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

ON SEMICONDUCTOR CORP was among the worst performers today. It fell by -4.93% to close at 17.37. During the last week it fell by -9.44% and saw a maximum drawdown of -10.23% before bouncing back.

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Buy-and-Hold investors in ON experienced a maximum drawdown of -26.42% over the last three months. It fell by -10.09% 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. The net profit from Short signals was +12.01%.

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Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

ON has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 12 Feb, 2016 to 21 Mar, 2018. Over the last 2 years 11 months and 3 days, ON outperformed the SP500 index on 55% days.

During the last three months ON was mostly loss making and delivered on average -0.12% per day. It's best return during this period (of +8.82%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -8.33%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 3 Oct, 2018 and ended on 10 Oct, 2018. This bearish trend lost -14.64% of investor capital.

During the last year ON had 4 profitable months and 8 loss making months. ON returned profits in fewer months than SP500 index. ON significantly outperformed SP500 index in May 2018, when it returned +13.81% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. ON 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 -37.97%. It is interesting to note that both ON and SP500 index significantly outperform during months when quarterly/annual results are announced.

The challenge is not to pick the best investment. The challenge is to pick the right investment.
-- Don Connelly

ON 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 ON's volatility from 11 Sep, 2018 to 2 Nov, 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 ON has significant positive skewness in it's return distribution. This indicates that investors can expect ON to recover from drawdowns quickly. Which makes ON a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ON you may find it interesting to know that TYHT, EPIX and AMRH have all shown remarkable performance and qualify to be on every investor's watchlist.