MICROCHIP TECHNOLOGY INC

71.64 -0.78 (-1.09%) Sell

MCHP is a falling knife, continues to bleed every investor trying to catch it

13 min read

MCHP is a falling knife that can bleed you if you catch it today. On a longer term basis, investors in MICROCHIP TECHNOLOGY INC made -0.04% per day. Friday's performance of -1.09% was a significant underperformance compared to it's daily average.

[Themes containing MCHP]

Buy-and-Hold investors in MCHP experienced a maximum drawdown of -26.48% over the last three months. It returned -11.42% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +7.67%.

Trend

MCHP has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, MCHP outperformed the SP500 index on 56% days.

During the last three months MCHP was mostly loss making and delivered on average -0.16% per day. It's best return during this period (of +6.98%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -8.81%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 3 Oct, 2018 and went on till 10 Oct, 2018. The trend delivered -15.33% losses to investors. This was followed by a bullish trend that started on 13 Nov, 2018 and ended on 16 Nov, 2018. This bullish trend delivered +8.33% to investors.

On monthly basis, MCHP delivered losses in more months over the last year, than profits. MCHP delivered profits less regularly than SP500 index. MCHP significantly outperformed SP500 index in May 2018, when it returned +16.4% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MCHP had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -30.95%. It is interesting to note that both MCHP and SP500 index significantly outperform during months when quarterly/annual results are announced.

But having said that, what's happening with campaign finance reform and our political culture is devastating.
-- Robert McChesney

MCHP 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 MCHP's volatility from 28 Sep, 2018 to 1 Nov, 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 MCHP has significant positive skewness in it's return distribution. This indicates that investors can expect MCHP to recover from drawdowns quickly. Which makes MCHP 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 MCHP. Therefore, SP500 must receive a lower allocation than MCHP in your portfolio. SP500 index usually has shorter drawdown period than MCHP.

On a general note (since you are interested in MCHP), two mid cap instruments that deserve special mention are TWTR and AMD. They have significantly outperformed the overall market.

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