Stop-loss on the minds of NDSN investors as it was among the worst performers
17 Dec, 201813 min read
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NORDSON CORP is a falling knife that can bleed you if you catch it on Monday. It lost -3.18% to close at 114.78. On a day when the overall market breadth was 34%, it closed higher than 12% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
NDSN is currently in a down trend. The current bearish signal has generated a profit of +13.91% for investors in the last three months.
NDSN has been underperforming the SP500 index in recent time, after having outperformed till 4 Jan, 2018. Over the last 2 years 11 months and 10 days, NDSN outperformed the SP500 index on 55% days.
During the last three months NDSN was mostly loss making and delivered on average -0.35% per day. It's best return during this period (of +6.33%) was on Thursday, 13 Dec, 2018. While it's worst loss in the same period (of -5.08%) was on Tuesday, 27 Nov, 2018. There was initially a bearish trend during this period which started on 21 Sep, 2018 and went on till 1 Oct, 2018. The trend delivered -5.47% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +10.41% to investors.
NDSN had 4 profitable and 8 loss making months over the last year. During the last year, NDSN underperformed SP500 index on monthly return basis. NDSN was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.8% compared to -7.28% returned by SP500 index in Oct 2018. NDSN had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -14.27%.
The difference between playing the stock market and the horses is that one of the horses must win.
-- Joey Adams
NDSN is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in NDSN's volatility from 3 Oct, 2018 to 13 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 NDSN has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
SP500 index has more chance of extreme outcomes than NDSN. Therefore, SP500 must receive a lower allocation than NDSN in your portfolio. SP500 index usually has shorter drawdown period than NDSN.
Based on your interest in NDSN you may find it interesting to know that RHT and LULU are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.
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