High growth stocks have been on quite a run.
After a punishing three months that saw the Ark Innovation Fund (ARKK) fall 36%, Cathie Wood's high growth fund has surged back 30% in the last six weeks.
The shift in momentum is due to a policy change by the Federal Reserve:
The US central bank announced it would raise interest rates twice in 2023. Since "the market" expected a larger shift after the surge in government bond yields and rising inflation expectations, growth stocks have been on a run.
But I'm not convinced this move in growth stocks is sustainable. On a technical basis alone, ARKK is overbought on the 14-day relative strength index (RSI):
Every time ARKK has been "overbought" (i.e. the 14-day RSI is 70 or higher) in the last year the...