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Industrial machinery stocks are bullish, with trends continuing to improve.

We like to focus on stocks with explosive earnings growth. Then we look for bullish setups that match our criteria.

  • Price above the 9/20 ema
  • 9/20 ema sloping higher, > 45° best
  • MACD above its signal line
  • RSI/STO rising through 50

Kennemetal (KMT) currently meets our criteria.

“The Pittsburgh-based company manufactures tooling, engineered components and advanced materials used in production processes across a wide range of industries, including aerospace, energy, transportation and general engineering.” – Source Investors Business Daily.

Considering the strength in all of the sectors for which the company produces products, it’s easy to deduce why earnings are growing so rapidly.

Technically speaking, volume indicates institutions are active. RSI is rising, MACD is above its signal line and stochastic is rising quickly. Any short-term weakness, like a pullback to the 9ema daily that immediately gets bought up, would be an ideal entry. Bollinger Bands appear to be opening top and bottom, so there is potential for a breakout if this continues. We will use the Trade of the Day Setup for entry, exit, and stops.



400% Earnings Growth

“Kennemetal posted a 400% spike in EPS growth in Q3, bringing its average earnings gain over the last three quarters to 163%.

Analysts expect earnings-per-share to rise 125% in the fourth quarter and 67% for the full year.

While revenue growth has been less explosive, it has been accelerating over the last six quarters, from a decline of 18% in Q2 2016 to a 14% increase last quarter.”

We are watching Parker-Hannifin (PH), which broke out on Wednesday.

When you are considering watchlist candidates, we recommend scanning the pages of Investors Business Daily.

There is no coincidence that my 30 years of investing experience and longevity in this shark infested business is attributed to things I’ve learned over the many years of being a subscriber to IBD. Fundamentals matter too. And, what you find inside the pages of IBD will open your eyes to many opportunities. That’s why we consider these stocks each week when formulating our watchlist.

When you combine all three, sentiment, fundamentals and technicals, you arrive at the sweet spot for investing, the hallmark of Schaeffer’s Investment Research.

Happy Trading,


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