Cathie Wood-Led ARKK Signals The Bottom Is In Ahead Of Tesla Earnings: This Fund Offers 2X Leverage

Cathie Wood-led ARK Innovation ETF ARKK was trading higher on Monday, consolidating Thursday’s and Friday’s combined 5.34% drop, which occurred amid the fund offloading $20.67 million worth of Tesla shares.

The selling comes ahead of Tesla’s third-quarter earnings print, set to take place on Wednesday after the market close.

Analysts expect Tesla to report earnings of $0.74 per share, down from $1.04 per share a year ago. Revenue is expected to come in at $24.16 billion, up 10% year-over-year.

While ARKK has shown weakness over the last four trading days, the ETF may be forming a triple bottom pattern and if Tesla receives a positive reaction to its earnings print, the formation is likely to play out.

Traders and investors looking for leveraged long exposure to ARKK can play the AXS 2x Innovation ETF TARK.

TARK is an actively managed 2X leveraged ETF aiming to return 200% of the daily performance of ARKK.

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The ARKK Chart: On Monday, ARKK fell to Friday’s low-of-day and bounced up from that area, forming a triple bottom pattern, when paired with similar price action on Oct. 4 and Friday. A double or triple bottom pattern is considered to be bullish and when found in a downtrend, can indicate the lows are in and a longer-term reversal to the upside is on the horizon.

• ARKK has been trading under the 200-day simple moving average since Sept. 21, attempting to break back above the area on five separate occasions and failing. When a stock or ETF trades under the 200-day SMA it’s considered to be in a bear cycle but the 50-day SMA hasn’t yet crossed under the 200-day SMA, which means that a death cross hasn’t formed.
• ARKK is trading within Friday’s trading range, which has the ETF forming an inside bar pattern. Although the pattern leans bearish in this case, the double bottom may prove to be the stronger technical pattern.
• A potential rise in ARKK is a more likely scenario because the ETF has developed exaggerated bullish divergence on the daily chart. Exaggerated bullish divergence occurs when a stock forms a double or triple bottom pattern while the relative strength index forms a series of higher lows.
• ARKK has resistance above at $41.29 and at $43.83 and support below at $37.55 and at $34.97.

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