25.9 +0.78 (+3.02%) Sell

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

13 min read

TOWER INTERNATIONAL, INC. delivered good returns today. It grew by +3.02% to close at 25.9. It's recent 5 day performance has been -1.91%, -0.97%, -5.27%, -2.01% and -4.98%.

[Themes containing TOWR]

TOWR showed a strong down trend over the last 3 months. During this period TOWR returned -16.85% and saw a maximum drawdown of -24.78%. There were 2 short signals during this period that returned a cumulative of +21.7% to investors.


TOWR has been underperforming the SP500 index in recent time, after having outperformed till 4 Jan, 2016. Over the last 2 years 11 months and 8 days, TOWR underperformed the SP500 index on 50% days. Which indicates that on days TOWR underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months TOWR was mostly loss making and delivered on average -0.24% per day. It's best return during this period (of +13.59%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -7.28%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 11 Oct, 2018. The trend delivered -13.1% losses to investors. This was followed by a bullish trend that started on 5 Nov, 2018 and ended on 8 Nov, 2018. This bullish trend delivered +6.46% to investors.

On monthly basis, TOWR delivered profits and losses in equal number of months. TOWR delivered profits less regularly than SP500 index. TOWR was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -13.58% compared to -7.28% returned by SP500 index in Oct 2018. TOWR had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both TOWR and SP500 index significantly outperform during months when quarterly/annual results are announced.

Wealth is not his that has it, but his that enjoys it.
-- Benjamin Franklin

TOWR 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 TOWR's volatility from 28 Sep, 2018 to 30 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 TOWR 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.

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

On a general note (since you are interested in TOWR), two instruments that deserve special mention are I and NIHD. They have significantly outperformed the overall market this year.

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