1027.52 +0.43 (+0.04%) Sell

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Prayers for MIDCAP THEME investors as it was among the worst performers

14 min read

Mid Cap significantly underperformed on Tuesday. It increased by +0.04% to close at 1027.52. 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]

Buy-and-Hold investors in ~MIDCAP experienced a maximum drawdown of -15.43% over the last three months. It delivered -14.33% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +11.22%.


~MIDCAP has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 25 Apr, 2018 to 4 Sep, 2018. Over the last 8 months, ~MIDCAP outperformed the SP500 index on 66% days.

During the last three months ~MIDCAP was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +3.09%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -4.32%) was on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 5 losing days, which started on 8 Nov, 2018 and ended on 14 Nov, 2018. This bearish trend lost -5.66% of investor capital.

The last 12 months saw ~MIDCAP's investors making profits in 6 months and incurring losses in 6 months. ~MIDCAP was less consistent in delivering monthly returs than SP500 index. ~MIDCAP was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -9.72% compared to -7.75% returned by SP500 index in Dec 2018. ~MIDCAP had a shorter streak of profitable months than SP500 index. It only went up in 8 straight months during the last year.

Greed is not a financial issue. It's a heart issue.
-- Andy Stanley

~MIDCAP 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 ~MIDCAP's volatility from 1 Oct, 2018 to 4 Dec, 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 ~MIDCAP has significant positive skewness in it's return distribution. This indicates that investors can expect ~MIDCAP to recover from drawdowns quickly. Which makes ~MIDCAP a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ~MIDCAP you may find it interesting to know that LULU is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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