I often call SuperGroup (LON:SGP) the worst sell I ever made. I had sold on 16 July 2013 at 942p, only to watch the share price climb much higher. A few days ago, I got an alert that the shares were down 20% from their 52w high. So I thought it would be interesting to revisit the shares.
My reasons for selling at the time was that the price versus 50dma rose above 25%, and I figured that the share price was over-extended. Looking back at the charts, I see that the RSI had made it into overbought territory slightly before that. I wasn’t aware of the RSI at the time, though.
Imagine my dismay as the share price seemed to climb ever-upwards. I was anticipating a pullback within a few weeks of my sale, which never happened. The shares did trade sideways from mid-August to December. I’m not surprised, given the very strong gains that it had made previously. A consolidation phase was to be expected.
In December, the shares had consolidated enough, and its upward trajectory resumed. The shares reached a high of 1749p in April, and I was obviously disappointed that I had sold out far too soon.
Then a bad thing happened: momentum shares reached a peak, and the bubble popped. The shares now trade at 977p as at the time of writing. IF you had perfect timing, you would have made a considerable amount of money out of SGP. IF you were a bit slow on the trigger, then you would have seen much of those gains evaporate.
As it happens, over the period during which I sold, the share price is up around 3.2%, almost exactly the same as the Footsie, and a shade behind the FTSE 250.
So, putting that in perspective, I don’t think my sell was bad at all. The gains you make or don’t make are often quite sensitive to timing. I am also glad, in retrospect, that I didn’t chase momentum as the stock galloped away from me, tempting though it was. Momentum is fine, provided you can call the top, which is rarely a definite. I think it does illustrate the point that if you think the shares are overextended, you are probably as well to back that judgment, rather than pine for what might have been.
So, my current thinking…
