ADM is a falling knife, continues to bleed every investor trying to catch it

ARCHER DANIELS MIDLAND CO was among the worst performers on Tuesday. It returned -0.09% to close at 44.55. On a day when the overall market breadth was 35%, it closed higher than 11% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.

[Themes containing ADM]

ADM showed a strong down trend over the last 3 months. During this period ADM returned -10.9% and saw a maximum drawdown of -14.15%. There were 2 short signals during this period that returned a cumulative of +6.63% to investors.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

ADM has been underperforming the SP500 index in recent time, after having outperformed till 3 Nov, 2016. Over the last 2 years 11 months and 7 days, ADM underperformed the SP500 index on 48% days. Which indicates that on days ADM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months ADM delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.11%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -3.01%) was on Friday, 26 Oct, 2018. There was initially a bullish trend during this period which started on 2 Oct, 2018 and went on till 8 Oct, 2018. The bullish trend returned +3.32% to investors. This was followed by a bearish trend that started on 19 Nov, 2018 and ended on 23 Nov, 2018. This bearish trend lost -2.56% of investor capital.

On monthly basis, ADM delivered profits and losses in equal number of months. ADM delivered profits less regularly than SP500 index. ADM significantly outperformed SP500 index in Apr 2018, when it returned +7.36% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ADM had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -11.76%. It is interesting to note that both ADM and SP500 index significantly outperform during months when quarterly/annual results are announced.

Finance, like time, devours its own children.
-- Honore de Balzac

ADM 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 ADM's volatility from 14 Sep, 2018 to 6 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

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

Investors trading in ADM derivatives at this moment can consider 'Bear Put Spread' options strategy to receive better risk-adjusted returns.

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

Based on your interest in ADM you may find it interesting to know that TSN, HTBK and SBAC have all performed similar to ADM and qualify as alternative investment candidates that must be evaluated for diversification.