A truly difficult context for American Tech. The Nasdaq 100 has dropped by more than 10% since the beginning of the year, in the wake of the increasingly hawkish declarations of the Fed. The American Central Bank is now solely focused on fighting inflation and this translates into an end of QE and a rise in rates. The market already discounts 5 in the year: a very difficult scenario for American techs. US inflation turned out to be stronger than expected at 7.5%. The index moves back towards the key support at 14,000 points.
The ARK Innovation ETF, after strong performance in 2020, started an equally strong underperformance compared to the sector benchmarks. The picture of weakness seems to persist and the ETF also pierced the Fibonacci retracement of 61.8% of the entire bullish trend which started in March 2020 and which reached the top on February 16, 2021. Recall that the break of 61.8% makes reversal of the main (bullish) trend more likely. It therefore becomes an ETF you can go short on. We have already closed the first short strategy on this ETF with the target taken at $70. We remain bearish on the ETF and the rebound movement after the low of $64 for now looks more like a pull-back phase.
We recommend going SHORT on the ETF by buying the Leverage Shares Short -3X ARK Innovation ETF (ISIN: XS2399368906), with an increase in returns towards $80, for short term target again towards $70 and $64. Alert/stop loss should be above $82.