55.8 +0.39 (+0.7%) Sell

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

14 min read

TYSON FOODS INC ranked among the best performers on Tuesday. It delivered +0.7% to close at 55.8. It is currently trading -32% below it's 52 week high of 82.85.

[Themes containing TSN]

Buy-and-Hold investors in TSN experienced a maximum drawdown of -13.04% over the last three months. It fell by -12.43% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +12.43% for investors.


TSN has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 22 Sep, 2016 to 1 Oct, 2018. Over the last 2 years 11 months and 7 days, TSN underperformed the SP500 index on 47% days. Which indicates that on days TSN underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months TSN was mostly loss making and delivered on average -0.2% per day. It's best return during this period (of +4.07%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -5.58%) was on Tuesday, 13 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +7.34%) started on 2 Oct, 2018 and went on till 8 Oct, 2018 while the bearish trend (which returned -3.44%) started on 13 Sep, 2018 and went on till 19 Sep, 2018.

During the last year TSN had 4 profitable months and 8 loss making months. TSN returned profits in fewer months than SP500 index. TSN was also a more risky investment than SP500 index as it's worst month in the last year, Jul 2018, returned -13.2% compared to -7.28% returned by SP500 index in Oct 2018. TSN had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -9.46%. It is interesting to note that both TSN and SP500 index significantly outperform during months when quarterly/annual results are announced.

If all the economists were laid end to end, they'd never reach a conclusion.
-- George Bernard Shaw

TSN 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 TSN's volatility from 12 Sep, 2018 to 10 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 TSN has significant positive skewness in it's return distribution. This indicates that investors can expect TSN to recover from drawdowns quickly. Which makes TSN a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in TSN 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 TSN. Therefore, SP500 must receive a lower allocation than TSN in your portfolio. TSN usually has shorter drawdown period than the SP500 index.

On a general note (since you are interested in TSN), three instruments that have performed similar to TSN are SFL, PLXS and RHP. They must all be evaluated as alternative investment options and for diversification.

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