86.02 +0.15 (+0.17%) Sell

Joy for ARCH investors as it marginally outperforms

13 min read

ARCH COAL INC managed to outperform the broader market on Tuesday. It surged by +0.17% to close at 86.02. It is currently trading -14% below it's 52 week high of 100.71.

[Themes containing ARCH]

ARCH is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for ARCH's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -3.85%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to ARCH.


ARCH has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 20 Jun, 2017 to 20 Apr, 2018. Over the last 2 years 2 months and 6 days, ARCH outperformed the SP500 index on 55% days.

ARCH was profitable on 54% days in the last three months. During this time, it delivered on average -0.04% per day. It delivered it's worst daily return of -7.62%, during this period, on Tuesday, 20 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +7.82%) started on 11 Oct, 2018 and went on till 17 Oct, 2018 while the bearish trend (which returned -19.31%) started on 19 Nov, 2018 and went on till 26 Nov, 2018.

During the last year ARCH had 7 profitable months and 5 loss making months. ARCH returned profits in fewer months than SP500 index. ARCH was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -15.26% compared to -7.28% returned by SP500 index in Oct 2018. ARCH had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

"Of course, it is a little bit disingenuous to hint that hard work is the only thing you need to achieve success.

ARCH is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ARCH's volatility from 21 Sep, 2018 to 26 Oct, 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 ARCH has significant positive skewness in it's return distribution. This indicates that investors can expect ARCH to recover from drawdowns quickly. Which makes ARCH a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ARCH), two instruments that have been extremely volatile in recent times are NVCN and IMTE. Investors in these instruments should consider reducing their exposure (to NVCN and IMTE) and diversifying their portfolios.

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