Prime Selling Pointers:

Reference: William O Neil, How to Make Money in Stocks

Tools for the Do-it-yourself Investor:
C Current Quarterly Earnings per Share: The Higher, the Better
A Annual Earnings Increases: Look for Significant Growth
N New Products, New Management, New Highs: Buying at the Right Time
S Supply and Demand: Shares Outstanding Plus Big Volume Demand
L Leader or Laggard: Which is Your Stock?
I Institutional Sponsorship: Follow the Leaders
M Market Direction: How to Determine It
1.) Buying right solves half of your selling problem. If you buy exactly at
the right time off a proper base structure in the first place and do not chase
or pyramid a stock when it is extended in price too far past a buy point, you wi
ll be in a position to sit in through most normal corrections in the price of yo
ur stock. Winning stocks seldom drop 8% below a correct pivot-point buying pric
e.
2.) Beware of the big block selling you see on the ticker tape just after yo
u’ve bought a stock during a bull market. The selling might be emotional, uninfor
med, temporary, or not as large, relative to past volume, as it appears. The be
st of stocks can have sharp sell-offs for a few days or a week. You should neve
r refer to a chart of the stock for overall perspective to avoid getting scared
or shaken out in what may just be a normal pullback.
3.) If after a stock’s price is extended from a proper base, its price closes
for a larger increase than on any previous up days, watch out. This move usuall
y occurs at or very close to a stock’s peak.
4.) The ultimate top may occur on the heaviest volume day since the beginnin
g of the advance.
5.) Sell if a stock advance gets so active that it has a rapid price runup f
or two or three weeks (eight to twelve days). This is called climax (blow-off)
top activity.
6.) Sell if a stock runs up on a stock split for one or two weeks (usually 2
5 to 30% , and in a few rare instances, 50%). If a stock’s price is extended from
its base and a stock split is announced, in many instances, the stock should be
sold.
7.) Big investors must sell when they have buyers to absorb their stock. Th
erefore, consider selling if a stock runs up and then good news or major publici
ty is released.
8.) New highs on decreased or poor volume means there is temporarily no dema
nd for the stock at that level and selling may soon overcome the stock.
9.) After an advance, heavy volume without further upside price progress sig
nals distribution.
10.) Tops will show arrows pointing down on a stock’s daily chart (closing at l
ows of the daily price range) on several days. In other words, full retracement
of a day’s advance.)
11.) When it’s exciting and obvious to everyone that a stock is going higher, s
ell, because it is too late! Jack Dreyfus said, ‘Sell when there is an overabundan
ce of optimism. When everyone is bubbling optimism and running around trying to
get everyone else to buy, they are fully invested. At this point, all they can
do is talk. They can’t push the market up anymore. It takes buying power to do
that. Buy when you’re scared to death and others are unsure. Wait until you’re hap
py and tickled to death to sell.
12.) If a stock that has been advancing rapidly is extended from its base and
opens on a gap up in price, the advance is probably near its peak. A two point
gap in a stock’s price would occur if it closed at its high of $50 for the day an
d the next morning opened at $52 and held above $52 during the day.
13.) Sell if a stock’s price breaks badly for several days and does not rally.
Consider selling if a stock takes off for a good advance over several weeks and
 then retraces all of that advance.
14.) When quarterly earnings increases slow materially or earnings actually d
ecline for two consecutive quarters, in most cases sell.
15.) Consider selling if there is no confirming price strength by another imp
ortant member of the same group.
16.) Be careful of selling on bad news or rumors; they are usually of tempora
ry influence. Rumors are sometimes started to catch the little fish off balance
.
17.) Try to avoid selling on shakeouts (below major price support areas).
18.) If you didn’t sell early while the stock was still advancing, sell on the
way down from the peak. After the first break, some stocks may once pull back u
p in price.
19.) After a stock declines 8% or so from its peak, in some cases examination
of the previous runup, the top, and the decline may help determine if the advan
ce may be over or if a normal 8 to 12% correction is in progress. You may occas
ionally want to sell if a decline from peak exceeds 12 or 15%.
20.) If a stock already has made an extended advance and suddenly makes its g
reatest one-day price drop since the beginning of the move, consider selling, bu
t only if confirmed by other signals.
21.) When you see initial heavy selling near the top, the next recovery will
either follow through weaker in volume, show poor price recovery, or last a shor
ter number of days. Sell on the second or third day of poor rally; it will be t
he last good chance to sell before trend lines and support areas are broken.
22.) Sell if a stock closes the end of the week below a major long-term up tr
end line or breaks a key price-support area on overwhelming volume.
23.) The number of down days in price versus up days in price will change aft
er a stock starts down.
24.) Wait for a second confirmation of major changes in the general market, a
nd don’t buy back stocks you sold just because they can be bought cheaper.
25.) Learn from your past selling mistakes. Do your own post-analysis by plo
tting on charts your past buy-sell points.
26.) Sell quickly before it becomes completely clear that a stock should be s
old. Selling after a stock has broken an obvious support level could be a poor
decision because the stock could pull back after touching off stop orders and at
tracting short sellers.
27.) Always project the week you can expect capital-gains selling by those wh
o bought in volume at the original breakout point from a base. (This applies onl
y if current tax laws favor capital gains.)
28.) In a few cases, you should sell if a stock hits its upper channel line.
Stocks surging above their channel lines should normally be sold.
29.) Sell when your stock makes a new high in price if it’s off a third or four
th stage base. The third chance is seldom a charm in the market. It has become
too obvious and almost everyone sees it.
30.) Sell on new price highs off a wide and loose, erratic chart price format
ion.
31.) Sell on new highs if a stock has a weak base with much of the price work
in the lower half of the base or below its 200 day moving average price line.
32.) Sell if a stock breaks down on the largest weekly volume in its prior fi
ve years.
33.) Some stocks can be sold when they are 70 to 100% above their 200 day mov
ing average price line.
34.) After a prolonged upswing, if a stocks 200-day moving average line of it
s price turns into a downtrend, consider selling the stock.
35.) Poor relative price strength can be a reason for selling. Consider sell
ing when a stock’s relative strength on a scale from 1 to 99 drops below 70.