High Momentum THEME

1897.38 +0.31 (+0.02%) Sell

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Don't buy HIGHMOMENTUM THEME now, it is an investor's nightmare

14 min read

High Momentum is a falling knife that can bleed you if you catch it on Tuesday. It surged by +0.02% to close at 1897.38. On a day when the overall market breadth was 34%, it closed higher than 84% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

[Theme constituents]

~HIGHMOMENTUM showed a strong bearish trend over the last 3 months. During this period ~HIGHMOMENTUM fell by -17.51% and saw a maximum drawdown of -18.45%. There was a short signal during this period which returned +17.52%.

Trend

~HIGHMOMENTUM has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 31 May, 2017 to 20 Jun, 2018. Over the last 2 years and 5 months, ~HIGHMOMENTUM outperformed the SP500 index on 55% days.

~HIGHMOMENTUM returned losses on 61% days in the last three months. During this time, it delivered on average -0.29% per day. It delivered it's worst daily return of -4.59%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 7 losing days, which started on 4 Oct, 2018 and ended on 12 Oct, 2018. This bearish trend lost -8.05% of investor capital.

During the last year ~HIGHMOMENTUM had 8 profitable months and 4 loss making months. Profitable number of months of ~HIGHMOMENTUM and SP500 index were the same. ~HIGHMOMENTUM was also a more risky investment than SP500 index as it's worst month in the last year, Dec 2018, returned -11.01% compared to -7.75% returned by SP500 index in Dec 2018. ~HIGHMOMENTUM 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 ~HIGHMOMENTUM and SP500 index significantly outperform during months when quarterly/annual results are announced.

Money is multiplied in practical value depending on the number of W's you control in your life: what you do, when you do it, where you do it, and with whom you do it.
-- Timothy Ferriss

~HIGHMOMENTUM 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 ~HIGHMOMENTUM's volatility from 27 Sep, 2018 to 25 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 ~HIGHMOMENTUM has significant positive skewness in it's return distribution. This indicates that investors can expect ~HIGHMOMENTUM to recover from drawdowns quickly. Which makes ~HIGHMOMENTUM a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ~HIGHMOMENTUM you may find it interesting to know that AMZN, V and PFE are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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