CNH INDUSTRIAL N.V. (FOREIGN)

9.3 +0.06 (+0.65%) Sell

Profit booking on the minds of CNHI investors as it marginally outperforms

13 min read

CNH INDUSTRIAL N.V. (Foreign) managed to marginally outperform the broader market on Tuesday. It gained +0.65% to close at 9.3. On a day when the overall market breadth was 34%, it closed higher than 18% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Themes containing CNHI]

CNHI is currently in a down trend. The current bearish signal has generated a profit of +11.51% for investors in the last three months.

Trend

CNHI has been underperforming the SP500 index in recent time, after having outperformed till 1 Feb, 2018. Over the last 2 years 11 months and 14 days, CNHI outperformed the SP500 index on 49% days. Which indicates that on days CNHI outperforms the SP500 index, it's performance is marginally better than on the days it underperforms the SP500 index.

CNHI returned losses on 61% days in the last three months. During this time, it delivered on average -0.41% per day. It delivered it's best daily return of +7.73%, during this period, on Monday, 3 Dec, 2018. There was initially a bearish trend during this period which started on 24 Sep, 2018 and went on till 1 Oct, 2018. The trend delivered -6.17% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +11.16% to investors.

On monthly basis, CNHI delivered losses in more months over the last year, than profits. CNHI delivered profits less regularly than SP500 index. CNHI significantly outperformed SP500 index in Jul 2018, when it returned +13.24% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CNHI had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both CNHI and SP500 index significantly outperform during months when quarterly/annual results are announced.

Courage is being scared to death, but saddling up anyway.
-- John Wayne

CNHI 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 CNHI's volatility from 28 Sep, 2018 to 11 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CNHI has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

On a general note (since you are interested in CNHI), three mid cap instruments that deserve special mention are ABMD, LULU and SQ. They have all outperformed the market and must be closely watched for investment opportunities.

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