Growth stocks have been strong recently, and many investors are using Cathy Wood's ARK Innovation ETF ( ARKK ) as a proxy for these stocks.
But even those who aren't will find it hard to deny the recent power of some industry stocks. Stocks like Shopify ( SHOP ) - Get Free Report , Uber ( UBER ) - Get Free Report , Roku ( ROKU ) - Get Free Report , DigitalOcean ( DOCN ) - Get Free Report , SoFi ( SOFI ) - Get Free Report , and with people others are much better off negotiating for a long time.
While there is still a lot of pessimism, we are starting to see more constructive price action in rising stocks.
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The ARKK ETF has closed below its 50-week moving average since September 2021.
However, like the rotation of small cap stocks, we don't know how long this strength will last. If the last run is short, up-and-coming names can sell out quickly.
But if we look at the group continuing to rally, given the pain these stocks have been through in a bear market, there is a lot to gain.
© TheStreet ARKK ETF Daily Chart Based . Graphics courtesy of TrendSpider.comARKK ETF shares traded up $43.83 this week on Friday. But they disappeared from the top in the big mixed market.
From here, bulls should keep an eye on the $43.83 zone. A move above this level opens the door for a 61.8% pullback, with Q1 gains of around $44.50 and $45.50, respectively.
If the ARKK ETF breaks out and moves higher into this zone, a 78.6% retracement around $48.50 would occur, followed by a possible rally to $50.
On the other hand, this title performed quite well. This should deter buyers, at least at first.
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Notice how the $41 level holds up as support now that ARKK has broken it. It helps that the 10-day moving average is close to this level.
A further break could draw attention to $40, which represents the 21-day, 50-week moving average. From a technical point of view, failing this level would be disastrous.
However, buyers will have other options if the stock tests the $38 area. There they will find the 200-day moving average and the previous high resistance to the downside.
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