15.38 +0.39 (+2.53%) Sell

CJ does a dead cat bounce, it's still too early to buy into it

13 min read

CJ outperformed the broader market today. On a longer term basis, investors in C&J ENERGY SERVICES, INC. made +0.14% per day. Wednesday's performance of +2.53% was a outperformance compared to it's daily average.

[Themes containing CJ]

CJ showed a strong bearish trend over the last 3 months. During this period CJ delivered -24.05% and saw a maximum drawdown of -34.13%. There were 3 short signals during this period that returned a cumulative of +7.69% to investors.


CJ has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 6 Mar, 2017 to 6 Dec, 2018. Over the last 1 year 9 months and 6 days, CJ underperformed the SP500 index on 52% days.

During the last three months CJ delivered profits on 52% days. However, it still managed to end this period in a loss. It's best return during this period (of +6.21%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -9.23%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 18 Sep, 2018 and went on till 24 Sep, 2018. This bullish trend returned +7.23% to investors.

The last 12 months saw CJ's investors making profits in 3 months and incurring losses in 9 months. CJ was less consistent in delivering monthly returs than SP500 index. CJ was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -21.62% compared to -7.28% returned by SP500 index in Oct 2018. CJ had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Aug 2018 to Dec 2018) during which period it delivered -42.06%. It is interesting to note that both CJ and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The way to become rich is to put all your eggs in one basket and then watch that basket.

CJ 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 CJ's volatility from 13 Sep, 2018 to 1 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 CJ has positive skewness in it's return distribution. This indicates that investors can expect CJ to make attempts to recover from drawdowns quickly. Which makes CJ a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

Based on your interest in CJ you may find it interesting to know that AMZN and CSCO are both large caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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