In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Are The Worst Stocks Bottoming?
One thing we’re looking for to signal that the selling pressure has passed is the weakest areas carving out bottoms. In recent sessions, we’ve actually seen resilience and some relative strength from US growth stocks. Many of 2020s top-performers have endured significant losses already this year, and the ARK Innovation ETF is a great barometer for what’s taken place. When we look at a weekly chart, there is a hammer candle slightly beneath the May lows. If we see some upside follow-through, this could result in a failed downside move and fast move in the opposite direction. We’re also seeing signs of selling pressure waning on the daily chart as buyers continue to step in during the intraday session and send prices higher. This is illustrated by a handful of long lower wicks at the recent lows, which is evidence of strong demand at current levels. We think things are setting up for these laggards to put in a tradable low. If the worst stocks can bottom and reverse higher, what are the strongest stocks likely doing? We think they’ll be back at new highs in no time if this is the case.
