Are you evaluating investing in NOV? Avoid as it is a falling knife that can bleed you if you catch it

NATIONAL OILWELL VARCO INC is a falling knife that can bleed you if you catch it on Friday. It lost -1.52% to close at 29.81. On a day when the overall market breadth was 35%, it closed higher than 75% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing NOV]

NOV showed a strong down trend over the last 3 months. During this period NOV lost -31.71% and saw a maximum drawdown of -34.41%. There was a short signal during this period which returned +26.21%.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

NOV has been underperforming the SP500 index in recent time, after having outperformed till 6 Dec, 2016. Over the last 2 years 11 months and 3 days, NOV underperformed the SP500 index on 50% days. Which indicates that on days NOV underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

NOV returned losses on 58% days in the last three months. During this time, it delivered on average -0.58% per day. It delivered it's best daily return of +5.75%, during this period, on Tuesday, 30 Oct, 2018. There was initially a bullish trend during this period which started on 27 Sep, 2018 and went on till 4 Oct, 2018. The bullish trend returned +5.24% to investors. This was followed by a bearish trend that started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -14.35% of investor capital.

NOV had 5 profitable and 7 loss making months over the last year. During the last year, NOV underperformed SP500 index on monthly return basis. NOV was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -16.33% compared to -7.28% returned by SP500 index in Oct 2018. NOV had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both NOV and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Great businesses produce great results

NOV is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in NOV's volatility from 19 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that NOV has significant positive skewness in it's return distribution. This indicates that investors can expect NOV to recover from drawdowns quickly. Which makes NOV a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in NOV derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

NOV has more chance of extreme outcomes than the SP500 index. Therefore, NOV must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than NOV.

On a general note (since you are interested in NOV), three instruments that have performed similar to NOV are TDC, PICO and STM. They must all be evaluated as alternative investment options and for diversification.