CW does a dead cat bounce, it's still too early to buy into it
12 Dec, 201813 min read
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CURTISS WRIGHT CORP delivered good returns on Wednesday. It grew by +3.17% to close at 105.63. It is currently trading -25% below it's 52 week high of 142.06.
CW showed a strong down trend over the last 3 months. During this period CW returned -23.58% and saw a maximum drawdown of -27.0%. There were 2 short signals during this period that returned a cumulative of +17.42% to investors.
CW has been underperforming the SP500 index in recent time, after having outperformed till 20 Apr, 2018. Over the last 2 years 11 months and 8 days, CW outperformed the SP500 index on 54% days.
During the last three months CW was mostly loss making and delivered on average -0.41% per day. It's best return during this period (of +3.17%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -4.81%) was on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 13 Sep, 2018 and went on till 18 Sep, 2018. The bullish trend returned +1.46% to investors. This was followed by a bearish trend that started on 2 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -15.67% of investor capital.
On monthly basis, CW delivered profits in more months over the last year, than losses. CW delivered profits less regularly than SP500 index. CW was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -20.92% compared to -7.28% returned by SP500 index in Oct 2018. CW 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 CW and SP500 index significantly outperform during months when quarterly/annual results are announced.
"Everything is always feasible if you run a corporate finance exercise: you can always try to come out with a justification on how things could work. But the real issue is to say how do you translate that into practice.
CW 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 CW's volatility from 2 Oct, 2018 to 31 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 CW 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.
CW has more chance of extreme outcomes than the SP500 index. Therefore, CW must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than CW.
On a general note (since you are interested in CW), CSCO is a large cap that deserves to be closely tracked for investment opportunities.
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