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When to Sell
A few (technical) reasons to sell:
Largest daily price run-up.
Sell if an extended stock has its biggest gain since the move started.
Being "extended" means it’s far above the buy point from a solid base.
This usually occurs very close to a (temporary) top.
Heaviest daily volume.
Sell on the heaviest volume day if the stock is extended.
The ultimate top often happens on the highest volume day.
Heavy volume means lots of institutional money is getting out.
Exhaustion gap.
Sell if an extended stock gaps up.
If a stock suddenly jumps or gap ups dramatically, it might mean the run is almost over.
This is called an "exhaustion gap," and it often signals the top of the stock's move.
Climax top.
Sell if a stock’s advance gets super extended with the biggest weekly price gain.
This is called a „climax top”.
This shows the stock is moving too fast and might be close to its top.
Signs of distribution.
Sell when there’s a high daily volume with no price movement.
Sometimes, the stock moves a lot one week but doesn’t go higher, with lots of trading. This is called "railroad tracks" because the volume chart looks like two parallel lines.
It’s a sign of distribution because institutions are starting to sell.
Stock splits.
Sell if a stock runs up 25%, 50%, or even 100% after a stock split.
Watch out if a stock’s price is greatly extended and they announce a stock split.
Stocks tend to top around excessive stock splits.
Consecutive down days.
Sell if a stock has more down days than up days consistently.
You might see four or five down days, then two or three up days.
This means more stock is being sold than bought.
Upper channel line.
Sell if a stock goes through its upper channel line after a huge run-up.
Channel lines are upward lines that connect the recent lows and highs.
A move above their upper channel line often marks the top.
200-day moving average.
Sell stocks that are 70% to 100% or more above their 200-day moving average.
This one is rarely used.
Selling on the way down.
Sell on the way down from the top, IF you didn’t sell while the stock was going up.
After the first drop, some stocks bounce back once but won't get back to the last high.
If you didn’t sell early, you have to sell late.
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