36.49 +0.82 (+2.24%) Sell

KMT does a dead cat bounce, it's still too early to buy into it

13 min read

KENNAMETAL INC outperformed on Wednesday. It surged by +2.24% to close at 36.49. It is currently trading -29% below it's 52 week high of 51.92.

[Themes containing KMT]

Buy-and-Hold investors in KMT experienced a maximum drawdown of -26.07% over the last three months. It fell by -15.02% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


KMT has been underperforming the SP500 index in recent time. It showed significant outperformance (compared to the SP500 index) from 19 Jan, 2016 to 12 Jan, 2018. Over the last 2 years 11 months and 8 days, KMT outperformed the SP500 index on 52% days.

KMT was profitable on 50% days in the last three months. During this time, it delivered on average -0.23% per day. It delivered it's worst daily return of -7.12%, during this period, on Tuesday, 4 Dec, 2018. The longest stort-term trend during this period was 11 profitable days, which started on 25 Oct, 2018 and went on till 8 Nov, 2018. This bullish trend returned +22.26% to investors.

During the last year KMT had 5 profitable months and 7 loss making months. KMT returned profits in fewer months than SP500 index. KMT was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -18.37% compared to -7.28% returned by SP500 index in Oct 2018. KMT had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -24.67%.

It's not the situation, but whether we react (negative) or respond (positive) to the situation that's important.
-- Zig Ziglar

KMT is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in KMT's volatility from 14 Sep, 2018 to 7 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 13 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that KMT has significant positive skewness in it's return distribution. This indicates that investors can expect KMT to recover from drawdowns quickly. Which makes KMT a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than KMT. Therefore, SP500 must receive a lower allocation than KMT in your portfolio. KMT usually has shorter drawdown period than the SP500 index.

Based on your interest in KMT you may find it interesting to know that HQY and AAXN are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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