5.65 +0.23 (+4.05%) Sell

LBY does a dead cat bounce, it's still too early to buy into it

13 min read

LIBBEY INC outperformed on Thursday. It surged by +4.05% to close at 5.65. On a day when the overall market breadth was 35%, it closed higher than 84% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing LBY]

Buy-and-Hold investors in LBY experienced a maximum drawdown of -46.72% over the last three months. It delivered -34.38% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


LBY has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Jan, 2016 to 3 Dec, 2018. Over the last 2 years 11 months and 9 days, LBY underperformed the SP500 index on 51% days.

LBY returned losses on 58% days in the last three months. During this time, it delivered on average -0.59% per day. It delivered it's worst daily return of -21.27%, during this period, on Tuesday, 6 Nov, 2018. The longest stort-term trend during this period was 8 losing days, which started on 29 Nov, 2018 and ended on 11 Dec, 2018. This bearish trend lost -31.05% of investor capital.

The last 12 months saw LBY's investors making profits in 5 months and incurring losses in 7 months. LBY was less consistent in delivering monthly returs than SP500 index. LBY significantly outperformed SP500 index in Jun 2018, when it returned +24.88% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. LBY had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both LBY and SP500 index significantly outperform during months when quarterly/annual results are announced.

A real entrepreneur is somebody who has no safety net underneath them.
-- Henry Kravis

LBY is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in LBY's volatility from 28 Sep, 2018 to 17 Oct, 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 LBY has positive skewness in it's return distribution. This indicates that investors can expect LBY to make attempts to recover from drawdowns quickly. Which makes LBY a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

On a general note (since you are interested in LBY), two instruments that deserve special mention are AMRN and NFEC. They have significantly outperformed the overall market this year.

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