4.15 +0.07 (+1.72%) Sell

Don't go profit booking on SWN now, it delivered a decent return

13 min read

SOUTHWESTERN ENERGY CO delivered stellar performance today. It gained +1.72% to close at 4.15. It's recent 5 day performance has been -3.77%, +0.47%, -3.87%, -0.68% and -2.0%.

[Themes containing SWN]

SWN showed a strong down trend over the last 3 months. During this period SWN returned -16.5% and saw a maximum drawdown of -30.73%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SWN till volatility reduces and a clear trend emerges.


SWN has been underperforming the SP500 index in recent time, after having outperformed till 6 Jun, 2016. Over the last 2 years 11 months and 9 days, SWN underperformed the SP500 index on 53% days.

SWN was profitable on 50% days in the last three months. During this time, it delivered on average -0.23% per day. It delivered it's worst daily return of -9.93%, during this period, on Wednesday, 26 Sep, 2018. There was initially a bullish trend during this period which started on 14 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +14.86% to investors. This was followed by a bearish trend that started on 29 Nov, 2018 and ended on 10 Dec, 2018. This bearish trend lost -15.72% of investor capital.

On monthly basis, SWN delivered losses in more months over the last year, than profits. SWN delivered profits less regularly than SP500 index. SWN was also a more risky investment than SP500 index as it's worst month in the last year, Jan 2018, returned -28.26% compared to -7.28% returned by SP500 index in Oct 2018. SWN had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year.

How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
-- Robert G. Allen

SWN is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in SWN's volatility from 17 Sep, 2018 to 14 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 14 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that SWN has significant negative skewness in it's return distribution. This indicates that SWN is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in SWN derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

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

Based on your interest in SWN you may find it interesting to know that MSFT is a large cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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