Consumer Cyclical THEME

1249.89 -31.13 (-2.49%) Sell

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Don't buy CONSUMERCYCL THEME now, it is a risky investment

14 min read

Consumer Cyclical delivered massive losses on Friday. It returned -2.49% to close at 1249.89. On a day when the overall market breadth was 35%, it closed higher than 70% of the market. In comparison, the benchmark SP500 index closed today at -0.0233%.

[Theme constituents]

~CONSUMERCYCL showed a down trend over the last 3 months. During this period ~CONSUMERCYCL returned -6.42% and saw a maximum drawdown of -8.87%. There were 2 short signals during this period that returned a cumulative of +2.83% to investors.

Trend

~CONSUMERCYCL has been underperforming the SP500 index in recent time, after having outperformed till 21 Mar, 2016. Over the last 2 years 11 months and 3 days, ~CONSUMERCYCL underperformed the SP500 index on 47% days. Which indicates that on days ~CONSUMERCYCL underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

~CONSUMERCYCL returned losses on 51% days in the last three months. During this time, it delivered on average -0.1% per day. It delivered it's worst daily return of -3.27%, during this period, on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 6 Nov, 2018. The bullish trend returned +5.55% to investors. This was followed by a bearish trend that started on 14 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -3.82% of investor capital.

On monthly basis, ~CONSUMERCYCL delivered profits and losses in equal number of months. ~CONSUMERCYCL delivered profits less regularly than SP500 index. ~CONSUMERCYCL was also a less risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -4.09% compared to -7.28% returned by SP500 index in Oct 2018. ~CONSUMERCYCL had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both ~CONSUMERCYCL 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

~CONSUMERCYCL is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ~CONSUMERCYCL's volatility from 17 Sep, 2018 to 7 Dec, 2018. While there was a significant surge in the SP500 index's volatility from 10 Sep, 2018 to 29 Oct, 2018.

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

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

On a general note (since you are interested in ~CONSUMERCYCL), AMRN has performed really well this year and deserves to be closely tracked for investment opportunities.

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