24.73 -0.26 (-1.04%) Sell

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

13 min read

SIMMONS FIRST NATIONAL CORP is a falling knife that can bleed you if you catch it on Tuesday. It lost -1.04% to close at 24.73. It is currently trading -25% below it's 52 week high of 33.35.

SFNC is currently in a down trend. Over the last three months 2 bearish signals have generated a profit of +13.34% for investors.


SFNC has been underperforming the SP500 index in recent time, after having outperformed till 9 Dec, 2016. Over the last 2 years 11 months and 14 days, SFNC underperformed the SP500 index on 48% days. Which indicates that on days SFNC underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SFNC was mostly loss making and delivered on average -0.37% per day. It's best return during this period (of +3.45%) was on Thursday, 25 Oct, 2018. While it's worst loss in the same period (of -7.05%) was on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 25 Oct, 2018 and went on till 5 Nov, 2018. The bullish trend returned +11.36% to investors. This was followed by a bearish trend that started on 3 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -11.91% of investor capital.

SFNC had 5 profitable and 7 loss making months over the last year. During the last year, SFNC underperformed SP500 index on monthly return basis. SFNC was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -15.88% compared to -7.75% returned by SP500 index in Dec 2018. SFNC had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both SFNC and SP500 index significantly outperform during months when quarterly/annual results are announced.

I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.
-- Warren Buffett

SFNC is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SFNC's volatility from 19 Sep, 2018 to 24 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 SFNC has significant positive skewness in it's return distribution. This indicates that investors can expect SFNC to recover from drawdowns quickly. Which makes SFNC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in SFNC), two mid cap instruments that deserve special mention are EW and LULU. They have significantly outperformed the overall market.

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