Liquidity has dried up and the most speculative issues have taken the biggest hit. Cathie Wood's ARK ETF is an excellent example.

(Click on image to enlarge)

ARK Innovation ETF chart courtesy of StockCharts.Com, Annotated by Mish

Investment guru Cathie Wood's ARK ETF topped at 158.82 in February. Since then, the ETF has fallen 55%.

Big Betting Against ARK

'Short interest as a percentage of shares outstanding on the $12 billion ARK Innovation ETF (ARKK) has jumped to a record 8.6%.' https://t.co/HsPjFiXLWd pic.twitter.com/1Prv5h6usi

— Jesse Felder (@jessefelder) January 25, 2022

Those shorts will cover sometime, but when and at what price?

ARK Innovation ETF Weekly

ARK Innovation ETF weekly chart courtesy of StockCharts.Com, Annotated by Mish

There is technical support for ARK in the low 30s. And that's where I think it's headed, but with no time frame in mind. 

If you want a different view, Wood says "Disruptive innovation is often not priced correctly by traditional investment strategies because people may not understand how big the ultimate opportunities are going to be. They aren't seizing the opportunity and they aren't analyzing the disruption."

She sounds remarkably like the roaring 2000s "Gorilla Game" wisdom that implied "You can never pay too much for a gorilla."

Investment gurus come and go in every stock market cycle. Most look like geniuses until suddenly they don't. 

Tweets of the Day

New note from Jeremy Grantham on "the most dangerous breadth of asset overpricing in financial history. If valuations across asset classes return even two-thirds of the way to historical norms, U.S. wealth losses will be on the order of $35 trillion." Yep.https://t.co/HhY9GdTpuA pic.twitter.com/mDvoUQFeLu

— John P. Hussman, Ph.D. (@hussmanjp) January 25, 2022

"The wealth is lost on the way up" by investing in bubbles. 

What the Fed Achieved

A little harsh but is any part really inaccurate? https://t.co/izHqMKVGyC

— Jim Bianco biancoresearch.eth (@biancoresearch) January 12, 2022

Cramer's Magnificent Seven

What a hoot - Jim Cramer's "Magnificent Seven"

Anyone have a scorecard since he posted that chart? https://t.co/Cm9xGklQQG

— Mike "Mish" Shedlock (@MishGEA) January 21, 2022

Second Consecutive Wild Ride in the Stock Markets, This Time Closing Lower

In case you missed it, please consider my post on January 25, Second Consecutive Wild Ride in the Stock Markets, This Time Closing Lower

Many people think the Fed will keep hiking until it breaks something.

I have news. The markets and the economy are already broken by the Fed's policy errors.

For discussion of how bad inflation really is, please see Home Prices Jump Another Percent, Fed Extremely Behind the Inflation Curve

Home prices rise another percent according to Case-Shiller. The Fed does not even count that as inflation.

The seeds of decline were sown in bubbles already blown. And it's not just the stock market. It's also junk bonds, housing, and cryptocurrencies.

It's far too late for the Fed to prevent another deflationary asset bubble collapse.