44.93 +0.44 (+0.99%) Sell

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

13 min read

MAGNA INTERNATIONAL INC (Foreign) outperformed the broader market on Tuesday. It increased by +0.99% to close at 44.93. It is currently trading -32% below it's 52 week high of 66.68.

[Themes containing MGA]

MGA is currently in a bearish trend. Over the last three months 3 bearish signals have generated a profit of +1.68% for investors.


MGA has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 6 Jul, 2016 to 21 May, 2018. Over the last 2 years 11 months and 7 days, MGA underperformed the SP500 index on 48% days. Which indicates that on days MGA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MGA delivered profits on 53% days. However, it still managed to end this period in a loss. It's best return during this period (of +4.68%) was on Thursday, 8 Nov, 2018. While it's worst loss in the same period (of -6.24%) was on Tuesday, 4 Dec, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +4.83%) started on 28 Nov, 2018 and went on till 3 Dec, 2018 while the bearish trend (which returned -6.36%) started on 2 Oct, 2018 and went on till 5 Oct, 2018.

The last 12 months saw MGA's investors making profits in 5 months and incurring losses in 7 months. MGA was less consistent in delivering monthly returs than SP500 index. MGA was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -10.96% compared to -7.28% returned by SP500 index in Oct 2018. MGA had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both MGA and SP500 index significantly outperform during months when quarterly/annual results are announced.

Finance is not merely about making money. It's about achieving our deep goals and protecting the fruits of our labor. It's about stewardship and, therefore, about achieving the good society.
-- Robert J. Shiller

MGA 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 MGA's volatility from 17 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MGA has significant positive skewness in it's return distribution. This indicates that investors can expect MGA to recover from drawdowns quickly. Which makes MGA 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 MGA. Therefore, SP500 must receive a lower allocation than MGA in your portfolio. SP500 index usually has shorter drawdown period than MGA.

On a general note (since you are interested in MGA), three large cap instruments that deserve special mention are AMZN, V and PFE. They have all outperformed the market and must be closely watched for investment opportunities.

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