TECK does a dead cat bounce, it's still too early to buy into it
11 Dec, 201813 min read
Share with friends 
TECK RESOURCES LTD (Foreign) delivered stellar performance today. It gained +4.09% to close at 21.89. It's recent 5 day performance has been -1.96%, +0.28%, -1.52%, +1.73% and +5.17%.
TECK is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for TECK's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -5.52%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to TECK.
TECK has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 7 days, TECK outperformed the SP500 index on 53% days.
TECK returned losses on 55% days in the last three months. During this time, it delivered on average -0.05% per day. It delivered it's worst daily return of -7.45%, during this period, on Thursday, 25 Oct, 2018. There was initially a bullish trend during this period which started on 13 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +9.86% to investors. This was followed by a bearish trend that started on 23 Oct, 2018 and ended on 29 Oct, 2018. This bearish trend lost -22.27% of investor capital.
On monthly basis, TECK delivered losses in more months over the last year, than profits. TECK delivered profits less regularly than SP500 index. TECK was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -17.05% compared to -7.28% returned by SP500 index in Oct 2018. TECK had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -12.63%. It is interesting to note that both TECK and SP500 index significantly outperform during months when quarterly/annual results are announced.
Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.
-- Johann Wolfgang von Goethe
TECK 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 TECK's volatility from 17 Sep, 2018 to 31 Oct, 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 TECK 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 TECK derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
SP500 index has more chance of extreme outcomes than TECK. Therefore, SP500 must receive a lower allocation than TECK in your portfolio. SP500 index usually has shorter drawdown period than TECK.
Based on your interest in TECK you may find it interesting to know that BURL, EHC and HQY are small caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.
All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.
We want to empower investors with all the tools and analysis required by them to make a rational investment decision.
If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute