279.47 +0.24 (+0.09%) Sell

Profit booking on the minds of LMT investors as it performed better than the broader market

13 min read

LOCKHEED MARTIN CORP performed better than the broader market on Tuesday. It returned +0.09% to close at 279.47. It is currently trading -22% below it's 52 week high of 361.0.

[Themes containing LMT]

LMT is currently in a down trend. The current bearish signal has generated a profit of +13.03% for investors in the last three months.


LMT has been underperforming the SP500 index in recent time, after having outperformed till 23 Apr, 2018. Over the last 2 years 11 months and 14 days, LMT outperformed the SP500 index on 53% days.

During the last three months LMT was mostly loss making and delivered on average -0.29% per day. It's best return during this period (of +4.56%) was on Monday, 10 Dec, 2018. While it's worst loss in the same period (of -6.03%) was on Monday, 29 Oct, 2018. There was initially a bullish trend during this period which started on 12 Oct, 2018 and went on till 16 Oct, 2018. The bullish trend returned +3.3% to investors. This was followed by a bearish trend that started on 22 Oct, 2018 and ended on 29 Oct, 2018. This bearish trend lost -13.24% of investor capital.

On monthly basis, LMT delivered losses in more months over the last year, than profits. LMT delivered profits less regularly than SP500 index. LMT was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -15.54% compared to -7.75% returned by SP500 index in Dec 2018. LMT had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -16.49%. It is interesting to note that both LMT and SP500 index significantly outperform during months when quarterly/annual results are announced.

I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.
-- Warren Buffett

LMT 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 LMT's volatility from 9 Oct, 2018 to 29 Oct, 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 LMT has significant positive skewness in it's return distribution. This indicates that investors can expect LMT to recover from drawdowns quickly. Which makes LMT a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in LMT derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in LMT), three instruments that deserve special mention are AYTU, NSPR and RGSE. They have all outperformed the market and must be closely watched for investment opportunities.

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