11.25 -0.02 (-0.18%) Sell

AXL continues its fall as more investors loose confidence

13 min read

AMERICAN AXLE & MANUFACTURING HOLDINGS INC trailed the broader market on Monday. It fell by -0.18% to close at 11.25. On a day when the overall market breadth was 34%, it closed higher than 71% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing AXL]

AXL showed a strong bearish trend over the last 3 months. During this period AXL fell by -37.01% and saw a maximum drawdown of -40.6%. There were 3 short signals during this period that returned a cumulative of +29.95% to investors.


AXL has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 4 Jan, 2016 to 5 Nov, 2018. Over the last 2 years 11 months and 10 days, AXL underperformed the SP500 index on 48% days. Which indicates that on days AXL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

AXL returned losses on 54% days in the last three months. During this time, it delivered on average -0.62% per day. It delivered it's worst daily return of -26.91%, during this period, on Friday, 2 Nov, 2018. The longest stort-term trend during this period was 4 losing days, which started on 8 Nov, 2018 and ended on 13 Nov, 2018. This bearish trend lost -10.76% of investor capital.

During the last year AXL had 6 profitable months and 6 loss making months. AXL returned profits in fewer months than SP500 index. AXL was also a more risky investment than SP500 index as it's worst month in the last year, Nov 2018, returned -17.93% compared to -7.28% returned by SP500 index in Oct 2018. AXL 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 -41.8%. It is interesting to note that both AXL and SP500 index significantly outperform during months when quarterly/annual results are announced.

I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know I am a net loser.
-- Charles Schwab

AXL 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 AXL's volatility from 28 Sep, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

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

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

On a general note (since you are interested in AXL), three instruments that deserve special mention are I, DFBG and ECYT. They have all outperformed the market and must be closely watched for investment opportunities.

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