CLW does a dead cat bounce, it's still too early to buy into it
14 Dec, 201813 min read
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CLEARWATER PAPER CORP outperformed the broader market on Friday. It increased by +0.76% to close at 27.71. On a day when the overall market breadth was 35%, it closed higher than 18% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
CLW is currently in a bearish trend. The previous short signal in CLW has not been profitable for investors in general. If you are short on CLW at current levels please make sure that your allocation is limited and that your portfolio is well diversified.
CLW has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 15 Jul, 2016 to 25 Jul, 2018. Over the last 2 years 11 months and 10 days, CLW underperformed the SP500 index on 44% days. Which indicates that on days CLW underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months CLW was mostly loss making and delivered on average -0.14% per day. It's best return during this period (of +7.9%) was on Monday, 26 Nov, 2018. While it's worst loss in the same period (of -6.16%) was on Tuesday, 23 Oct, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +9.76%) started on 13 Nov, 2018 and went on till 19 Nov, 2018 while the bearish trend (which returned -8.15%) started on 21 Sep, 2018 and went on till 27 Sep, 2018.
The last 12 months saw CLW's investors making profits in 6 months and incurring losses in 6 months. CLW was less consistent in delivering monthly returs than SP500 index. CLW was also a more risky investment than SP500 index as it's worst month in the last year, Apr 2018, returned -36.51% compared to -7.28% returned by SP500 index in Oct 2018. CLW had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year.
Traditionally, the sample is always better than the stock you deliver to the store.
-- Calvin Klein
CLW 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 CLW's volatility from 8 Oct, 2018 to 12 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 CLW has significant positive skewness in it's return distribution. This indicates that investors can expect CLW to recover from drawdowns quickly. Which makes CLW 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 CLW. Therefore, SP500 must receive a lower allocation than CLW in your portfolio. CLW usually has shorter drawdown period than the SP500 index.
Based on your interest in CLW you may find it interesting to know that IX and VIPS are highly volatile and therefore risky. Investors should consider limiting their exposure to these instruments (because of their volatile nature).
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