80.28 -6.35 (-7.9%) Sell

NEWR investors looking to exit as part of sectoral rotation

13 min read

NEW RELIC, INC. ranked among the worst performers on Monday. It delivered -7.9% to close at 80.28. On a day when the overall market breadth was 34%, it closed higher than 4% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.

[Themes containing NEWR]

Buy-and-Hold investors in NEWR experienced a maximum drawdown of -25.45% over the last three months. It delivered -19.98% 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.


NEWR has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 15 Apr, 2016 to 23 Jul, 2018. Over the last 2 years 11 months and 10 days, NEWR outperformed the SP500 index on 54% days.

During the last three months NEWR was mostly loss making and delivered on average -0.29% per day. It's best return during this period (of +11.66%) was on Wednesday, 7 Nov, 2018. While it's worst loss in the same period (of -9.58%) was on Monday, 19 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 26 Sep, 2018 and ended on 2 Oct, 2018. This bearish trend lost -11.38% of investor capital.

The last 12 months saw NEWR's investors making profits in 5 months and incurring losses in 7 months. NEWR was less consistent in delivering monthly returs than SP500 index. NEWR significantly outperformed SP500 index in May 2018, when it returned +45.36% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. NEWR 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 -12.33%.

"Beware of little expenses. A small leak will sink a great ship.

NEWR is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in NEWR's volatility from 18 Sep, 2018 to 20 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 NEWR has significant positive skewness in it's return distribution. This indicates that investors can expect NEWR to recover from drawdowns quickly. Which makes NEWR 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 NEWR. Therefore, SP500 must receive a lower allocation than NEWR in your portfolio. NEWR usually has shorter drawdown period than the SP500 index.

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

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