78.83 -0.9 (-1.14%) Sell

NXPI is a falling knife, continues to bleed every investor trying to catch it

13 min read

NXP SEMICONDUCTORS N.V. (Foreign) ranked among the worst performers on Thursday. It lost -1.14% to close at 78.83. On a day when the overall market breadth was 35%, it closed higher than 81% of the market. In comparison, the benchmark SP500 index closed today at -0.0002%.

[Themes containing NXPI]

Buy-and-Hold investors in NXPI experienced a maximum drawdown of -24.68% over the last three months. It lost -12.56% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +12.56% for investors.


NXPI has been underperforming the SP500 index in recent time, after having outperformed till 20 Oct, 2016. Over the last 2 years 11 months and 9 days, NXPI underperformed the SP500 index on 50% days. Which indicates that on days NXPI underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

NXPI returned losses on 57% days in the last three months. During this time, it delivered on average -0.17% per day. It delivered it's best daily return of +12.13%, during this period, on Thursday, 1 Nov, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +4.11% to investors. This was followed by a bearish trend that started on 21 Sep, 2018 and ended on 26 Sep, 2018. This bearish trend lost -9.43% of investor capital.

NXPI had 4 profitable and 8 loss making months over the last year. During the last year, NXPI underperformed SP500 index on monthly return basis. NXPI was also a more risky investment than SP500 index as it's worst month in the last year, Jul 2018, returned -12.37% compared to -7.28% returned by SP500 index in Oct 2018. NXPI had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Jun 2018 to Oct 2018) during which period it delivered -38.84%.

"The way to become rich is to put all your eggs in one basket and then watch that basket.

NXPI 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 NXPI's volatility from 21 Sep, 2018 to 1 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 NXPI 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.

Investors trading in NXPI derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

Based on your interest in NXPI you may find it interesting to know that NFEC has shown remarkable performance this year and deserves to be on every investors' watchlist.

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