103.29 -0.66 (-0.63%) Buy

W investors herd to book profits while the going is good

13 min read

W delivered massive losses today. On a longer term basis, investors in WAYFAIR INC. made +0.16% per day. Friday's performance of -0.63% was a significant underperformance compared to it's daily average.

[Themes containing W]

W showed a strong down trend over the last 3 months. During this period W returned -27.38% and saw a maximum drawdown of -44.06%. There was a short signal during this period which returned +12.64%.


W has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 10 days, W outperformed the SP500 index on 55% days.

During the last three months W was mostly loss making and delivered on average -0.42% per day. It's best return during this period (of +14.51%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -15.71%) was on Friday, 2 Nov, 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 -15.46% losses to investors. This was followed by a bullish trend that started on 20 Nov, 2018 and ended on 3 Dec, 2018. This bullish trend delivered +32.01% to investors.

On monthly basis, W delivered losses in more months over the last year, than profits. W delivered profits less regularly than SP500 index. W significantly outperformed SP500 index in May 2018, when it returned +48.23% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. W had a longer winning streak of losing months than SP500 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -29.2%.

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W 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 W's volatility from 18 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that W has significant positive skewness in it's return distribution. This indicates that investors can expect W to recover from drawdowns quickly. Which makes W a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in W derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in W), two mid cap instruments that deserve special mention are ABMD and TWTR. They have significantly outperformed the overall market.

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