SPLUNK INC

106.29 -2.07 (-1.95%) Sell

Waiting to invest in SPLK? Avoid at the moment as it ranked among the worst performers

13 min read

SPLUNK INC ranked among the worst performers on Tuesday. It delivered -1.95% to close at 106.29. It is currently trading +32% above it's 52 week low of 80.44 and is down only -17% from it's 52 week high.

[Themes containing SPLK]

SPLK showed a strong bearish trend over the last 3 months. During this period SPLK delivered -15.14% and saw a maximum drawdown of -29.91%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SPLK till volatility reduces and a clear trend emerges.

Trend

SPLK has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 12 Feb, 2016 to 4 Sep, 2018. Over the last 2 years 11 months and 7 days, SPLK outperformed the SP500 index on 53% days.

During the last three months SPLK was mostly loss making and delivered on average -0.19% per day. It's best return during this period (of +9.94%) was on Friday, 30 Nov, 2018. While it's worst loss in the same period (of -11.19%) was on Monday, 19 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +16.2%) started on 29 Oct, 2018 and went on till 2 Nov, 2018 while the bearish trend (which returned -15.24%) started on 4 Oct, 2018 and went on till 10 Oct, 2018.

The last 12 months saw SPLK's investors making profits in 7 months and incurring losses in 5 months. SPLK was less consistent in delivering monthly returs than SP500 index. SPLK significantly outperformed SP500 index in Aug 2018, when it returned +33.35% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. SPLK had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year.

It's not the employer who pays the wages. Employers only handle the money. It's the customer who pays the wages.
-- Henry Ford

SPLK 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 SPLK's volatility from 27 Sep, 2018 to 20 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SPLK 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 SPLK derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in SPLK), two instruments that deserve special mention are APRN and AMRH. They have significantly outperformed the overall market.

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