TR does a dead cat bounce, it's still too early to buy into it
13 Dec, 201813 min read
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TR outperformed the broader market today. On a longer term basis, investors in TOOTSIE ROLL INDUSTRIES INC made +0.03% per day. Thursday's performance of +0.96% was a outperformance compared to it's daily average.
TR showed a strong bullish trend over the last 3 months. During this period TR increased by +15.05% and saw a maximum drawdown of -7.06%. There were 2 long signals during this period that returned a cumulative of +10.29% to investors.
TR has been outperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 9 Jun, 2016 to 24 Sep, 2018. Over the last 2 years 11 months and 9 days, TR underperformed the SP500 index on 48% days. Which indicates that on days TR underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months TR was mostly profitable and delivered on average +0.23% per day. It's best return during this period (of +3.43%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -1.99%) was on Monday, 10 Dec, 2018. The longest stort-term trend during this period was 12 profitable days, which started on 2 Nov, 2018 and went on till 19 Nov, 2018. This bullish trend returned +12.39% to investors.
The last 12 months saw TR's investors making profits in 5 months and incurring losses in 7 months. TR was less consistent in delivering monthly returs than SP500 index. TR significantly outperformed SP500 index in Nov 2018, when it returned +10.9% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. TR had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -18.2%.
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TR 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 TR's volatility from 21 Sep, 2018 to 12 Dec, 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 TR 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.
TR has more chance of extreme outcomes than the SP500 index. Therefore, TR must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than TR.
On a general note (since you are interested in TR), two small cap instruments that deserve special mention are BURL and AAXN. They have significantly outperformed the overall market.
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