S&P 500 Index INDEX

2546.16 +0.22 (+0.01%) Sell

Don't go profit booking on SP500 INDEX now, it delivered a decent return

12 min read

S&P 500 Index managed to marginally outperform the broader market today. It gained +0.01% to close at 2546.16. It's recent 5 day performance has been -1.91%, -0.02%, +0.54%, -0.04% and +0.18%.

SP500 showed a strong down trend over the last 3 months. During this period SP500 lost -12.44% and saw a maximum drawdown of -13.12%. There was a short signal during this period which returned +8.6%.


SP500 returned losses on 63% days in the last three months. During this time, it delivered on average -0.21% per day. It delivered it's worst daily return of -3.29%, during this period, on Wednesday, 10 Oct, 2018. There was initially a bullish trend during this period which started on 27 Sep, 2018 and went on till 1 Oct, 2018. The bullish trend returned +0.64% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -6.9% of investor capital.

SP500 had 8 profitable and 4 loss making months over the last year. During the last year, number of profitable months of SP500 and SP500 index were the same. SP500 and SP500 index were almost equally risky as their worst month performance was almost the same. SP500 and SP500 index, both had periods of 6 consecutive profitable months. It is interesting to note that both SP500 and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The real measure of your wealth is how much you'd be worth if you lost all your money

SP500 is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SP500's volatility from 19 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SP500 has significant positive skewness in it's return distribution. This indicates that investors can expect SP500 to recover from drawdowns quickly. Which makes SP500 a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in SP500 derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than SP500. Therefore, SP500 must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than SP500.

On a general note (since you are interested in ^SP500), two small cap instruments that deserve special mention are AAXN and ZBRA. They have significantly outperformed the overall market.

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