Search for alternative investments is on for WDFC investors as it shows weakness
17 Dec, 201813 min read
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WD 40 CO is a falling knife that can bleed you if you catch it on Monday. It delivered -2.79% to close at 174.49. On a day when the overall market breadth was 34%, it closed higher than 6% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
WDFC is currently in a bullish trend. The previous long signal in WDFC has not been profitable for investors in general. If you are invested in WDFC at current levels please make sure that your allocation is limited and that your portfolio is well diversified.
WDFC has been outperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 24 Oct, 2017 to 13 Dec, 2018. Over the last 2 years 11 months and 10 days, WDFC outperformed the SP500 index on 54% days.
WDFC returned losses on 55% days in the last three months. During this time, it delivered on average +0.04% per day. It delivered it's worst daily return of -4.7%, during this period, on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 28 Sep, 2018 and ended on 4 Oct, 2018. This bearish trend lost -6.05% of investor capital.
The last 12 months saw WDFC's investors making profits in 10 months and incurring losses in 2 months. During the last year, WDFC delivered profits in more months than SP500 index. WDFC significantly outperformed SP500 index in Aug 2018, when it returned +10.8% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. WDFC had a longer winning streak of profitable months than SP500 index. It went up in 8 straight months (from Jan 2018 to Aug 2018) during which period it delivered +45.58%. It is interesting to note that both WDFC and SP500 index significantly outperform during months when quarterly/annual results are announced.
If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks.
-- John Bogle
WDFC 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 WDFC's volatility from 28 Sep, 2018 to 19 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that WDFC has significant positive skewness in it's return distribution. This indicates that investors can expect WDFC to recover from drawdowns quickly. Which makes WDFC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
SP500 index has more chance of extreme outcomes than WDFC. Therefore, SP500 must receive a lower allocation than WDFC in your portfolio. SP500 index usually has shorter drawdown period than WDFC.
On a general note (since you are interested in WDFC), two small cap instruments that deserve special mention are AAXN and KEYS. They have significantly outperformed the overall market.
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