Profit booking on the minds of FF investors as it manages to marginally outperform broader market
18 Dec, 201813 min read
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FUTUREFUEL CORP. was among the best performers on Tuesday. It returned +2.87% to close at 15.78. On a day when the overall market breadth was 34%, it closed higher than 73% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.
FF is currently in a down trend. Over the last three months 2 bearish signals have generated a profit of +15.0% for investors.
FF has been underperforming the SP500 index in recent time, after having outperformed till 8 Dec, 2016. Over the last 2 years 11 months and 14 days, FF underperformed the SP500 index on 48% days. Which indicates that on days FF underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months FF was mostly loss making and delivered on average -0.15% per day. It's best return during this period (of +7.19%) was on Monday, 12 Nov, 2018. While it's worst loss in the same period (of -4.78%) was on Friday, 12 Oct, 2018. There was initially a bullish trend during this period which started on 23 Nov, 2018 and went on till 28 Nov, 2018. The bullish trend returned +1.79% to investors. This was followed by a bearish trend that started on 29 Nov, 2018 and ended on 7 Dec, 2018. This bearish trend lost -12.22% of investor capital.
On monthly basis, FF delivered losses in more months over the last year, than profits. FF delivered profits less regularly than SP500 index. FF significantly outperformed SP500 index in Sep 2018, when it returned +25.02% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. FF had a shorter streak of profitable months than SP500 index. It only went up in 2 straight months during the last year.
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FF 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 fall in FF's volatility from 19 Sep, 2018 to 27 Nov, 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 FF has significant positive skewness in it's return distribution. This indicates that investors can expect FF to recover from drawdowns quickly. Which makes FF 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 FF. Therefore, SP500 must receive a lower allocation than FF in your portfolio. SP500 index usually has shorter drawdown period than FF.
On a general note (since you are interested in FF), three mid cap instruments that deserve special mention are RHT, SQ and EW. They have all outperformed the market and must be closely watched for investment opportunities.
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