16.31 -0.39 (-2.39%) Sell

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

13 min read

SM ENERGY CO delivered massive losses today. It fell by -2.39% to close at 16.31. It's recent 5 day performance has been -9.92%, -2.16%, +1.17%, -0.85% and -3.82%.

[Themes containing SM]

SM is currently in a bearish trend. The current bearish signal has generated a profit of +43.39% for investors in the last three months.


SM has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 10 Oct, 2016 to 30 Aug, 2017. Over the last 2 years 11 months and 10 days, SM underperformed the SP500 index on 52% days.

During the last three months SM was mostly loss making and delivered on average -0.99% per day. It's best return during this period (of +6.13%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -9.92%) was on Friday, 14 Dec, 2018. The longest stort-term trend during this period was 5 losing days, which started on 8 Nov, 2018 and ended on 14 Nov, 2018. This bearish trend lost -14.55% of investor capital.

During the last year SM had 6 profitable months and 6 loss making months. SM returned profits in fewer months than SP500 index. SM significantly outperformed SP500 index in Apr 2018, when it returned +45.24% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SM 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 SM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.

SM 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 SM's volatility from 27 Sep, 2018 to 2 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 SM has significant negative skewness in it's return distribution. This indicates that SM is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in SM), two large cap instruments that deserve special mention are V and AMZN. They have significantly outperformed the overall market.

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