TATA MOTORS LTD (FOREIGN)

10.8 +0.13 (+1.22%) Sell

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

13 min read

TATA MOTORS LTD (Foreign) outperformed the broader market today. It increased by +1.22% to close at 10.8. During the last week it delivered -10.67% and saw a maximum drawdown of -11.75% before bouncing back.

[Themes containing TTM]

TTM is currently in a bearish trend. Over the last three months 2 bearish signals have generated a profit of +36.71% for investors.

Trend

TTM has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 7 Sep, 2016 to 9 Oct, 2018. Over the last 2 years 11 months and 7 days, TTM underperformed the SP500 index on 50% days. Which indicates that on days TTM underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months TTM was mostly loss making and delivered on average -0.8% per day. It's best return during this period (of +3.6%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -11.0%) was on Tuesday, 9 Oct, 2018. The longest stort-term trends during this period were 8 profitable and losing days. The bullish trend (which returned +13.0%) started on 29 Oct, 2018 and went on till 7 Nov, 2018 while the bearish trend (which returned -24.11%) started on 2 Oct, 2018 and went on till 11 Oct, 2018.

The last 12 months saw TTM's investors making profits in 1 months and incurring losses in 11 months. TTM was less consistent in delivering monthly returs than SP500 index. TTM was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -21.58% compared to -7.28% returned by SP500 index in Oct 2018. TTM had a longer winning streak of losing months than SP500 index. It went down in 7 straight months (from Jan 2018 to Jul 2018) during which period it delivered -61.04%.

The only limit to our realization of tomorrow will be our doubts of today.
-- Franklin D. Roosevelt

TTM is currently seeing overall fall in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in TTM's volatility from 28 Sep, 2018 to 29 Oct, 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 TTM has significant positive skewness in it's return distribution. This indicates that investors can expect TTM to recover from drawdowns quickly. Which makes TTM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in TTM derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

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

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