CERN does a dead cat bounce, it's still too early to buy into it
11 Dec, 201813 min read
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CERNER CORP ranked among the best performers on Tuesday. It delivered +0.97% to close at 54.97. On a day when the overall market breadth was 35%, it closed higher than 70% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.
CERN is currently in a bearish trend. Over the last three months 2 bearish signals have generated a profit of +12.92% for investors.
CERN has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 8 Aug, 2016 to 8 Nov, 2018. Over the last 2 years 11 months and 7 days, CERN underperformed the SP500 index on 49% days. Which indicates that on days CERN underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months CERN delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +5.13%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -10.86%) was on Friday, 26 Oct, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +3.77%) started on 20 Nov, 2018 and went on till 28 Nov, 2018 while the bearish trend (which returned -4.91%) started on 4 Oct, 2018 and went on till 11 Oct, 2018.
During the last year CERN had 7 profitable months and 5 loss making months. CERN returned profits in fewer months than SP500 index. CERN was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.57% compared to -7.28% returned by SP500 index in Oct 2018. CERN had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both CERN and SP500 index significantly outperform during months when quarterly/annual results are announced.
"There are no patents in finance.
CERN is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in CERN's volatility from 13 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 CERN has significant positive skewness in it's return distribution. This indicates that investors can expect CERN to recover from drawdowns quickly. Which makes CERN 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 CERN. Therefore, SP500 must receive a lower allocation than CERN in your portfolio. SP500 index usually has shorter drawdown period than CERN.
On a general note (since you are interested in CERN), three instruments that are extremely volatile are ICPT, VIPS and IMTE. They must all be evaluated prudently and investors are better off avoiding them at the moment.
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