12.49 +0.03 (+0.24%) Sell

SUM does a dead cat bounce, it's still too early to buy into it

13 min read

SUMMIT MATERIALS, INC. ranked among the best performers today. It delivered +0.24% to close at 12.49. It's recent 5 day performance has been +3.06%, -7.43%, +2.83%, -2.68% and -0.23%.

[Themes containing SUM]

SUM is currently in a bearish trend. Over the last three months 2 bearish signals have generated a profit of +29.89% for investors.


SUM has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 5 Oct, 2017 to 29 Oct, 2018. Over the last 2 years 11 months and 10 days, SUM underperformed the SP500 index on 49% days. Which indicates that on days SUM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months SUM was mostly loss making and delivered on average -0.62% per day. It's best return during this period (of +9.63%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -7.59%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 16 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -22.89% of investor capital.

During the last year SUM had 3 profitable months and 9 loss making months. SUM returned profits in fewer months than SP500 index. SUM was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -25.04% compared to -7.28% returned by SP500 index in Oct 2018. SUM 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 -66.63%. It is interesting to note that both SUM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"I'm involved in the stock market, which is fun and, sometimes, very painful.

SUM 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 SUM's volatility from 27 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 SUM has significant positive skewness in it's return distribution. This indicates that investors can expect SUM to recover from drawdowns quickly. Which makes SUM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in SUM), two instruments that have delivered similar performance as SUM are LXFR and PW. They are suitable as good alternative investment candidates that can diversify your portfolio.

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