On January 21, when I put out a press release suggesting a sharp and sudden pullback was eminent–I also reminded everyone that as soon as it comes we would be hearing of “the beginning of the end!”
I am not foolish enough to think I can call the top or bottom of any market or stock. The key is to keep grounded and disciplined and not to get carried too far by the daily sentiment–positive or negative. Sure there could be more downside pressure, but my guess is we are already close to the end of this sell-off and will soon be ready to see a test again of the recent highs.
The key in the stock market is to identify great companies and buy in at good levels. By using the Magnet® Stock Selection Process to do my initial screening, I can see which companies have the best blend of value, growth, and momentum. Then the key is to enter a position right–that is, at a good price by evaluating the recent technical chart. It is all too easy to chase a stock up only to be sitting with a loss on a pullback. It is also too easy to buy “what’s going up”–or play the momentum game. The problem is usually what is easy does not work well.
By keeping several watch lists–small caps, mid-caps, large caps–I watch the lists of “Top Ranked Magnet® Stocks” carefully. When they get to the top of an envelope, I’ll sell partial positions of even my best names. When a stock is at the bottom of the envelop, I like to step in and buy–especially if the stock has pulled back on low volume. It is not always easy and I am not always right, but this is how I believe you can maximize profits.
So today, as I watch the emotions running high, there are a few companies that I have just re-entered positions in Magnet AE. Nike (NKE) and Winnebago (WGO) are two companies that have been very good for me, but ran up too high based on my model. After pulling back, both are back in my portfolio as of today. I am also willing to buy much smaller names and China Recycling (CREG) currently sits right at the top of my model and I am adding positions in Magnet AE today. There is another new name–a very old company that recently came public that I have already traded successfully a couple of times–Amira Nature Foods (ANFI) . I just bought some again for Magnet AE. You might want to take a look and see if any of these companies are suitable for you and belong in your portfolio.
None of these are recommendations for you. Simply, I always suggest you do your own homework and buy only what you are comfortable with, and what is suitable for you–as only you know how much volatility and risk you can handle. For me, I love to buy when they is some fear in the air–and buying shares of my best ranked companies on pullbacks is the way I invest. Following a proven model is what my discipline is about–and trading based of the technicals is what makes sense for me.
Jordan Kimmel recently joined KCD Financial, Inc. Member FINRA/SIPC, a fully introducing broker/dealer and State Registered Investment Advisor firm that is majority-owned by Freedom Securities, Inc. In his role as chief market strategist, he provides guidance to the firm’s nationwide network of independent brokers and their clients on relative risk and opportunities in the capital markets.