TEL is a falling knife, continues to bleed every investor trying to catch it
11 Dec, 201813 min read
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TE CONNECTIVITY LTD. ranked among the worst performers today. It fell by -0.32% to close at 73.85. It's recent 5 day performance has been +1.04%, -3.13%, +2.06%, -4.7% and +1.17%.
TEL showed a strong bearish trend over the last 3 months. During this period TEL fell by -19.49% and saw a maximum drawdown of -20.84%. There was a short signal during this period which returned +19.49%.
TEL has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 21 Mar, 2018 to 4 Dec, 2018. Over the last 2 years 11 months and 7 days, TEL underperformed the SP500 index on 47% days. Which indicates that on days TEL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
TEL returned losses on 60% days in the last three months. During this time, it delivered on average -0.33% per day. It delivered it's worst daily return of -4.7%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 21 Sep, 2018 and ended on 1 Oct, 2018. This bearish trend lost -6.41% of investor capital.
During the last year TEL had 5 profitable months and 7 loss making months. TEL returned profits in fewer months than SP500 index. TEL was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -13.14% compared to -7.28% returned by SP500 index in Oct 2018. TEL had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -19.25%. It is interesting to note that both TEL and SP500 index significantly outperform during months when quarterly/annual results are announced.
"As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.
TEL 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 TEL'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 TEL has significant positive skewness in it's return distribution. This indicates that investors can expect TEL to recover from drawdowns quickly. Which makes TEL 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 TEL. Therefore, SP500 must receive a lower allocation than TEL in your portfolio. SP500 index usually has shorter drawdown period than TEL.
On a general note (since you are interested in TEL), three instruments that are extremely volatile are ICPT, EPIX and NVCN. They must all be evaluated prudently and investors are better off avoiding them at the moment.
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