Question 1: When is it a better time to buy Intuitive Surgical stock - after a drop or after a rise?Answer:Consider two situations,Case 1: Intuitive Surgical stock drops by -5% or more in a monthCase 2: Intuitive Surgical stock rises by 5% or more in a month
ISRG stock fares better after Case 1, with a 66.8% chance of a 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 62.8% chance of a rise for Case 2. This would suggest that it is better to buy ISRG stock after a recent drop
Try the Trefis machine learning engine to see for yourself how Intuitive Surgical stock is likely to behave after any specific gain or loss over a period.
Question 2: Does Intuitive Surgical stock have a higher chance of a rise after a steeper drop?Answer:Trefis machine learning engine's calculations show that for most stocks, the chance of a 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 a rise. This makes sense intuitively, as markets often overreact to bad news around a company
For ISRG 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 ProbabilityISRG S&P 500-1%64.1%71.1%-3%64.4%73.0%-5%66.8%72.7%-7.5%67.7%78.3%-10%63.8%78.4%
Question 3: What about Intuitive Surgical stock's chances of a rise after a recent rally?
Answer:ISRG'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 ProbabilityISRG S&P 500+1%63.1%67.8%+3%64.0%68.5%+5%62.8%67.0%+7.5%62.2%68.4%+10%56.6%74.2%