As Stock Market Slides Into A Correction, Check For Key Sell Signals

The market is in a correction, so it's more important than ever to review CAN SLIM sell rules.

Most of those involve specific chart action, which has sprouted in recent weeks among many high-rated stocks -- even before Thursday's meltdown.

Let's review how daily and weekly charts help investors decide when it's time to dump a position.

High-volume selling. Watch out for increases in volume without increases in price, or declines in heavy trading.

Closing at or near day's lows. This is a sign of weakness, showing that buyers could not prevail over sellers. Stocks that reverse lower from highs, giving up earlier gains, are another form of this flagging action. Palomar Medical peaked in exactly this way (point 1). A single day of this type of weakness may not be worrisome, but a string of such days certainly bears watching.

New highs on low volume. This suggests institutional investors have lost their interest in the stock. The trend can show up on daily or weekly charts.

Climax tops. If a stock has climbed for many months and suddenly charges ahead for one or two weeks at a much faster rate, it's probably topping.

This happened to most market leaders in March and April 2000, when a bear market began.

Look for a surge of 25% to 50% in one to three weeks, or largest one-day price gain since the beginning of the stock's entire run-up. Also a red flag is when a stock forms its largest weekly price spread since the start of its move.

Late-stage breakouts. Sell most stocks breaking out of a fourth-stage base. Few leaders can make any meaningful progress -- and many peak -- after they're gone that far into their advances.

Drops below key support levels. Sell a stock that plunges below its 10-week moving average on huge volume, especially if it stays below the line for several weeks. This is especially true for stocks that have found support at their 10-week lines during their climbs from a breakout.

Comments

Post a Comment

Popular posts from this blog

US Quake Test Goes “Horribly Wrong”, Leaves 500,000 Dead In Haiti

By: Sorcha Faal, and as reported to her Western Subscribers A grim report prepared by the Russian Northern Fleet for Prime Minister Putin is stating today that the catastrophic earthquake that has devastated the Island of Haiti was the ‘clear result’ of a United States Navy test of one of its ‘earthquake weapons’ planned to be used by the Americans upon the Persian Nation of Iran but had gone ‘horribly wrong’. The Northern Fleet has been monitoring US Naval movements and activities in the Caribbean since 2008 when the Americans announced their intention to re-establish their Forth Fleet that had been disbanded in 1950, and which was responded to by the Motherland when later that year a Russian flotilla led by nuclear powered cruiser Peter the Great began their first exercises in this region since the ending of the Cold War. Though virtually unknown to the American people, the use, and perfection, of earthquake weapon technology has a decade’s long history that began with the former Sov
Read more

I'm an accountant, I hate my job, but seriously, I wouldn’t know what else to do

I was born to be a lot of things, but being an accountant isn't one of them. In my heart of hearts I have always known this, but for some stupid subconscious reason, I have always ignored it. Why? Well...um...err...I didn’t know what else to do. How many people faced with the same predicament of deciding on a profession upon graduating used “not really knowing what to do” as their guiding compass? Blink. Ten years have passed and you’re left wondering, how did I get here? In this cubicle? Doing something I cannot stand (and I’m not even honestly good at), with people I quite frankly don’t really care about? For me that was accounting, a profession that conjures numerous clichés, such as boring, bean counting, personality not needed, number crunching etc etc. These have now evolved and have been replaced by repetition, reconciliations, long hours, fudging figures, high turnover, Enron and even more reconciliations. R-E-S-P-E-C-T But please don’t get me wrong, I have the utmost respe
Read more

Have We Reached a Top?

By James Kostohryz It's never been my position that the flow of fundamental news would turn from positive to negative overnight and in a total fashion. The world simply doesn't work that way. When I terminated my core long position a couple of weeks ago for reasons explained in�Ten Reasons the Countertrend Rally May Be Over,�I outlined a series of factors I believe may manifest in the later half of 2009 and the first half of 2010. Indeed, most of these factors will be more back-end loaded, as negative factors tend to build on one another and gain momentum in time through the medium of psychology and social mood. It's my view that the flow of economically relevant events�-- and perceptions of these events --are in the early stages of a transition. In this case, a transition means the flow of relatively good news will tend to wane somewhat while there's an uptick in relatively bad news. This is what one would expect at a top. However, it's to be expected that during t
Read more