Spear Alpha ETF SPRX was trading flat on Wednesday, remaining within a narrow range
between approximately $22.60 and $24.50 amidst declining volume.
The actively managed fund provides exposure to various stocks across themes such as enterprise digitalization, automation and robotics, AI, environmental focus, decarbonization, photonics, additive manufacturing, and space exploration. Outperforming Ark Innovation ETF by Cathie Wood, SPRX has risen about 3.6% year-to-date, while ARKK dropped 4.24% over the same period.
In recent times, several stocks within the fund have been hovering close to their all-time highs, reflecting investors’ growing optimism about the companies held by the fund. NVIDIA Corporation surged 85% this year and is the largest holding in the fund, accounting for 10.88% of the portfolio.
Similarly, Zscaler, Inc., the second-largest holding within SPRX at 10.2%, skyrocketed 193% between May 3, 2023, and Feb. 8, 2024, before starting to retrace.
For diversification-oriented investors, SPRX includes various other popular stocks like Advanced Micro Devices, Inc., Snowflake, Inc., and Shopify, Inc., among others.
The SPRX Chart: After hitting a new all-time high of $25.66 on Feb. 12, SPRX entered a downtrend, retracing about 11.96% between that date and March 19. On Monday, SPRX reversed the downtrend by forming a higher low above the recent low of $22.59, and on Wednesday, the fund retested that level as support and rebounded.
- The backtest of the support area led SPRX to potentially form a double-bottom pattern. Recognition of this formation could indicate an upcoming bullish momentum in the following days. To confirm a new uptrend, the fund would eventually need to surpass the March 21 high of $24.02.
- During SPRX’s retracement, decreasing volume suggests healthy consolidation rather than a shift towards bearish control. A breakout to a higher high could spark an increase in bullish volume.
- Bearish scenarios entail SPRX dropping to a new low with rising bearish volume. In such a case, the higher low and double bottom pattern might be invalidated, potentially accelerating selling pressure.
- SPRX faces resistance levels at $23.50 and $24.47, with support at $23.06 and $22.78.
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