Technology THEME

1721.77 -56.43 (-3.28%) Sell

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Don't invest in TECHNOLOGY THEME now, it is a risky investment

14 min read

Technology delivered massive losses on Friday. It delivered -3.28% to close at 1721.77. It is currently trading -18% below it's 52 week high of 2103.82.

[Theme constituents]

~TECHNOLOGY showed a strong bearish trend over the last 3 months. During this period ~TECHNOLOGY delivered -15.54% and saw a maximum drawdown of -18.31%. There was a short signal during this period which returned +10.35%.

Trend

~TECHNOLOGY has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 10 Feb, 2016 to 6 Jun, 2018. Over the last 2 years 11 months and 3 days, ~TECHNOLOGY outperformed the SP500 index on 59% days.

During the last three months ~TECHNOLOGY was mostly loss making and delivered on average -0.25% per day. It's best return during this period (of +3.41%) was on Tuesday, 16 Oct, 2018. While it's worst loss in the same period (of -4.94%) was on Wednesday, 24 Oct, 2018. The longest stort-term trend during this period was 6 losing days, which started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -10.06% of investor capital.

The last 12 months saw ~TECHNOLOGY's investors making profits in 7 months and incurring losses in 5 months. ~TECHNOLOGY was less consistent in delivering monthly returs than SP500 index. ~TECHNOLOGY was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -12.13% compared to -7.28% returned by SP500 index in Oct 2018. ~TECHNOLOGY 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 ~TECHNOLOGY and SP500 index significantly outperform during months when quarterly/annual results are announced.

"The best thing money can buy is financial freedom.

~TECHNOLOGY is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in ~TECHNOLOGY's volatility from 3 Oct, 2018 to 25 Oct, 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 ~TECHNOLOGY has significant positive skewness in it's return distribution. This indicates that investors can expect ~TECHNOLOGY to recover from drawdowns quickly. Which makes ~TECHNOLOGY a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

Based on your interest in ~TECHNOLOGY you may find it interesting to know that PRQR and AMRN have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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