72.52 +1.19 (+1.64%) Sell

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

13 min read

CMA delivered good returns today. On a longer term basis, investors in COMERICA INC made -0.06% per day. Wednesday's performance of +1.64% was a significant outperformance compared to it's daily average.

[Themes containing CMA]

Buy-and-Hold investors in CMA experienced a maximum drawdown of -24.65% over the last three months. It returned -22.03% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +22.03% for investors.


CMA has been underperforming the SP500 index in recent time, after having outperformed till 7 Mar, 2018. Over the last 2 years 11 months and 8 days, CMA outperformed the SP500 index on 53% days.

During the last three months CMA was mostly loss making and delivered on average -0.38% per day. It's best return during this period (of +2.57%) was on Wednesday, 3 Oct, 2018. While it's worst loss in the same period (of -4.24%) was on Tuesday, 4 Dec, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 28 Sep, 2018. The trend delivered -4.82% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 6 Nov, 2018. This bullish trend delivered +6.05% to investors.

On monthly basis, CMA delivered losses in more months over the last year, than profits. CMA delivered profits less regularly than SP500 index. CMA significantly outperformed SP500 index in Jan 2018, when it returned +9.99% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CMA 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 -28.41%. It is interesting to note that both CMA and SP500 index significantly outperform during months when quarterly/annual results are announced.

"One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.

CMA is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in CMA's volatility from 25 Sep, 2018 to 24 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 CMA has significant positive skewness in it's return distribution. This indicates that investors can expect CMA to recover from drawdowns quickly. Which makes CMA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in CMA), if you are an investor in ICPT, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.

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