkings. 

ARKK stock price forecast

The four-hour chart shows that the ARKK stock price has been in a major sell-off lately. The stock has crashed to the lowest level since October 6. It has moved below the key support at $113. It has also moved below the 25-period moving average. The Relative Strength Index (RSI) has crashed to the oversold level. 

Therefore, the Ark Innovation Fund will likely keep falling as investors target the key support at $100. This view will be invalidated if the price rises to $113.