MOLSON COORS BREWING CO

63.37 -1.07 (-1.69%) Buy

Stop-loss on the minds of TAP investors as it shows weakness

13 min read

MOLSON COORS BREWING CO delivered massive losses on Friday. It lost -1.69% to close at 63.37. On a day when the overall market breadth was 35%, it closed higher than 15% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Themes containing TAP]

Buy-and-Hold investors in TAP experienced a maximum drawdown of -14.2% over the last three months. It lost -2.1% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

Trend

TAP has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 3 days, TAP underperformed the SP500 index on 51% days.

During the last three months TAP was mostly loss making and delivered on average -0.01% per day. It's best return during this period (of +9.95%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.35%) was on Friday, 2 Nov, 2018. There was initially a bearish trend during this period which started on 9 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -5.56% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 1 Nov, 2018. This bullish trend delivered +17.52% to investors.

TAP had 4 profitable and 8 loss making months over the last year. During the last year, TAP underperformed SP500 index on monthly return basis. TAP was also a more risky investment than SP500 index as it's worst month in the last year, May 2018, returned -13.46% compared to -7.28% returned by SP500 index in Oct 2018. TAP had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -26.45%. It is interesting to note that both TAP and SP500 index significantly outperform during months when quarterly/annual results are announced.

My formula for success is rise early, work late and strike oil.
-- JP Getty

TAP 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 TAP's volatility from 14 Sep, 2018 to 2 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

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

Investors trading in TAP derivatives at this moment can consider 'Bear Put Spread' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in TAP), I has performed really well this year and deserves to be closely tracked for investment opportunities.

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