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The (Stock Market) Tide is Going Out…

When a stock, sector, or the market is acting bullish, it feels like you are at the beach and each wave represents a higher high and a higher low. When the tide is coming in, I like to add to
Jordan Kimmel is a Portfolio Manager for Gitterman Wealth Management. Phone: 848-248-4290Email: [email protected] With over 30 years of experience in the financial services industry, both as a retail broker and fund / portfolio manager, Jordan is the creator of the FACTS® Stock Selection Process, which employs a unique holistic and quantitative analysis on the integrity and sustainability of over 2,000 US companies. Jordan’s FACTS® method identifies organizations with: Financial Strength Accounting Conservativeness Corporate Integrity Transparency Sustainability / ESG (Environmental, Social, and Governance) Metrics FACTS® analyzes the largest and most liquid companies, and also incorporates Jordan’s Magnet® Investment Strategy, one of the first strategies of its kind to combine the best tenets of value, growth, and momentum of company fundamentals. Magnet® has been licensed to several leading institutions around the country, and Jordan appears frequently on several major financial TV networks, including CNBC, Fox Business, Bloomberg, and ABC News, among others. He has also been quoted extensively in several publications, including Forbes, The Wall Street Journal, and U.S. News & World Report. He is the author of two books, the most recent being “The Magnet Method of Investing.” (Wiley, 2009).
Jordan Kimmel is a Portfolio Manager for Gitterman Wealth Management. Phone: 848-248-4290Email: [email protected] With over 30 years of experience in the financial services industry, both as a retail broker and fund / portfolio manager, Jordan is the creator of the FACTS® Stock Selection Process, which employs a unique holistic and quantitative analysis on the integrity and sustainability of over 2,000 US companies. Jordan’s FACTS® method identifies organizations with: Financial Strength Accounting Conservativeness Corporate Integrity Transparency Sustainability / ESG (Environmental, Social, and Governance) Metrics FACTS® analyzes the largest and most liquid companies, and also incorporates Jordan’s Magnet® Investment Strategy, one of the first strategies of its kind to combine the best tenets of value, growth, and momentum of company fundamentals. Magnet® has been licensed to several leading institutions around the country, and Jordan appears frequently on several major financial TV networks, including CNBC, Fox Business, Bloomberg, and ABC News, among others. He has also been quoted extensively in several publications, including Forbes, The Wall Street Journal, and U.S. News & World Report. He is the author of two books, the most recent being “The Magnet Method of Investing.” (Wiley, 2009).

When a stock, sector, or the market is acting bullish, it feels like you are at the beach and each wave represents a higher high and a higher low. When the tide is coming in, I like to add to positions on light volume pullbacks (a receding wave) as the next wave brings us to a higher high. During these times it feels like the tide will keep coming in, but nature dictates that day is followed by night. Eventually the tide of the market starts to go out and the waves get smaller and pullbacks are followed by lower highs. This pattern can be identified scientifically. Oh how nice it would be if the market was so easy! At the moment, one cannot say we have hit high tide (the market top) but it feels to me like the tide is going out.

This recent pullback has not raised too much fear yet in investors’ minds. It has been so long since we had “a downside market event” or even a 10% pullback that many new investors are complacent or even over-confident. Many are ready, in fact, to ride the next wave up. In the shortest term, the market may be “oversold” and ready to provide a wave up. Pay particular attention to the volume. If you see your holdings rise to a lower high on lower volume, and begin to roll over again; be very careful.

In our trading fund, I have been stopped out of many of my long positions already. In fact, I have almost an equal amount of short positions at this time. I expect the fourth quarter of this year to begin another strong market cycle that will last right up to the next presidential election, and I want to be ready for it.

I have been more bullish than most others over the last five years and the market has rewarded me. I have tried to develop the ability to buy when the fear levels are running high. Right now it is too early to really say…but…be careful at this time. There are no lifeguards to help you in the market.

Longs: Matador Resources Company (MTDR) , Rambus Inc. (RMBS)

Shorts: NetSuite Inc. (N) , Catamaran Corp. (CTRX) , TIBCO Software Inc. (TIBX)

 
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