MICHAELS COMPANIES, INC.

15.1 +0.04 (+0.27%) Sell

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

13 min read

MIK ranked among the best performers today. On a longer term basis, investors in MICHAELS COMPANIES, INC. made +0.03% per day. Thursday's performance of +0.27% was a outperformance compared to it's daily average.

[Themes containing MIK]

Buy-and-Hold investors in MIK experienced a maximum drawdown of -15.25% over the last three months. It fell by -10.17% 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. The net profit from Short signals was +1.25%.

Trend

MIK has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Jun, 2016 to 4 Oct, 2018. Over the last 2 years 11 months and 9 days, MIK underperformed the SP500 index on 49% days. Which indicates that on days MIK underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MIK was mostly loss making and delivered on average -0.15% per day. It's best return during this period (of +3.61%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -5.79%) was on Tuesday, 4 Dec, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +11.55%) started on 1 Nov, 2018 and went on till 8 Nov, 2018 while the bearish trend (which returned -14.32%) started on 4 Dec, 2018 and went on till 12 Dec, 2018.

During the last year MIK had 4 profitable months and 8 loss making months. MIK returned profits in fewer months than SP500 index. MIK was also a more risky investment than SP500 index as it's worst month in the last year, Aug 2018, returned -16.76% compared to -7.28% returned by SP500 index in Oct 2018. MIK had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -34.92%. It is interesting to note that both MIK and SP500 index significantly outperform during months when quarterly/annual results are announced.

If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.
-- Edmund Burke

MIK 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 MIK's volatility from 26 Sep, 2018 to 7 Dec, 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 MIK has significant positive skewness in it's return distribution. This indicates that investors can expect MIK to recover from drawdowns quickly. Which makes MIK 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 MIK. Therefore, SP500 must receive a lower allocation than MIK in your portfolio. SP500 index usually has shorter drawdown period than MIK.

On a general note (since you are interested in MIK), two instruments that have been extremely volatile in recent times are GNK and IMTE. Investors in these instruments should consider reducing their exposure (to GNK and IMTE) and diversifying their portfolios.

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