Tuesday, April 19, 2011

Selling 15-20 % above the 30 day average in a rally

When to sell and when not to sell to get into safely and cash out.

1. It is good to sell when you think it is the end of the rally and there is a lot of speculation going  on. This should be the only reason to sell the stock.

2. My selling BRKR at 20.8 was good because after correction it came back to 19.5 and I bought it at 18.8 when it was close to 30 day moving average.

3. My selling VRX was a horrible thing to do even though I made a profit at 44. 5. This stock when to 53.

I am making this blunder and it has cost me several thousand dollars. I was right on VRX it is an excellent stock but did not hold it to get all the gains. I sold it prematurely to cash out profits. Fast moving stocks can go more than 30 percent sometimes and consolidate at the top. This has happened with best stocks like VRX and BIDU and many others. So it is a mistake to sell it even if it is 15-20 percent above the 30 day moving average. It is unpredictable and it is good to just hold it and learn to hold stocks.

Not holding stocks like CMG and many other stocks cost me several several thousand dollars till now.

Ofcourse I did not understand what was continuation rally in the case of Riverbed and Polypore and also Chipotle. I am still learning.

Especially when the stock is in continuation rally, I observed  that it consolidate far from the 30 day moving average. The primary rally is slow and bordering the 30 day moving average but the continuation rally is rapid after the usual cup and handle formation. One should never sell the stock just because it is 15-20 percent above the 30 day moving average. It is a blunder to do so. Example is LULU and SINA and BIDU. All of these and many others consolidated 30-40 percent above the 30 day moving average. Even VRX that moved from 35 to 53 .That is like a 60 percent move. What a move!!!!!! Great. I missed it because of misunderstand and not holding the stock. The stock can consolidate much much above the 30 day moving average.

Learning learning. So never sell except if stock comes 7-8 percent below 30 day moving average. This will save you many thousand dollars profit.

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