36.94 -0.59 (-1.6%) Buy

CRUS investors herd to book profits while the going is good

13 min read

CIRRUS LOGIC INC significantly underperformed on Thursday. It lost -1.6% to close at 36.94. On a day when the overall market breadth was 35%, it closed higher than 66% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing CRUS]

CRUS is currently in a up trend. Over the last three months trading long signals has not been a profitable strategy for CRUS's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -6.98%). It is therefore better to tread with caution in the current uptrend by limiting your allocation to CRUS.


CRUS has been underperforming the SP500 index in recent time, after having outperformed till 8 Jun, 2017. Over the last 2 years 11 months and 9 days, CRUS underperformed the SP500 index on 49% days. Which indicates that on days CRUS underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months CRUS was mostly loss making and delivered on average -0.06% per day. It's best return during this period (of +7.51%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -13.86%) was on Monday, 12 Nov, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 5 Oct, 2018. The trend delivered -6.57% losses to investors. This was followed by a bullish trend that started on 12 Oct, 2018 and ended on 17 Oct, 2018. This bullish trend delivered +7.74% to investors.

CRUS had 4 profitable and 8 loss making months over the last year. During the last year, CRUS underperformed SP500 index on monthly return basis. CRUS significantly outperformed SP500 index in Jul 2018, when it returned +12.63% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. CRUS had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

"Inflation is taxation without legislation.

CRUS is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in CRUS's volatility from 18 Sep, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that CRUS 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.

Investors trading in CRUS derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

Based on your interest in CRUS you may find it interesting to know that AMRN has shown remarkable performance this year and deserves to be on every investors' watchlist.

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