Question 1: When is it a better time to buy Harley-Davidson stock - after a drop or after a rise?Answer:Consider two situations,Case 1: Harley-Davidson stock drops by -5% or more in a monthCase 2: Harley-Davidson stock rises by 5% or more in a month
HOG stock fares better after Case 1, with a 55.5% chance of rise over the next month (21 trading days) under Case 1 (where the stock has suffered a 5% loss over the previous month), versus, a 49.9% chance of rise for Case 2. This would suggest that it is better to buy HOG stock after a recent drop
Try the Trefis machine learning engine to see for yourself how Harley-Davidson stock is likely to behave after any specific gain or loss over a period.
Question 2: Does Harley-Davidson stock have a higher chance of rise after a steeper drop?Answer:Trefis machine learning engine's calculations show that for most stocks, the chance of rise reduces as the drop gets steeper. However, after unusually high declines of -10% or more, there is usually an improvement in the chance of rise. This makes sense intuitively, as markets often overreact to bad news around a company
For HOG stock, the probability of positive returns over the next month (21 trading days) after a drop of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% DropNext 21 daysPositive Return ProbabilityHOG S&P 500-1%53.6%71.1%-3%53.8%73.0%-5%55.5%72.7%-7.5%57.5%78.3%-10%63.3%78.4%
Question 3: What about Harley-Davidson stock's chance of rise after a recent rally?
Answer:HOG's probability of positive returns over the next month (21 trading days) after a gain of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% RiseNext 21 daysPositive Return ProbabilityHOG S&P 500+1%48.4%67.8%+3%49.1%68.5%+5%49.9%67.0%+7.5%49.5%68.4%+10%49.7%74.2%
