ENTA does a dead cat bounce, it's still too early to buy into it
14 Dec, 201813 min read
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ENANTA PHARMACEUTICALS INC delivered stellar performance today. It gained +1.36% to close at 73.76. It's recent 5 day performance has been -2.67%, +1.0%, -1.29%, +2.7% and -1.91%.
ENTA showed a strong down trend over the last 3 months. During this period ENTA lost -19.6% and saw a maximum drawdown of -25.97%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ENTA till volatility reduces and a clear trend emerges.
ENTA has been underperforming the SP500 index in recent time, after having outperformed till 6 Jul, 2018. Over the last 2 years 11 months and 10 days, ENTA outperformed the SP500 index on 53% days.
ENTA returned losses on 51% days in the last three months. During this time, it delivered on average -0.29% per day. It delivered it's worst daily return of -7.61%, during this period, on Thursday, 8 Nov, 2018. There was initially a bearish trend during this period which started on 28 Sep, 2018 and went on till 2 Oct, 2018. The trend delivered -12.03% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +9.98% to investors.
ENTA had 6 profitable and 6 loss making months over the last year. During the last year, ENTA underperformed SP500 index on monthly return basis. ENTA significantly outperformed SP500 index in Jan 2018, when it returned +46.54% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ENTA had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both ENTA and SP500 index significantly outperform during months when quarterly/annual results are announced.
An investment in knowledge pays the best interest.
-- Benjamin Franklin
ENTA 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 ENTA's volatility from 17 Sep, 2018 to 25 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that ENTA has significant positive skewness in it's return distribution. This indicates that investors can expect ENTA to recover from drawdowns quickly. Which makes ENTA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
SP500 index has more chance of extreme outcomes than ENTA. Therefore, SP500 must receive a lower allocation than ENTA in your portfolio. ENTA usually has shorter drawdown period than the SP500 index.
On a general note (since you are interested in ENTA), NSPR has performed really well and deserves to be closely tracked for investment opportunities.
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