NOC is a falling knife, continues to bleed every investor trying to catch it
18 Dec, 201813 min read
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NORTHROP GRUMMAN CORP was among the worst performers today. It delivered -0.12% to close at 256.94. During the last week it delivered -4.88% and saw a maximum drawdown of -4.88%.
NOC is currently in a bearish trend. The current bearish signal has generated a profit of +10.12% for investors in the last three months.
NOC has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Apr, 2018 to 4 Dec, 2018. Over the last 2 years 11 months and 14 days, NOC outperformed the SP500 index on 52% days.
During the last three months NOC was mostly loss making and delivered on average -0.29% per day. It's best return during this period (of +4.93%) was on Monday, 10 Dec, 2018. While it's worst loss in the same period (of -6.0%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 9 losing days, which started on 17 Oct, 2018 and ended on 29 Oct, 2018. This bearish trend lost -19.21% of investor capital.
The last 12 months saw NOC's investors making profits in 4 months and incurring losses in 8 months. NOC was less consistent in delivering monthly returs than SP500 index. NOC was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -17.76% compared to -7.75% returned by SP500 index in Dec 2018. NOC had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jun 2018 to Aug 2018) during which period it delivered -9.35%.
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NOC 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 NOC's volatility from 4 Oct, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that NOC has significant positive skewness in it's return distribution. This indicates that investors can expect NOC to recover from drawdowns quickly. Which makes NOC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in NOC derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than NOC. Therefore, SP500 must receive a lower allocation than NOC in your portfolio. SP500 index usually has shorter drawdown period than NOC.
Based on your interest in NOC you may find it interesting to know that NIHD and DFBG have both shown remarkable performance this year and deserve to be on every investors' watchlist.
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