Energy THEME

1108.66 -20.26 (-1.83%) Sell

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Looking to invest in ENERGY THEME? Avoid at the moment as it was among the worst performers

14 min read

Energy was among the worst performers on Tuesday. It fell by -1.83% to close at 1108.66. On a day when the overall market breadth was 34%, it closed higher than 69% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Theme constituents]

~ENERGY showed a strong bearish trend over the last 3 months. During this period ~ENERGY fell by -20.92% and saw a maximum drawdown of -23.06%. There was a short signal during this period which returned +20.92%.

Trend

~ENERGY has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 3 Jan, 2017 to 30 Nov, 2018. Over the last 2 years 11 months and 14 days, ~ENERGY underperformed the SP500 index on 48% days. Which indicates that on days ~ENERGY underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months ~ENERGY was mostly loss making and delivered on average -0.36% per day. It's best return during this period (of +2.16%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -3.72%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 17 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -10.18% of investor capital.

During the last year ~ENERGY had 7 profitable months and 5 loss making months. ~ENERGY returned profits in fewer months than SP500 index. ~ENERGY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -12.63% compared to -7.75% returned by SP500 index in Dec 2018. ~ENERGY had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both ~ENERGY and SP500 index significantly outperform during months when quarterly/annual results are announced.

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
-- Charles Dickens

~ENERGY 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 ~ENERGY's volatility from 20 Sep, 2018 to 26 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 ~ENERGY has significant positive skewness in it's return distribution. This indicates that investors can expect ~ENERGY to recover from drawdowns quickly. Which makes ~ENERGY a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ~ENERGY you may find it interesting to know that DFBG, NFEC and TNDM have all shown remarkable performance this year and deserve to be on every investor's watchlist.

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