Update 7/10/2018: I have exited ARKG for a small profit. My fundamental reason for buying ARKG — growth of the genetics sector — remains valid. However, we have been in a bear market since Jan. 26, and ARKG has moved into a down wave. I took my chips off the table — temporarily — in order to let that wave do its work without impacting me, and I shall jump back in once that wave is complete.
Shares produced a net rise of 3.1% over my 25-day holding period, for a +46% annual rate.
The ARKG chart below, covering one year with daily bars, shows that at the Minor degree the stock is in an uptrend and has begun a counter-trend correction at the Minute and Minuette degrees.
The 4th wave is generally a sideways movement, and often a complex one. That means a shallow correction but one that will take some time to complete. It will be followed by a 5th wave rise to new highs.
My plan is follow the Minute wave and trade the reversal to the upside of the Minor wave.
Update 6/17/2018: After buying into ARKG I have spent the weekend learning more about the fund’s creator and manager, ARK Investment Management LLC. Among my finds was this half-hour interview with ARK’s CEO, Catherine D. Woods, in which she discusses the company’s disruptive technologies themes. Interesting ideas.
I have entered a long shares position on ARKG, one of the few exchange-traded funds with an uptrending Fisher Transform and a visual trend on the annual chart to match.
I have structured it as a longer-term trade, a traditional buy-and-hold. The chart doesn’t follow the normal movements of the broad market, and in this bear market, I judge that outliers give the best prospects.
I screened for it in the simplest possible way: Listing all of the available exchange-traded funds, the huge majority of which are downtrending, and looking at those few with an uptrending Fisher. After that, it was just a matter of skimming through the charts.
The entry price was $30.22.
Atypically for me, ARKG is a story trade. I’m fascinated by genomics and all the useful information that can be harvested from a genetic test. Like millions of others, I’ve been tested by 23andMe (Wikipedia article), and have learned more about myself, my limits and gifts, my likely health challenges and I age, than my parents could have ever hoped to know.
After much reading, I’m convinced that this tech is the Next Big Thing, and I want to go along for the ride. Plus, ARKG is classified as a Health Care ETF. I judge that we are in the last stage of the expansion that began in October 2009, a stage in which Health is a sector that does well.
ARKG is newly uptrending on the monthly Fisher Transform, and I shall use a switch to downtrending on that indicator as a signal to pull out temporarily.
By Tim Bovee, Portland, Oregon, June 15, 2018
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
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