Software THEME

1757.8 +5.15 (+0.29%) Sell

Optimize theme

SOFTWARE THEME is a falling knife, continues to bleed every investor trying to catch it

14 min read

Software has destroyed investor wealth on Tuesday. It gained +0.29% to close at 1757.8. It is currently trading -11% below it's 52 week high of 1994.92.

[Theme constituents]

~SOFTWARE showed a down trend over the last 3 months. During this period ~SOFTWARE returned -9.19% and saw a maximum drawdown of -14.1%. There was a short signal during this period which returned +2.36%.


~SOFTWARE has been outperforming the SP500 index in recent time. Over the last 2 years 11 months and 14 days, ~SOFTWARE outperformed the SP500 index on 59% days.

~SOFTWARE returned losses on 53% days in the last three months. During this time, it delivered on average -0.13% per day. It delivered it's worst daily return of -4.61%, during this period, on Wednesday, 10 Oct, 2018. There was initially a bullish trend during this period which started on 19 Sep, 2018 and went on till 28 Sep, 2018. The bullish trend returned +3.03% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -9.7% of investor capital.

On monthly basis, ~SOFTWARE delivered profits in more months over the last year, than losses. ~SOFTWARE delivered profits less regularly than SP500 index. ~SOFTWARE was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -8.42% compared to -7.75% returned by SP500 index in Dec 2018. ~SOFTWARE and SP500 index, both had periods of 6 consecutive profitable months. It is interesting to note that both ~SOFTWARE and SP500 index significantly outperform during months when quarterly/annual results are announced.

"Beware of little expenses. A small leak will sink a great ship.

~SOFTWARE is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ~SOFTWARE's volatility from 1 Oct, 2018 to 26 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 ~SOFTWARE has significant positive skewness in it's return distribution. This indicates that investors can expect ~SOFTWARE to recover from drawdowns quickly. Which makes ~SOFTWARE a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ~SOFTWARE), three large cap instruments that deserve special mention are CSCO, MSFT and V. They have all outperformed the market and must be closely watched for investment opportunities.

Want to improve your Portfolio's performance?

Spotalpha's Portfolio optimizer is all you need to improve your returns and reduce your risk.
Optimize Portfolio NOW
Symbol Price {{retType}} | Tr.
{{detail.symbol}} {{detail.close}} {{detail.priceChange}}  {{detail.pctChange}}%  {{}} {{detail.trend}} 
If you liked what you read here ...

... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.

All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.

We want to empower investors with all the tools and analysis required by them to make a rational investment decision.

If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute
Share with friends   WhatsApp   Facebook   Twitter