CHEMICALS THEME is a falling knife, continues to bleed every investor trying to catch it
18 Dec, 201814 min read
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Chemicals is a falling knife that can bleed you if you catch it today. It increased by +0.71% to close at 1427.57. During the last week it delivered -3.07% and saw a maximum drawdown of -3.75% before bouncing back.
~CHEMICALS is currently in a bearish trend. The current bearish signal has generated a profit of +16.47% for investors in the last three months.
~CHEMICALS has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 25 Jan, 2016 to 5 Jan, 2018. Over the last 2 years 11 months and 14 days, ~CHEMICALS outperformed the SP500 index on 53% days.
During the last three months ~CHEMICALS was mostly loss making and delivered on average -0.32% per day. It's best return during this period (of +3.85%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -4.47%) was on Tuesday, 9 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 21 Sep, 2018 and ended on 28 Sep, 2018. This bearish trend lost -3.55% of investor capital.
The last 12 months saw ~CHEMICALS's investors making profits in 6 months and incurring losses in 6 months. ~CHEMICALS was less consistent in delivering monthly returs than SP500 index. ~CHEMICALS was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.65% compared to -7.75% returned by SP500 index in Dec 2018. ~CHEMICALS had a shorter streak of profitable months than SP500 index. It only went up in 4 straight months during the last year. It is interesting to note that both ~CHEMICALS and SP500 index significantly outperform during months when quarterly/annual results are announced.
Security depends not so much upon how much you have, as upon how much you can do without.
-- Joseph Wood Krutch
~CHEMICALS 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 ~CHEMICALS's volatility from 3 Oct, 2018 to 1 Nov, 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 ~CHEMICALS has significant positive skewness in it's return distribution. This indicates that investors can expect ~CHEMICALS to recover from drawdowns quickly. Which makes ~CHEMICALS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
~CHEMICALS has more chance of extreme outcomes than the SP500 index. Therefore, ~CHEMICALS must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than ~CHEMICALS.
Based on your interest in ~CHEMICALS you may find it interesting to know that FDX, ~INTERNET and ~GARPLOWPEG have all performed similar to ~CHEMICALS and qualify as alternative investment candidates that must be evaluated for diversification.
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