A Noble Trade in Noble Corp

This trade in Noble Corp, (symbol NE), is in the market only 219 days since January 2, 2009. By comparison, a Buy & Hold trade in NE was in the market for 2013 days. I love trades that beat B&H, and I love ’em even more when they keep my cash free for other uses 90% of the time.

Here’s the details:

Trade Statistics

  • Company Name: Noble Corp PLC
  • Symbol: NE
  • Market Cap: $8.4B
  • 3M Average Daily Volume: ~3.3M shares
  • Time Period Analyzed: 1 Jan 2009  – 21 July 2014
  • Number of trading days: 1396
  • Number of trades from this signal: 172
  • Number of winning trades: 76
  • Number of losing trades: 96
  • Average Win per share: $0.73
  • Average Loss per share: -$0.27
  • Max Win per Share traded: $2.02
  • Max Loss per share traded: -$0.46
  • Max Drawdown: 15%

Trading Strategy for Noble Corp PLC

This trade is a modification of my Touch SMA strategy I’ve been testing the last month or so. (See here, here & here.) This trade has 3 setups. First, the price 2 days ago must be below the moving average. Second, the price yesterday has to be above the moving average and third, the close yesterday has to be above the open yesterday. I also added a trailing stop to this trade. (If it is not obvious, this is a Long-Only trade.

Noble Corp has a higher volatility than the stocks I’ve been testing; the beta, (as of this writing), is 1.86. I don’t have any concerns about trading a higher beta stock, since I have a tight stop-loss and a trailing stop.

The optimal trading strategy here is a 4 Day Simple Moving Average, a stop-loss 1% below the entry price, a profit target of 105% of the entry price, and a trailing stop.

Comparison of Trade to Buy & Hold

Buy & Hold obviously has only one trade during the same time period. The first trade in this strategy occurred on Jan 9, 2009 when the price was $24.01. The last trade occurred on July 15 when the price was 32.51. Starting with a $10,000 account, I was able to buy 416 shares. During that time period, B&H generated a net profit of $13,540.19 whereas my strategy generated $16,701.35. Both amounts are net of commissions, fees and taxes. I assumed a 28% Cap Gains tax rate on the short-term trading, and a 7.56% Long Term Cap Gains tax-rate on Buy & Hold.

Given that this strategy strategy is in cash 90% of the time, and still beats B&H, I would consider it wildly successful. It’s certainly not profitably enough to live on, but – if you consider that this generated $6700 on a $10,000 investment over a period of only 219 days, that’s a pretty terrific return. Obviously, I would need to combine this strategy with 10 or 20 others to keep my money working all the time, but this kind of strategy is just what is needed in a successful fund.

If there are any details about this strategy I didn’t cover, or you have any questions about it, drop me a note or leave a comment.