ECOLAB INC. is looking better than most other alternatives on Tuesday. It grew by +0.43% to close at 155.27. On a day when the overall market breadth was 35%, it closed higher than 10% of the market. In comparison, the benchmark SP500 index closed today at -0.0004%.
ECL showed a flat trend over the last 3 months. During this period ECL returned -0.81% and saw a maximum drawdown of -8.44%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ECL till volatility reduces and a clear trend emerges.
During the last three months ECL was mostly loss making and delivered on average -0.01% per day. It's best return during this period (of +2.79%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -3.22%) was on Thursday, 11 Oct, 2018. There was initially a bullish trend during this period which started on 18 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +2.01% to investors. This was followed by a bearish trend that started on 24 Sep, 2018 and ended on 28 Sep, 2018. This bearish trend lost -1.65% of investor capital.
ECL had 7 profitable and 5 loss making months over the last year. During the last year, ECL underperformed SP500 index on monthly return basis. ECL significantly outperformed SP500 index in Apr 2018, when it returned +8.06% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ECL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year.
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ECL 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 ECL's volatility from 17 Sep, 2018 to 30 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 ECL has significant positive skewness in it's return distribution. This indicates that investors can expect ECL to recover from drawdowns quickly. Which makes ECL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in ECL derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
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